Economy improving in most electrical sectors according to Fed’s Beige Book

There really isn’t much to cause concern for the primary markets of the electrical industry, and plenty of cause for continued optimism, in the Federal Reserve’s latest Beige Book report, a compendium of anecdotal reports on current economic conditions from the Fed’s 12 regional banks. The Fed banks prepare the Beige Book to provide background for the Federal Reserve Open Market Committee meetings in which monetary policy is set. The committee is meeting today and tomorrow in Washington, D.C. The excerpts below are edited down from the Beige Book summary.

Residential real estate: Real estate activity increased at a moderate to strong pace in most districts and most reported an increase in home sales. Home prices increased throughout the majority of the reporting districts. Boston, New York, Richmond, Atlanta, Minneapolis, Kansas City, and Dallas noted low or declining home inventories and upward pressures on home prices in some areas. Residential construction activity also improved moderately across the districts, and contacts in New York, Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco reported faster growth in multi-family construction, in particular.

Commercial real estate: Commercial real estate market conditions likewise continued to improve across most districts and non-residential construction activity as a whole was stable to increased throughout the nation. New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco reported modest to moderate improvements in nonresidential real estate activity. Dallas reported strong growth in leasing activity for office and industrial space.

Manufacturing: Manufacturing increased in most districts since the previous survey. The exception was Kansas City, which noted a slight contraction, with storms retarding some activity. Most districts reported stable or increasing new orders, shipments, and production. Firms in the Boston, Philadelphia, and San Francisco districts were broadly optimistic about prospects for the second half of 2013, while manufacturers in the Richmond district were cautiously optimistic; contacts expressed mixed outlooks in the Dallas district, and contacts in the Cleveland and Atlanta district do not expect future production to be as high as previously projected.

Strong demand in residential construction continued to stimulate the manufacturing sector in several districts. Home-building suppliers in the Philadelphia and Cleveland districts reported strong activity. Wood product manufacturers expanded operations and increased production in the St. Louis and San Francisco districts. A cement producer in the Dallas district saw a very strong market. Demand for construction equipment picked up in the Chicago district.

Automobile manufacturing remained a source of strength in the Chicago, St. Louis and Minneapolis districts. Steel and metal production increased in several districts, including Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco. Fabricated metal manufacturers in the Philadelphia and Dallas districts reported gains. Primary metal production was steady at strong levels in the Dallas district, while reports on primary metal orders in the Philadelphia district were mixed. Specialty metal manufacturers in Chicago saw modest improvement in demand. The metal-forming business in Minneapolis is having a very strong year. Gains were reported by petroleum refining manufacturers in the St. Louis and Dallas districts. Reports on semiconductor orders in the Dallas district were mixed, and semiconductor firms in the San Francisco district said sales increased substantially. Electronic equipment firms in the Philadelphia district reported lower activity. Food producers in the Philadelphia and Kansas City districts saw weaker activity, while demand for heavy equipment in the Chicago district remained soft.