Beige Book: R.I. developers discussing possibility of new industrial construction

BUSINESS CONTACTS are “generally upbeat” across sectors, according to the Federal Reserve’s latest Beige Book report on the economy. / BLOOMBERG FILE PHOTO/BRENT LEWIN

BOSTON – For the first time since before the Great Recession, Rhode Island developers are discussing the possibility of new industrial construction, according to the Federal Reserve’s latest Beige Book report based on reports from late November to early January.
The report said that commercial leasing activity slowed “modestly” in the past month in Providence, where a contact reported greater caution among business owners. Concerns that the national election cycle could delay decisions contributed to that caution, the report said.
In Boston, office leasing demand “remains robust,” the report said.
In addition, residential real estate markets continue to be strong and consistent with the “seller’s market environment” present throughout 2015.
Sales of single-family homes increased in November on a year-over-year basis in every state. Massachusetts experienced its sixth consecutive month of year-over-year increases in sales, the report said.
Many contacts also reported that buyers were motivated to buy in the months leading up to December due to the anticipation of increasing interest rates, it said.
“In spite of any potential concerns about increased interest rates, a Massachusetts contact indicates that he feels buyer demand will remain strong in the New Year,” the report said.
The report found that business contacts were “generally upbeat,” across sectors.
The report said that most retailers, manufacturers, and consulting and advertising firms cited year-over-year sales increases compared with the same period a year ago.
Only five manufacturing firms responded due to seasonal issues, and four said they are positive regarding demand for their products. The exception was a frozen food manufacturer contact, which reported a “very competitive environment” with large retailers demanding – and receiving – price reductions.
An information services producer cited higher sales for the first time in many years, noting growth in legal and tax businesses. A toy company also reported significantly stronger sales, thanks to the new Star Wars movie. A laboratory instrument maker said new orders from India and China are stronger than expected.
The report did say that the “strong dollar” continues to be a problem for some firms, but counted lower energy prices as good news.
“All respondents report a generally positive outlook. The only major revision is from the information services provider, who anticipates growth for the first time in many years,” the report said.

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