The Federal Reserve believes the economy of the central bank’s regional district that includes Memphis “continued to expand” modestly in June and early July.
In nearly every category in the Fed’s latest so-called Beige Book economic survey, which is based on reports from the Fed’s 12 regional districts and which is published eight times per year, the central bank’s St. Louis district earned a proverbial grade of “improved.” The language in the report, however, was unenthusiastic, mirroring a general wariness about the current economic picture in the area and beyond.
“Residential real estate market conditions have continued to improve moderately,” the central bank said in the report it released this week. “Similarly, commercial real estate market conditions have also improved. Recent reports of planned activity from manufacturing firms have been positive.
“Reports from services contacts have been mixed. Overall lending at a sample of small and mid-sized District banks increased slightly from mid-March to mid-June.”
The Beige Book report is based on anecdotes about current conditions in the Fed districts that come in as reports from bank and branch directors, as well as through interviews with business contacts, economists, market experts and other officials.
“Residential real estate market conditions have continued to improve moderately. Similarly, commercial real estate market conditions have also improved.”
–The Federal Reserve Beige Book
The report noted bright spots for the Memphis-area district in real estate and construction and in manufacturing and other business activity.
“Reports of plans for manufacturing activity have been positive since our previous report,” the Fed noted. “Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to decrease operations and lay off workers. Firms in auto, appliance, wall coverings, stone wool insulation, food, construction machinery, factory components, and packaging and label manufacturing reported plans to hire new workers, expand operations, and build new plants.”
The report goes on to note that commercial and industrial real estate conditions have improved in the district, as have home sales. However, Todd Brown, the current treasurer of the Memphis Mortgage Bankers Association, told The Daily News the current pickup in local mortgage activity is probably less attributable to sentiment about the economy than it is to record low interest rates.
During the second three months of 2012, banks and mortgage lenders in Shelby County made 2,149 purchase mortgages, up 14 percent from 1,878 mortgages during Q2 2011, according to real estate information company Chandler Reports, www.chandlerreports.com.
As evidence of a pickup in commercial and industrial real estate activity, Logical Systems, an engineering company that provides high-tech manufacturing solutions worldwide, is planning to move to a new 30,397-square-foot space in Memphis after having outgrown the facilities in Bartlett it has occupied for several years.
This week, the Economic Development Growth Engine board approved a nine-year tax freeze to help the company finance the expansion. It’s a benefit that will save the company roughly $423,000 in taxes.
LSI specializes in control systems integration encompassing the computer control of manufacturing equipment.