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Economic activity in the Eighth District has continued to expand at a modest pace since our previous report. Manufacturing activity has increased since the previous report. Activity in the services sector also has increased, but at a slower pace than in the previous report. Retail and auto sales have risen in recent weeks. Residential real estate activity has continued to decline, while commercial construction activity has remained slow. Lending at a sample of small and mid-sized District banks declined in the three-month period from mid-December to mid-March.
Manufacturing and Other Business Activity
Manufacturing activity has increased since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or reduce operations. Firms in the silicone products, rubber products, and military vehicle manufacturing industries reported plans to expand existing operations and hire new workers. Additionally, firms in the electrical equipment and automobile parts manufacturing industries reported plans to open new plants in the District. In contrast, firms in the food, surgical instrument, packaging, and weapons manufacturing industries announced plans to decrease operations and lay off employees.
Activity in the District's services sector has increased slightly since our previous report. Contacts in the casino, electronic parts wholesale, transportation equipment wholesale, and health care industries announced plans to expand operations and hire new workers. In contrast, contacts in the education, restaurant, and fire protection services industries reported plans to decrease operations in the District and lay off employees. General retail contacts reported that sales have improved and costumer traffic has increased in recent weeks. Auto dealers report that sales of both new and used vehicles have increased, but the supply of quality used vehicles continues to be tight.
Real Estate and Construction
Home sales continued to decline throughout most of the Eighth District. Compared with the same period in 2010, February 2011 year-to-date home sales were down 6 percent in Louisville, 8 percent in St. Louis and Memphis, and 14 percent in Little Rock. Residential construction declined throughout the District as well. February 2011 year-to-date single-family housing permits decreased in the majority of the District metro areas compared with the same period in 2010. Permits decreased 25 percent in Little Rock, 40 percent in St. Louis, 2 percent in Memphis, and 20 percent in Louisville.
Commercial and industrial construction activity continues to be slow throughout most of the District. Commercial construction contacts in Missouri and western Illinois reported an increase in institutional projects but noted a scarcity of construction activity in the St. Louis area. Contacts in Louisville reported that there has been little change in commercial and industrial construction activity but there is some increase in industrial space leasing. A contact in Arkansas noted that commercial construction has remained steady while contacts in south central Kentucky noted some increased activity in commercial real estate as well as construction. A contact in St. Louis reported an increase in commercial construction inquiries but noted that it remains difficult for developers to finance projects.
Banking and Finance
Total loans outstanding at a sample of small and mid-sized District banks decreased 3.2 percent in the three-month period from mid-December to mid-March. Real estate lending, which accounts for 74.9 percent of total loans, decreased 1.3 percent. Commercial and industrial loans, accounting for 15.4 percent of total loans, decreased 8.7 percent. Loans to individuals, accounting for 5.0 percent of loans, decreased 2.6 percent. All other loans decreased 16.7 percent and accounted for 4.7 percent of total loans. Over this period, total deposits decreased 1.7 percent.
Agriculture and Natural Resources
Commercial red meat production in the Eighth District rose by 0.2 percent in February 2011, compared with February 2010, while year-to-date production at the end of February 2011 was 2 percent higher compared with the same period in 2010. Year-to-date estimates for the number of chickens slaughtered and for total live weight at the end of February 2011 were 2.3 percent and 3.7 percent higher, respectively, compared with 2010 figures. The District's year-to-date coal production at the end of February 2011 was 8.5 percent higher than in the same period in 2010.
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