Memphis Burgundy Book: Even as Unemployment Rates Inch Up, Business Outlook Remains Positive

MEMPHIS, Tenn. – The pace of economic activity in the Memphis zone appeared to weaken in the second quarter compared with three months earlier, according to the most recent edition of the Memphis Burgundy Book released today by the Federal Reserve Bank of St. Louis. However, the slowing was not uniform across cities or industries.

The Burgundy Books offer comprehensive data and information on the economic conditions of each of the St. Louis Fed’s four zones: St. Louis, Little Rock, Louisville and Memphis.  The publication, which is released quarterly, includes the following sections: labor markets, manufacturing, real estate and construction, the household sector, banking and finance, and agriculture and natural resources. 

View the entire Memphis report at: research.stlouisfed.org/regecon/burgundybooks/13/09/BB0913Mem.pdf

Weak employment growth in the service-producing sector continued to overshadow healthy job gains in the good-producing industry. Once again, job growth remained weak in the Memphis area’s largest industry. A majority of our Memphis business contacts expect little change in their employment levels over the next three months.

After dipping below 10 percent in the first quarter, the Memphis zone’s unemployment rate edged back above 10 percent in the second quarter.  Of the 73 counties in the Memphis zone, 69 counties had unemployment rates that exceeded the nation’s second-quarter average (7.6 percent).

Memphis’s commercial retail market continued to strengthen in the second quarter, as seen by falling vacancy rates and increasing asking rents.

Household balance sheet repair continued apace in the Memphis zone.  This is seen by falling loan delinquency rates and reductions in nonautomotive debt balances.

Profitability rose in the second quarter at Tennessee and Mississippi commercial banks because of slight increases in net interest margins and slight declines in loan loss provisions.

Our quarterly survey revealed that agricultural bankers expect greater loan demand and capital expenditures in the third quarter relative to the same period a year earlier.

To view all of the Burgundy Books, see research.stlouisfed.org/regecon/district.html.

In addition, MP3 audio clips of highlights from the Burgundy Books can be heard at stlouisfed.org/newsroom/multimedia/audio/20130912-burgundybooks.cfm. They are available in both English and Spanish. 

The remaining Burgundy Books for 2013 will be released on December 12.