Louisville Burgundy Book: Manufacturing Sector Continues to Grow

ST. LOUIS—In an August survey, a slight majority of the business contacts in the Louisville Zone of the Federal Reserve Bank of St. Louis expected economic conditions to improve over the second half of 2014.

The information was published Sept. 23 in the latest quarterly release of the Burgundy Books, a publication of the St. Louis Fed. The reports offer comprehensive economic information for each of the St. Louis Fed’s four zones: St. Louis, Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.

The Louisville Zone includes southern Indiana and western Kentucky, with a population of approximately 3.4 million people, including the nearly 1.3 million who live in the metropolitan statistical area (MSA) that includes Louisville.

The zone’s unemployment rate averaged 6.8 percent in the second quarter of 2014, modestly below its first-quarter average of 7.2 percent. The unemployment rates in the zone’s MSAs ranged from 5.4 percent in the MSA including Evansville, Ind., to 7.2 percent in the MSA including Elizabethtown, Ky.

Nonfarm payroll employment increased in most of the zone’s MSAs in the second quarter. Growth was the strongest in the MSA including Bowling Green, Ky. In the Louisville MSA, employment growth was especially brisk in manufacturing, professional and business services, and leisure and hospitality. Indiana also continued to see strong growth in manufacturing employment in the second quarter.

In the Louisville MSA, total home sales and single-family building permits declined in the second quarter, but home prices edged higher. Residential building permit activity picked up in most other MSAs in the second quarter.

Although auto dealer contacts noted strong sales in the second quarter, the growth of auto loan balances in the zone’s major MSAs trailed the national growth rate. Household delinquency rates for mortgages and credit cards declined significantly in the second quarter.

Commercial bank profits (return on average assets) and asset quality increased at Kentucky and Indiana banks in the second quarter. One-third of bankers surveyed expected loan growth to increase over the next three months.

According to the latest estimates by the U.S. Department of Agriculture, Indiana farmers are projected to harvest a record corn crop this fall, though the Kentucky corn crop is projected to be significantly below last year’s bumper crop.

View the entire Louisville Zone report at: https://research.stlouisfed.org/regecon/burgundybooks/14/09/BB0914Lou.pdf.

An audio summary of the report is available at http://www.stlouisfed.org/newsroom/multimedia/audio/20140923-burgundybooks.cfm.

The next Burgundy Books will be released Dec. 19.