Beige Book: Boston contacts see ‘increasingly uncertain’ outlook

RETAIL ACTIVITY was mostly flat in the First District, according to the Federal Reserve's quarterly Beige Book.
Posted 9/8/11

BOSTON – The Federal Reserve Bank of Boston said its contacts in all sectors reported an “increasingly uncertain” outlook in the Sept. 7 Beige Book.

First District business contacts in manufacturing were mixed in their responses – some cited slowing demand while other had strong sales. In other sectors, retail activity was mostly flat; tourism was up; staffing and software and IT services firms noted continued growth; and real estate markets remained sluggish.

In the retail market, contacts noted that consumers were conservative in the purchases they were making, and generally avoiding big-ticket items. Travel and tourism in New England continued a “strong upward trend” through the second quarter than began a year earlier, but softened since mid-July.

A number of manufacturing firms reported a slowdown in European demand for their products. More than one manufacturer commented that the country is “talking itself into a recession,” the Fed noted.

Nearly all New England staffing contacts reported upticks in business volume through the end of the second quarter and into the third, however many are disappointed that overall activity remains below expectations, the Fed said. Many expect to “move sideways” in 2012. They are generally less upbeat about growth than they were in three and six months ago.

Regional software and information technology contacts reported continued upward trends, with year-over-year revenue increases ranging from 4 percent to 30 percent. Most expect growth in late 2011 and early 2012 to be in the 10 to 20 percent range.

As for the real estate markets, commercial leasing fundamentals remained “roughly unchanged” and, although many New England states saw increases in home sales in July, First District contacts were unenthusiastic, because they reflect struggling sales activity following the expiration of the homebuyers’ tax credit last year, rather than improvement this year.

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