Local economy 'expanded moderately' in March, says Fed

The economy of the Tenth District of the Federal Reserve System, which includes Colorado, "expanded moderately" during March. According to the "Beige Book" of the Federal Reserve Bank of Kansas City, "Warmer weather conditions led to increased retail traffic and supported a modest rebound in consumer spending, generating some optimism among District contacts."

The Beige Book, which summarizes economic commentary from businesses "and other contacts" from the district, provided a view of the local economy that could best be described as highly restrained optimism.

Highlights of the report:

* Retailers reported higher than expected sales and were optimistic that business activity would continue to recover.
* Producer expectations for future factory activity improved with sustained growth in new order volumes. Employment levels held steady during the survey period, but more manufacturers planned to increase payrolls over the next six months.
* Residential real estate activity strengthened in March, while commercial real estate activity weakened further. Residential builders reported an upswing in building starts after the harsh winter. In contrast, commercial real estate activity remained well below year-ago levels. Contacts also noted that few new construction projects had qualified for financing due to continued tight credit conditions.
* Overall loan demand declined at a slightly faster pace than in the previous survey. Demand for commercial and industrial loans and commercial real estate loans fell moderately. Demand also declined somewhat for residential real estate loans and consumer installment loans.
* Energy activity expanded during the survey period, and additional modest gains were expected in the coming months. After rising in March, the number of active rigs in the District approached year-ago levels. Several firms planned to hire additional staff, primarily engineers and skilled labor.
* Agricultural conditions improved since the last survey period. Livestock prices strengthened in March boosting profitability, especially for cattle producers, and prices were expected to rise further with smaller supplies. Crop prices edged down in March with the prospects of increased plantings and bumper crops.
* Wages held steady since the last survey period, and some factories considered raising selling prices in coming months as raw materials prices rose further. Contacts reported little wage pressure in District labor markets, and most companies hiring new workers were not offering higher salaries to attract qualified applicants.

The Federal Reserve Bank of Kansas City covers the 10th District of the Federal Reserve, which includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and portions of western Missouri and northern New Mexico.