The economy of the Eighth District has expanded at a moderate pace since the previous report. Recent reports of planned activity in manufacturing and services have been positive. Reports of retail and auto sales over the past three months have also been positive. Residential real estate market conditions have continued to improve, and commercial and industrial real estate markets have also improved. Lending activity at a sample of large District banks was little changed during the second quarter of 2013. Prices, wages, and employment levels over the past three months have stayed the same or increased for a majority of contacts across the District.
Reports from retail contacts were generally positive. Two-thirds of contacts noted increases in sales over the past three months relative to the same period last year, while seventeen percent noted moderate decreases and the rest saw no changes. Half of retail contacts reported that sales levels met their expectations, and the other half reported that sales fell short of expectations. In addition, half of retail contacts reported an increase in the sales of low-end products relative to high-end products. The sales outlook for the next three months compared with the same period last year was slightly pessimistic: About half of contacts expect sales to stay the same, twenty-five percent of contacts expect sales to increase slightly, and the remaining contacts expect sales to decrease moderately.
Reports from auto dealers about sales over the past three months were generally positive. Seventy-five percent of the car dealers surveyed saw increases in sales relative to the same period last year, seventeen percent saw decreases, and the rest saw no changes. Similarly, seventy-three percent of contacts reported that sales met or exceeded their expectations. Two-thirds of car dealers reported an increase in used car sales relative to new car sales, and twenty-two percent reported the opposite. The sales outlook for the next three months relative to the same period last year was optimistic: Half of contacts expect sales to increase, while twenty-one percent expect sales to decrease.
Reports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported plans to add workers, expand operations, or open new facilities in the District, while a smaller number of manufacturers reported plans to reduce employment. Firms that manufacture appliances, food, outdoor equipment, automobile parts, refrigeration compressors, safety products, automobiles, roofing shingles, barges, ammo, apparel, and watercrafts plan to hire new employees and expand operations in the District. In contrast, firms that manufacture plastic products and printing products reported plans to lay off workers in the District.
Reports of planned activity in the District's service sector have also been positive since the previous report. Firms in health care benefit management, logistics, pharmaceutical benefit management, information, transportation, and restaurant services reported new hiring and expansion plans. In contrast, firms in information technology, health care, and disability benefit application services reported plans to reduce employment.
Home sales have continued to increase throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2012, July 2013 year-to-date home sales were up 19 percent in Louisville, 21 percent in Little Rock, 10 percent in Memphis, and 9 percent in St. Louis. June 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 15 percent in Louisville, 24 percent in Memphis, 3 percent in Little Rock, and 18 percent in St. Louis.
Commercial and industrial real estate market conditions have continued to improve moderately. Compared with the first quarter of 2013, the second quarter 2013 industrial vacancy rates declined in Louisville, Little Rock, Memphis, and St. Louis. During the same period, downtown office vacancy rates decreased in Louisville, Little Rock, and St. Louis and increased in Memphis. A contact in Evansville reported new plans for speculative office space, while a contact in Louisville reported new plans for speculative industrial space. Contacts reported industrial construction plans in southwest Missouri and several commercial construction plans in St. Louis. A contact in Little Rock noted a mixed-use commercial project, while another contact noted an industrial factory expansion in Baxter County.
A survey of senior loan officers at a sample of large District banks found little change in overall lending activity during the second quarter of 2013. During this period, the credit standards for commercial and industrial loans remained mostly unchanged, while demand ranged from unchanged to moderately stronger. Credit standards for commercial real estate loans ranged from basically unchanged to eased somewhat, while demand was moderately stronger. Credit standards for prime residential mortgage loans remained unchanged, while demand was moderately stronger. Meanwhile, credit standards for auto loans were mostly unchanged, while demand ranged from moderately weaker to moderately stronger.
Farmers in the District expect that the corn crop in 2013 will produce, on average, 59 percent more corn than last year. In contrast, the District cotton crop is expected to fall short of 2012 levels both in terms of acres harvested and production. Across the District states, 92 percent of the corn crop was rated in fair or better condition; the sorghum and soybean crops were similarly rated, with 93 percent and 91 percent in fair or better condition, respectively. District coal production improved modestly.