Beige Book report shows KC economic activity increased slightly in September

In the latest Beige Book, overall economic activity continued to increase across all districts, with the pace of growth characterized as slight to modest in most districts.

Changes in activity varied greatly by sector. Manufacturing activity generally increased at a moderate pace. Residential housing markets continued to experience steady demand for new and existing homes, with activity constrained by low inventories. Banking contacts also cited increased demand for mortgages as the key driver of overall loan demand.

Conversely, commercial real estate conditions continued to deteriorate in many Districts, with the exception being warehouse and industrial space where construction and leasing activity remained steady.

Consumer spending growth remained positive, but some districts reported a leveling off of retail sales and a slight uptick in tourism activity. Reports on agriculture conditions were mixed with some regions experiencing drought conditions. Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty.

Banking contacts in many Districts expressed concern that delinquency rates may rise in coming months, citing various reasons; however, delinquency rates have remained stable.

Kansas City Economic activity continued to increase in September, albeit at a slower pace than during the summer months. Consumer spending declined modestly, with drops in retail, auto, restaurant, and tourism sales. However, activity rose in the manufacturing, residential real estate, wholesale trade, and transportation sectors. In addition, the energy sector stabilized somewhat and the agriculture sector improved slightly.