WASHINGTON (MNI) – The following is the text of the Federal
Reserve’s Beige Book survey from the St. Louis district, published
Wednesday:

Summary

Economic activity in the Eighth District has continued to increase
at a modest pace since our previous report. Manufacturing activity has
continued to increase since the previous report. Activity in the
services sector also has increased. Residential real estate activity has
continued to decline. In contrast, commercial and industrial activity
has improved modestly in some areas, although commercial construction
activity has remained slow. Lending at a sample of small and mid-sized
District banks declined in the three-month period from late March to
late June.

Manufacturing and Other Business Activity

Manufacturing activity has continued to increase since our previous
report. Several manufacturers reported plans to open plants and expand
operations in the near future, while a smaller number of contacts
reported plans to close plants or reduce operations. Firms in the wood,
organic dye, automobile parts, lime, and hygiene product manufacturing
industries reported plans to expand operations and hire new workers.
Furthermore, a major firm in the automobile manufacturing industry
announced plans to hire a significant number of new workers. In
contrast, firms in the ice cream, air conditioner, and wrapping paper
manufacturing industries announced plans to close plants and lay off
employees.

Activity in the District’s services sector has increased since our
previous report. Firms in the business support, human resources
administration, entertainment, hotel, and tire wholesale industries
announced plans to expand operations and hire new workers. In contrast,
contacts in the government, newspaper publishing, restaurant, and
education industries reported plans to decrease operations in the
District and lay off employees. General retailers report that sales have
slowed in recent weeks. Auto dealers report inventory shortages of
quality used cars as well as new car models that contain parts supplied
by Japan.

Real Estate and Construction

Home sales continued to decline throughout most of the Eighth
District. Compared with the same period in 2010, May 2011 year-to-date
home sales were down 15 percent in Louisville, 13 percent in Memphis,
and 21 percent in Little Rock and St. Louis. Residential construction
also continued to decline throughout the District. May 2011 year-to-date
single-family housing permits decreased in the majority of the District
metro areas compared with the same period in 2010. Permits decreased 30
percent in Little Rock, 34 percent in St. Louis, 23 percent in Memphis,
and 27 percent in Louisville.

Commercial and industrial real estate activity has experienced
modest improvement in some regions, while construction activity remained
slow throughout most of the District. A contact in central Arkansas
reported that while office real estate activity continues to be
stagnant, there are more commercial space inquires from national
tenants. A contact in Memphis noted a slight increase in office space
demand in the first half of 2011 but noted unchanged activity for
industrial real estate. Contacts in St. Louis noted demand growth for
both industrial and office space but slow construction activity.
Contacts in Louisville reported increased industrial space leasing
activity and expect further demand growth in this sector as new
construction remains limited. Contacts in northeast Arkansas noted
growth in commercial real estate sales and construction in the Jonesboro
and Paragould areas.

Banking and Finance

Total loans outstanding at a sample of small and mid-sized District
banks decreased 1.0 percent from late March to late June. Real estate
lending, which accounts for 74.3 percent of total loans, decreased 1.4
percent. Commercial and industrial loans, accounting for 15.6 percent of
total loans, increased 0.8 percent. Loans to individuals, accounting for
4.7 percent of total loans, decreased 6.0 percent. All other loans,
roughly 5.4 percent of total loans, increased 13.6 percent. During this
period, total deposits at these banks decreased 0.5 percent.

Agriculture and Natural Resources

The majority of the corn, soybean, sorghum, rice, and cotton crops
in the Eighth District are currently in fair or better condition. Winter
wheat harvests are either complete or close to completion in all
District states, and the production of winter wheat and the area
harvested for the crop increased from 2010 to 2011. Finally, the
fraction of pastures in good or better condition has declined in most
District states since our previous report. Year-to-date coal production
for the District, at the end of June, was 6.1 percent higher than the
same period in 2010, and monthly production for June was 1.3 percent
higher than production for June 2010.

** Market News International Washington Bureau: 202-371-2121 **

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