The US Beige Book covering the period from November 14 to January 4 indicated that economic activity in all 12 districts showed 'either modest or modest' expansion. The tone of this report was more positive than previous ones. More importantly, it suggested that recovery in the housing market is underway and this would in turns lift the prospect of other sector in the economy.
Housing activity was strong with existing residential real estate activity expanded in all Districts while growth rates were 'moderate or strong' in 9 Districts. The 5 Districts that reported on housing inventories all reported falling levels. New residential construction expanded in all but 1 District. Kansas City District reported that increased lumber and drywall costs limited construction, causing a slight decline this period. Hurricane Sandy disrupted construction activity initially in New York, but then work for subcontractors on repairs and reconstruction increased. Despite weakness when compared with residential properties, sales and rental of non-residential real estate are still 'mostly positive - described as modest on average'.
Concerning manufacturing, mixed reports were seen with 6 out of the 12 Districts showing growth activity while 3 indicating contraction. Chicago showed expansion at a 'moderate' pace with contributions from the auto and housing sectors. However several firms in Richmond reported 'falling export demand, especially from Europe'. Consumer spending rose in all 12 Districts as driven by holiday sales which were 'modestly higher' than a year ago. Yet sales came in 'below expectations' for the New York, Cleveland, Atlanta, Chicago, and San Francisco. Auto sales were 'steady to stronger' in 10 of the 12 Districts while tourism activity was either 'holding steady or growing' in 7 of the 8 reporting Districts.
The job market conditions were reported as 'mostly unchanged'. Yet, 6 Districts reported 'delayed hiring' due to 'fiscal cliff uncertainties' The Chicago district reported that manufacturers were 'choosing to cut hours instead of reducing head count in expectation of production rebounds in 2013' while the New York, Atlanta, Minneapolis, and Dallas districts all saw the labor market 'firming modestly'. Meanwhile, several Districts reported 'difficulties finding qualified workers in specialized fields'.