BOSTON – The Federal Reserve Bank of Boston said Wednesday that the outlook is “slightly more optimistic than last time, with somewhat less reference to the downside possibilities” in its Beige Book.
The outlook was released in its quarterly survey based on anecdotal information collected on or before Nov. 19. The previous Beige Book – known for the color of its cover – was released on Oct. 21.
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The Providence commercial real estate market has seen slow but has seen positive net absorption and a pickup in leasing activity in recent weeks, the survey reported.
“A Providence contact, while quite optimistic in the near term, sees some vacancy risks on the horizon in two to three years,” it said.
Other Fed district contacts were also upbeat except for Hartford.
“The outlook for Hartford remains uncertain and our contact is not willing to bet on robust growth in the near future.”
Across New England, the commercial real estate market “improved modestly” in recent weeks the Fed said, flagging construction and development projects around the region, including health-care related activity in Providence, retail construction and speculative residential land development in Portland and a significant number of multifamily projects in Boston.
The Fed was gloomy on the residential real estate market – calling it “soft” and citing the expiration of the federal homebuyer tax credit, job insecurity and general economic uncertainty as weighing on sales after home and condo sales declined in September. Fed contacts said the market won’t improve until consumer confidence returns.
On a positive note, New England software and information technology continued to improve with respondents more optimistic than three months ago.
“With strong order pipeline, most [contacts] are expecting a continuation or slight acceleration of their current rate of growth in early 2011.”
Manufacturers shone on the survey, with “nearly all” Fed contacts saying they are “relatively upbeat” about their current activity and generally expecting to grow at a “reasonable pace” heading into 2011. Nevertheless, the Fed flagged some sector uncertainty for next year’s outlook.
Among the other Beige Book sectors covered: retailers in the First District reported mixed results, with a majority expecting the holiday season to yield “modest” sale increased, and travel and tourism was strong in Boston. New England staffing services reported business continued to grow while some survey respondents expressed concern over the rising employment-related costs such as unemployment insurance and worker’s compensation.
Overall, the Federal Reserve said five Fed banks, including Boston and San Francisco, said the economy grew “at a slight to modest” rate, while five others, including New York and Chicago, reported a “somewhat stronger pace of economic activity,” Bloomberg News reported. Conditions were reported as “mixed” in the Philadelphia and St. Louis regions.
The report signals an improvement in the economy after sluggish growth in the summer prompted the Fed last month to announce $600 billion in asset purchases to help cut unemployment persisting near 10 percent.
The positive outlook from 10 banks contrasts with the October report in which eight Fed banks, including San Francisco and Chicago, reported growth. At the time, the Philadelphia and Richmond Fed banks said their economies were “mixed” while the Cleveland region “held steady” and the Atlanta district “remained slow,” said Bloomberg News.
The survey will be considered by Federal Open Market Committee policy makers before their next meeting on Dec. 14, when they will review their asset purchase program.
