The latest Federal Reserve Board Beige Book said that the economy “expanded at a measured pace in recent weeks.” With that said, Hurricane Sandy disrupted activity in the Mid-Atlantic regions, and many respondents throughout the country were very concerned about the implications of the fiscal cliff. This is causing many manufacturers, for instance, to worry about the 2013 outlook.
The manufacturing sector was singled out as one industry that continues to be soft. This is not a surprise to those who follow the regional manufacturing surveys from the Federal Reserve Banks, many of which continue have experienced weak or falling new orders and production. In addition to concerns about the fiscal cliff, many manufacturers have also seen their sales – particularly exports – decline. Employment growth, which has seen some modest growth overall, remains more sluggish for manufacturers. Still, there were also some pockets of strength, namely in the heavy equipment and aerospace industries.
A couple larger strengths of note were rising consumer sales and continuing growth in the housing sector. Consumer spending has increased “at a moderate pace.” The news on the holiday season was positive, with retailers having “mostly upbeat expectations.” In addition, residential construction improved in many regions, along with commercial real estate.
Chad Moutray is chief economist, National Association of Manufacturers.