Phila. region's growth 'moderate,' but signs are hopeful

Posted: September 16, 2013

Moderation in all things seemed to be the theme of this month's Beige Book report for the Philadelphia region.

While the Philly50 might be underwhelmed by the report's somewhat tepid view of the region's recovery - "moderate growth" was a recurring phrase - local firms might still take heart in a few hints of better days to come.

Among the positives: Despite hesitancy and vacillation in other areas, consumers continued a recent buying spree when it comes to automobiles, particularly pickup trucks. The latter can be read as a sign of improving health of the construction industry. Another harbinger for building firms are reports that architects and engineering firms were seeing "increased interest and greater work flow."

"The local economy is very much in line with the national economy," said Luke Tilley, regional economic adviser for the Federal Reserve Bank of Philadelphia. "We still have a recovery ongoing but at a moderate pace."

The Beige Book report comes out eight times a year, always in advance of the next meeting of the Federal Open Market Committee, which will be Tuesday and Wednesday this week.

There are 12 regional reports, each anecdotal in nature: Local firms, economists, and market experts are interviewed and surveyed on a confidential basis to get their views on their area's economy. The result is more conversational, though at times less authoritative, than data-driven reports.

Here is a quick summary of this month's report on our region.

Manufacturing: Growth remained slight. There was a boost in demand for construction materials, primarily in response to continued rebuilding as a result of Hurricane Sandy.

Experts expect to see that dampen as we get further from the October 2012 storm.

"I would be surprised if Sandy-related construction is as pronounced in the December report," said Eduardo Martinez, senior economist with Moody's Analytics.

Despite expressing optimism for the next six months, manufacturers reported they had "lowered their expectations somewhat regarding hiring and capitol spending plans. . . ."

Retail: Other than auto dealers, retailers reported modest growth. Auto sales continued strong, the result most likely of pent-up demand.

"During the recession, people scaled back" and continued driving their older cars rather than replacing them, Martinez said. "Eventually those cars wear out."

"Sales of children's apparel were stronger at outlets than at traditional malls, indicating that consumers were doing more price-shoppings," according to the Beige Book report.

Construction: Homebuilders "remained moderately busy with existing projects from spring sales." Some, however, reported a dip in new sales in July attributable, in part, to rising interest rates.

The next Beige Book report is due Oct. 14


Contact Chris Hepp at 215-854-2594 or chepp@phillynews.com.

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