New England economy improving, but risks loom, Fed reports
The New England real estate market showed hints of a recovery in the spring, albeit a fragile one, the Federal Reserve said in an economic report released last week.
Housing was among several sectors reporting steady improvement — albeit with concerns about the future — as the New England economy continued to expand, according to the Fed. The region’s software and information technology firms reported “relatively strong” growth, but other industries reported slow hiring and concern about the possibility of an economic collapse in Europe.
“The outlook is generally for more of the same,” the report said.
The central bank surveys businesses across the 12 Federal Reserve districts and publishes its findings eight times a year in what is known as the Beige Book. The report is released in advance of the regular Fed meetings in which interest rates and other polices are set. Policy makers next meet June 19-20.
The survey found improving consumer sentiment in New England, with retailers reporting particularly strong sales of adult clothing, household goods, and home improvement and maintenance items. Travel and tourism businesses also reported strong results and advance hotel bookings were “robust, ” according to the Fed.
Manufacturers continued to grow, but their outlook for future growth was guarded because of concerns about Europe and a global slowdown. Many said they were reluctant to add significant numbers of employees.
“All contacts doing business in Europe report that the European manufacturing economy is near or in recession,” according to the Fed survey. “Asia continues to be relatively strong, but one contact said that ‘the best and most stable market’ is the United States.”
New England software and information technology firms, which make up one of the region’s strongest sectors, reported year-over-year revenue increases in the first quarter that were “largely in the high-single digits,” according to the Fed.
Meanwhile, Boston’s commercial real estate market is attracting interest from investors and building activity is on the rise, according to the Fed. Construction, among the hardest hit in the recent recession, appeared to be adding jobs for the first time in several years. Residential real estate also showed an improvement, the report said, boosted by low interest rates and competitive pricing.
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