Fed report shows economic conditions improved in St. Louis district, stayed flat in KC

The Federal Reserve Bank’s St. Louis district has shown slightly improved economic conditions in recent weeks, while the Fed’s Kansas City district stayed roughly flat, according to the latest Beige Book, a regular report about current economic conditions across the central bank’s 12 districts.

Overall, economic activity increased across most of the U.S., with eight of twelve Federal Reserve Districts reporting modest to moderate growth.

In general, outlooks remain positive, although many districts also reported that contacts had become less optimistic due to increased market volatility, rising interest rates, falling energy prices and political turmoil.

St. Louis

The eighth district, which covers all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee, saw moderate wage growth since the Fed’s last report. Employment has also grown slightly, despite employers citing difficulties finding qualified workers.

Banking conditions and consumer spending have improved modestly. Outstanding loan volumes grew by 4 percent relative to year-ago levels in the fourth quarter.

The manufacturing sector has seen increased activity in recent months, although at a slower rate than noted in the previous report.

Residential and commercial real estate activity has improved slightly, while residential construction activity was flat.

Activity in the nonfinancial services sector has been unchanged since the last report.

Agricultural conditions improved slightly thanks to higher crop prices, but overall conditions remain weak.

Kansas City

Activity in the tenth district, which includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, was roughly flat in December and early January, as growth in some sectors was offset by a slowdown in others. Positive growth is expected in the months ahead.

Retail sales were strongly above year-ago levels, but consumer spending remained flat due to low auto, restaurant and tourism sales.

Employment and employee hours rose across most industries and continued growth is expected. Although there is still a shortage of low- and medium-skill workers in positions like retail sales, mechanics, technicians, restaurant staff and truck drivers.

The report showed manufacturing edged up since the last survey period.

Residential real estate activity declined modestly, while overall activity in the commercial real estate sector rose slightly. 

Energy activity eased slightly since the previous survey period, and price expectations for crude oil declined further due to an increase in supply and rising global tensions. 

The district’s agricultural outlook remained weak despite slight gains in some commodity prices. 

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