By Kimberley Donoghue PBN Web Editor Twitter: @kydonoghue
BOSTON – The Federal Reserve Bank of Boston said on Wednesday that political uncertainty over budget deficits Rhode Island has stalled business plans, resulting in light leasing activity.
However, pending deals for downtown Providence continue to engender optimism regarding office absorption in coming months, the entity said in its Beige Book, a quarterly survey – named after the color of its cover – based on anecdotal information.
The multifamily sector remained strong in February and March with new construction in the planning stages at two Rhode Island locations and several projects underway in the greater Boston area.
As for the residential real estate market, the median price of homes slipped slightly in the region except for Rhode Island where it rose.
Overall, the Fed said its First District contacts in most sectors continued to expand in February and March, except for retail, which had “somewhat mixed” reports, and the real estate market.
Manufacturers saw ongoing revenue gains, the Fed said, observing that some were “quite strong.”
Nevertheless, many voiced greater concern about the rest of 2011 due to the natural disaster in Japan, the current geopolitical climate worldwide, and ambiguity about U.S. government spending going forward.
Inputs from Japan are expected to be in short supply soon but the impact of the disruption on First District firms is unknown.
Commodity prices also continue to be a concern for many contacts, especially the rising prices for oil, precious metals, corn and wheat, the Federal Reserve Bank of Boston said. Some firms rose their prices in response to the price hike and have found that their customers have “easily accepted” the increases.
Technology-related manufacturers said that sales growth continued be strong in the first quarter of 2011; a number of contacts said they plan to hire additional workers in coming months. Nearly all of the firms mentioned plans to implement merit-based salary increases of 1.5 percent to 3 percent.
Reports from the twelve Federal Reserve Districts showed a general improvement in activity since the last Beige Book and, although the improvements were moderate, most said the gains were widespread across sectors.