REGIONAL CHECK-UP TD Economics HIGHLIGHTS The latest Beige Book suggests that economic activity expanded at a modest to moderate pace across the TD footprint in September. The pace is little changed from previous round, but uncertainty on fiscal policies was pervasive. Retail, auto sales, and tourism remain bright spots across much of the footprint. reports remained mixed throughout the region. The housing market recovery continues to gather pace, with only some deceleration in new construction reported in southern Districts. As we wrote in our State Monitor (here), employment in the TD Footprint increased by just thousand in August, or less than one fifth of the national gain. increased in all regions but the Lower South Atlantic. The bulk of jobs originated in the Middle Atlantic, where brisk hiring in New York boosted payrolls. REGIONAL TRENDS New England The New England economy continued to expand at a moderate pace in September and early October. Strengthening residential and commercial real estate markets continue to offer a helping hand. The outlook also improved in manufacturing, thanks to a better international trade landscape. Additionally, service-sector activity has picked up slightly, with improved sales in retail, tourism, and professional and business services. Middle Atlantic Economic performance was uneven across the Middle Atlantic region, ranging from moderate in NY and northern NJ, to modest in PA and southern NJ. The regional housing market showed further strengthening, but still underperforms relative to the nation. Upper and Lower South Atlantic Momentum in the Upper South Atlantic economy eased in September relative to the summer, but results were mixed. Retail and existing housing market improved, but new construction and manufacturing weakened. Economic activity in the Lower South Atlantic expanded slowly through September after modestly improving earlier in the summer. Retail and auto sales remained supportive, as did the tourism industry. activity and transport volumes increased modestly. Housing continued to improve but the pace has slowed from earlier in the year. 0. Index (m/m % chng.) REGIONAL COINCIDENT INDICES 0. 0. 0.0 New England Mid Atlantic Upper South Atlantic Lower South Atlantic -0. Jan- Jul- Jan-11 Jul-11 Jan-1 Jul-1 Jan-1 Jul-1 Source: Federal Reserve Bank of Philadelphia, TD Economics Beata Caranci, VP & Deputy Chief Economist 1--07 Michael Dolega, Economist 1--000 Ksenia Bushmeneva, Economist 1-0-7
NEW ENGLAND (CT, MA, ME, NH, RI, VT) The latest Beige Book suggests that the New England economy continues to be characterized by a moderate pace of economic expansion. This assessment is in line with the previous statement, but reflects an improvement compared to the first half of the year. These positive dynamics are imbedded in our state forecast, and point to a strengthening recovery in the housing sector and international trade. Similarly to the rest of the nation, the housing recovery is the key ingredient for stronger near-term economic growth in the region. The recent pace of construction does not disappoint. Led by CT, MA, and RI, housing starts are up.% on a year-to-date basis slightly above the national pace. Earlier in the year, brisk pace of construction in RI and CT reflected Sandy-related re-building along the coastline, but recent gains are due to improving economic fundamentals. Moreover, the recent uptick in long-term interest rates did not spook homebuyers. Sales of existing homes have held steady or improved relative to last year in all states, but MA and VT. These two states have a higher share of investment and vacation home sales, and thus are more sensitive to increases in mortgage rates. In addition, low inventory of singlefamily homes in the Bay State has put upward pressure on prices, making it a sellers market. As a result, MA s home prices have shown the fastest rate of appreciation in the region, rising by 1.% y/y in August. Even as the economic outlook brightened, regional employment gains remained modest, advancing by 1% this year. The housing revival is helping to bolster construction payrolls. There is also strong demand for healthcare and economic consultants, due to a structural shift in the healthcare industry. However, government contractors have been adversely impacted by sequester. payrolls are also in the red, with employment below the year-ago level. National 1...1 17 1 07 New England 1... 