Beige Book: Uncertainty about presidential election delaying some business decisions

ECONOMIC ACTIVITY is continuing at a modest to moderate pace in the First District, despite uncertainty about the presidential election, according to the Federal Reserve’s Beige Book report released Wednesday.  / BLOOMBERG FILE PHOTO/BRENT LEWIN
ECONOMIC ACTIVITY is continuing at a modest to moderate pace in the First District, despite uncertainty about the presidential election, according to the Federal Reserve’s Beige Book report released Wednesday. / BLOOMBERG FILE PHOTO/BRENT LEWIN

BOSTON – Economic activity is continuing at a modest to moderate pace in the First District despite uncertainty about the presidential election, according to the Federal Reserve’s Beige Book report released Wednesday.

“Outlooks are positive, although contacts in several sectors cite the upcoming presidential election as a source of near-term uncertainty, delaying some business decisions,” the report said.

The report for the First District, which includes all of New England, except Fairfield County in Connecticut, said retailers and commercial real estate contacts reported mixed results in the period from late August to early October, but manufacturers and residential Realtors were more positive.

The report also said that more contacts in manufacturing and retail said they were raising wages moderately to retain and attract employees.

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In addition, the median sales prices of single-family homes rose year-over-year in all six New England states.

Seven manufacturing firms weighed in, with three reporting excellent business conditions, three reporting modest growth and one reporting a decline in revenue. One diversified manufacturer of aerospace and construction goods said that he “cannot think of when the domestic economy has been so strong.” Another semiconductor equipment firm credited the introduction of the iPhone 7 for its strong sales growth, while a lab equipment manufacturer said that sales rose 10 percent year on year due to strong sales in Japan. An industrial equipment parts maker was the only firm that reported lower sales, saying that weakness in oil and gas is still affecting business.
Commercial real estate activity was mixed in the First District, with contacts in Boston and Portland, Maine, saying that office leasing activity has been flat since late summer.
“These contacts speculate that political uncertainty in advance of the national elections may be delaying leasing decisions,” the report said.

In Providence, leasing activity has been steady since August, with August even busier than July.
“Together these patterns suggest that in Providence the autumn increase in activity may have occurred earlier than usual this year,” the report said.
The investment sales market is described as “somewhat softer” in Greater Boston, even though contacts expect that premier properties will continue to sell at near all-time-high prices.

As for residential real estate, contacts throughout the district were optimistic, saying that activity was unusually high for August.
However, pending sales data for condominiums was more tempered, with Rhode Island and New Hampshire seeing small decreases year over year. All New England states, with the exception of Rhode Island and Connecticut, saw increases in median sales prices for condos, according to the report.
Several contacts cited low interest rates and the impending presidential election as motivation for potential homeowners to buy now.

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