The Federal Reserve Board of Governors released its Beige Book this afternoon, finding that the U.S. economy continues to grow, albeit more slowly than in its previous report. The report states that some Federal Reserve districts are experiencing faster growth in manufacturing activity than others. In terms of short-term expectations, “… the manufacturing outlook remained generally optimistic, but capital spending plans were somewhat more cautious.”
Parsing through the regional reports, it is quite instructive as to which sectors are growing or struggling. To the relief of many, auto production is starting to recover from its supply disruptions stemming from the Japanese disaster. Other sectors which are doing well include heavy trucks and equipment, metal fabrication, and high-technology products. Exports are clearly lifting overall demand for manufactured goods.
At the same time, the Boston district gives some clues about manufacturing sectors which are more challenged. The summary says, “Softer growth was reported [in the Boston district] by firms delivering consumer luxury goods and products or services to small business, banking and government sectors.” Moreover, manufacturing output has been much weaker in many of the East Coast districts, including New York, Philadelphia, Richmond, and Atlanta.
Chad Moutray is chief economist, National Association of Manufacturers.