71 Connecticut 0. 1..1 11. 17. 1.0 Massachusetts 1..7...0.7 Maine 1.0 1...1.. New Hampshire 1.7 1.. 7.1.7 11. Rhode Island 1. 1.. 1... Vermont 1..7.1.0.. Source: BEA, BLS, TD Economics. Forecasts by TD Economics as of September 01. National 111 17.0..1 New England..1. Connecticut.. 7..1..0 Massachusetts 1. 1....0. Maine.....0. New Hampshire..7.... Rhode Island 1.0 1.0 1..7.. Vermont 1. 1. 1.7...0 Source: Census Bureau, CoreLogic, TD Economics. Forecasts by TD Economics as of September 01. NEW ENGLAND: EMPLOYMENT BY INDUSTRY Jobs 0 Leisure & Hospitality Government 0 0 0 0 0-0 0 011 01 Last 1 months NEW ENGLAND: UNEMPLOYMENT RATE CT 7 New England MA 1 001 00 00 007 00 011 01 01
MIDDLE ATLANTIC (NJ, NY, PA) Based on the latest Beige Book assessment, economic activity continues to expand at a moderate pace in New York and northern New Jersey in line with the previous assessment. At the same time, the pace of growth has decelerated slightly from moderate to modest in Pennsylvania and southern New Jersey. The Middle Atlantic housing market showed further signs of firming. The Empire State led the way in terms of home price growth, with prices up.% y/y in August. By contrast, NJ s housing sector is only beginning to show nascent signs of healing. Home prices have moved off the floor, and are forecast to rise by.1% in 01. Price gains will be modest going forward, as significant overhang of distressed properties in the Garden State will weigh on price appreciation. NJ s home prices remain % below their peak-level, meaning the road to full recovery will be a long one. The pace of regional hiring remained tepid, with employment projected to increase by 1% for 01 as a whole. Only in NJ did payrolls grow in line with the national pace, while both NY and PA underperformed. Payrolls in finance & insurance and manufacturing industries continued to stagnate. Meanwhile, hiring picked up in industries with ties to the housing sector, such as construction, real-estate & leasing, architectural & engineering services. Ahead of the impact from the government shutdown, consumer sentiment in the region had brightened, with the Conference Board s consumer confidence index rising to nearly a six-year high in September. Consequently, retailers reported that sales remain in line with their plan. In addition, auto dealers continued to benefit from robust demand for new autos. On the service-sector side, the tourism industry performance was mixed. In NY, hotel occupancy was high, and attendance at Broadway theaters picked up. Meanwhile, the Jersey Shore experienced lighter tourists traffic during the summer. National 1...1 17 1 07 Middle Atlantic 1. 1.. 1 1 1 New Jersey 1.1 1.7. 1... New York 1.7 1.7..1.. Pennsylvania 1. 1.. 7..1 Source: BEA, BLS, TD Economics. Forecasts by TD Economics as of September 01. National 111 17.0..1 Middle Atlantic 70 111.0.. New Jersey 1 7.1.. New York 7.0.. Pennsylvania 7... Source: Census Bureau, CoreLogic, TD Economics. Forecasts by TD Economics as of September 01. MIDDLE ATLANTIC: EMPLOYMENT BY INDUSTRY Jobs Leisure & Hospitality Government 00 0 00 0 0 0-0 -0 0 011 01 Last 1 months MIDDLE ATLANTIC: UNEMPLOYMENT RATE NJ PA 7 NY 1 001 00 00 007 00 011 01 01
Upper South Atlantic (DC, DE, MD, NC, VA, WV) Momentum in the Upper South Atlantic economy eased in September relative to the summer, but results were mixed. Retail and car sales rose, but less so than previously. Residential real estate improved, but new construction has slowed. weakened, but port activity appeared intact. Coal production dropped, but natural gas production rose. growth continued at its slow pace in recent weeks according to business contacts. Gains in the region have been sub-par, as weakness in Virginia, D.C. and West Virginia is not getting as much offset from other regions. Remarks regarding the sequester impacts were mixed, with the exception of VA where both federal government employees and contractors in the professional & business services sector have seen sizeable declines. Home prices have risen with sales improving in mid-price range and stagnating elsewhere. Price growth accelerated in all states except D.C. and WV both experiencing weakness in new construction. Year over year gains in WV starts are muted while D.C. starts