The latest release of the Federal Reserves Beige Book shows mixed results for the Boston district. One of the best indicators of economic growth in the region, the real estate industry, continues to indicate a slow recovery. With so much commercial real estate available some sellers saw increases as customers moved to take advantage of attractive rents. The absorption rate for empty space shows slight increases but far less than would be expected in a healthy recovery. The residential market remains weak with sluggish sales and home prices continuing to decline. Realtors report that many buyers are cautious regarding their job security and do not expect to see any improvement in the remainder of 2011 and 2012.

The manufacturing sector shows modest revenue growth with the automotive and aerospace sectors showing some signs of improvement while medical products, business services, and entertainment continue to suffer declines. Hiring is flat with new hires only added as existing employees retire or leave. Many firms expect sluggish growth to continue for the next six to eighteen months and are continuing to focus on cost cutting which often includes reducing headcount. Many manufacturers report that while food prices are rising commodity prices are falling taking the pressure off tight profit margins.

 

Marketing and advertising was one of the few bright spots in the report with many showing double digit gains. The new demand is driven in part by financial firms expanding their offerings to reflect recent changes in regulation. In spite of the increased business many firms say their hiring is likely to flat or very limited for the foreseeable future.

    

Travel and Tourism also recorded slight gains in spite of the continuing economic climate. Most of the increase is seen as coming from business travel while leisure travel is slowing.

    

The Beige book is published 8 times per year by the Federal Reserve and the information is gathered from key business contacts, economists, market experts, banks, and other sources.