New England economy continues slow expansion, says Fed

ACCORDING TO THE BEIGE BOOK REPORT released by the Federal Reserve Bank of Boston, New England's economy continued to grow "albeit modestly" from December 2012 to February 2013.
Posted 3/6/13

BOSTON – New England’s economic activity continued to grow as 2013 started, “albeit slowly,” according to the Beige Book report released by the Federal Reserve Wednesday afternoon.

Most contacted retailers reported higher sales in the latest period than last year, but, according to the report, although half of manufacturers reported higher sales from December to early February than they did the previous year. “Nonetheless, most manufacturers are upbeat about 2013,” said the report.

According to the report, part of the disconnect between the responding manufacturing firms was due to the “highly cyclical nature” of the semiconductor industry, which accounted for two of the firms reporting negative results but a positive outlook for 2013.

On average, most retailers contacted reported overall fiscal year 2012 sales increased from 1 to 3 percent over 2011. For January 2013, comparable-store sales ranged from a 1 percent decrease to a 6 percent increase year-over-year, according to the Beige Book.

Retailers reported that demand was strong for clothing, home furnishings and furniture, though some retailers said demand was “softening” in February due to consumer uncertainty over job creation, budget deficits and sequestration as well as weather-related issues.

The tourism industry posted record highs in 2012 for hotel occupancy rates and revenue. “Expectations for 2013 are that hotel occupancy will be flat or down about 1 percent compared to 2012, but that room revenues will be up about 6 percent,” said the report, adding that international travel is expected to rise roughly 9 percent in 2013.

New England’s restaurants continue to have “less robust” results than hotels, said the Beige Book, adding that average table check prices were expected to be lower than the figures from 2009 to 2011.

“Manufacturing firms in the First District continue to paint a picture of slow recovery,” said the report. Of the 12 respondent firms, six reported higher sales in the fourth quarter versus the same period a year earlier, two reported flat sales and four reported lower sales. “In contrast to the mixed sales picture, 10 of the 12 firms say their outlook for 2013 is positive.”

“Employment growth seems to be following sales and not the outlook,” said the report. Only four of the 12 contacts increased hiring during the fourth quarter or had plans to increase hiring in 2013. Four reported the opposite plan.

The report added that “investment appeared similar to employment,” and four of the 12 firms reported higher planned investment.

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