declined. Builder activity slowed during the summer, following strong gains in early-01. Commercial real estate construction remained flat except for some multi-family gains. Leasing activity varied by location, and was strongest in North Carolina and Maryland where metro areas benefited from robust gains in office-using employment. VA and D.C., on the other hand, have experienced softening, hand-in-hand with a slowdown in office payrolls. weakened across much of the region as both military and civilian orders declined. NC outperformed, as the state continues to attract higher value-added industry, while wood and furniture manufacturers benefited from the housing rebound and lifted quota in China. WV industry also accelerated, as shale drilling and pipeline manufacturers fared well. A recent investment in a car engine plant should provide additional support. National 1...1 17 1 07 Upper South Atlantic 1...1 1 17 District of Columbia 0.7 1.0 1. 1.1 0..7 Delaware. 1. 1.... Maryland 1.7.7... 0.7 North Carolina....7.. Virginia 1.0.....1 West Virginia 0. 1. 1.7.0. 7. Source: Sources: BEA, BLS, TD Economics. Forecasts by TD Economics as of September 01. National 111 17.0..1 Upper South Atlantic 7 11... District of Columbia 7..1. Delaware -.0-1. 1. Maryland 1 1 1... North Carolina... Virginia 1 7... West Virginia..1.7 Source: Census Bureau, CoreLogic, TD Economics. Forecasts by TD Economics as of September 01. UPPER SOUTH ATLANTIC: EMPLOYMENT BY INDUSTRY Jobs Leisure & Hospitality Government 17 1 7-0 011 01 Last 1 months UPPER SOUTH ATLANTIC: UNEMPLOYMENT RATE 1 11 NC UpSA 7 VA 1 001 00 00 007 00 011 01 01
Lower South Atlantic (FL, GA, SC) Economic activity in the Lower South Atlantic expanded slowly through September after modestly improving earlier in the summer. Retail and auto sales remained supportive, as did the tourism industry, albeit less so. activity and transport volumes increased modestly, with much of it related to housing, autos, and energy industries. Housing continued to improve but the pace has slowed from earlier in the year. Uncertainty on fiscal matters appeared pervasive. Regional payroll growth slowed in September, but has been improving for several months led by strength in Georgia and improvement in South Carolina. Retail, construction, and real estate & leasing led gains, benefiting from the healing housing market and household finances. Professional & business services helped, particularly in Georgia. On the other hand, manufacturing jobs disappointed despite better order books, while federal & state government payrolls still contracted. Leisure & hospitality and education & health both important regional sectors remained supportive but have decelerated from their pace earlier in the year. Much of the deceleration was in Florida where a rapid tourism recovery is gradually moderating, in part due to the impact on bookings of government cutbacks and lower demand from Europe and China. Housing in the region continues to rebound. Year over year home prices accelerated to 1.% in Georgia, 1.7% in Florida and.1% in South Carolina. Despite rapid price gains and a rise in mortgage rates, activity slowed only slightly. Affordability remains healthy, with prices well below their mid-000 s peaks as mortgage rates remain historically low. Anticipation of future rise in mortgage rates and an inability to lock-in current rates on a new home purchase dampened the rapidly improving new housing segment. Slowing sales led builders to rein in starts from 1,000 in May to just 1,000 units in August. Still, activity remains one-third above its levels in the previous year, led by gains in multiple-family starts. National 1...1 17 1 07 Lower South Atlantic.1.0.7 0 77 Florida... 11. 170.. Georgia.0.1.... South Carolina.0..7 7... Source: Sources: BEA, BLS, TD Economics. Forecasts by TD Economics as of September 01. National 111 17.0..1 Lower South Atlantic 11 1 1.0.. Florida 7 7 111..1.1 Georgia 7 7 1.. 7. South Carolina 1 0...0 Source: Sources: Census Bureau, CoreLogic, TD Economics. Forecasts by TD Economics as of September 01. LOWER SOUTH ATLANTIC: EMPLOYMENT BY INDUSTRY Jobs Leisure & Hospitality Government 00 0 00 0 0 0-0 -0 0 011 01 Last 1 months LOWER SOUTH ATLANTIC: UNEMPLOYMENT RATE 1 11 SC GA 7 FL 1 001 00 00 007 00 011 01 01
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