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VOL. 127 | NO. 43 | Friday, March 2, 2012

Fed Report: Activity Picks Up in Memphis

By Andy Meek

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The Federal Reserve sees an improving economy and a pickup in economic activity in the central bank’s Eighth District, its regional territory that includes Memphis.

A report released this week by the Fed – the so-called “beige book” – notes that economic activity in the Eighth District has expanded at a modest pace since the Fed last looked at the area.

The report is a broad national survey of economic conditions published eight times every year.

The latest report notes an increase in manufacturing activity and in the services sector, while residential real estate activity has declined somewhat and commercial real estate market conditions have been generally mixed.

Overall lending at a sample of large banks in the district that includes Memphis showed little change in activity during the fourth quarter.

In a statement accompanying the beige book release, Ruben Hernandez-Murillo, an economist with the St. Louis branch of the Federal Reserve, said that manufacturing is expanding at a steady pace across the Fed’s regional districts.

“Reports from the twelve Federal Reserve districts suggest that overall economic activity continued to increase at a modest to moderate pace in January and early February,” the report notes.

Nationally, the beige book shows a manufacturing expansion under way across the nation, with many districts reporting increases in new orders, shipments or production. Reports of consumer spending were generally positive except for sales of seasonal items, and the sales outlook for the near future was mostly optimistic, according to the report.

The report also shows an uptick in hiring across several districts. Most of the districts that provided data for the beige book on hiring reported a slight increase, and the Eight District was among those reporting increased hiring in manufacturing.

Zeroing down to the Memphis area, that’s certainly been the case.

January unemployment data will be out later this month. And the already-released December numbers were encouraging.

The Memphis metro area’s jobless rate dropped below 9 percent in December for the first time since late 2008. The unemployment rate was 8.8 percent in December, down from 9.4 percent in December 2010.

Housing continues to lag in the Eighth District, according to the beige book. The Fed’s figures show that compared with 2010, total 2011 home sales were down 2 percent in Memphis.

Total 2011 single-family housing permits also decreased in the majority of the district metro areas when compared with 2010.

“Commercial and industrial real estate conditions were mixed throughout the Eighth District,” the report states. “Contacts in Memphis reported weak commercial real estate loan demand but stable industrial real estate activity.”

Nevertheless, seeds continue to be sown in Memphis to boost more manufacturing, commercial real estate and industrial activity in the area. Colliers International executive vice president of brokerage services Andy Cates told the Memphis Rotary Club this week that the city finds itself “in the right place at the right time” to benefit from a re-emerging economy.

His remarks came later the same week in which Oxford Immunotec Inc. formally unveiled its new state-of-the-art facility in Memphis at 5846 Distribution Drive.

Greater Memphis Chamber senior vice president of economic development Mark Herbison told local economic development officials a few weeks ago that the chamber and state officials have worked on bringing Oxford to Memphis for more than a year.

The location here is Oxford’s first U.S. location outside of its Massachusetts headquarters.

Meanwhile, among other local trends that were part of the Fed’s economic snapshot:

The Fed’s contacts in the Eight District reported retail sales in January and early February that were up slightly on average over year-earlier levels.

On average, car dealers in the district also reported a slight uptick in sales in January and early February.

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