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Economic outlook is improving in region

By Robert Gavin
Globe Staff / December 2, 2010

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New England companies are becoming more optimistic about the economy, reporting improving business conditions, and hiring modestly, according to a Federal Reserve survey released yesterday.

The survey, known as the Beige Book and published eight times a year, found that economic activity in the region continues to expand gradually, with most business sectors adding employees and some firms increasing wages as demand for workers grows. Overall, many companies contacted by the Fed “seem more upbeat than six or 12 weeks ago,’’ the survey said. “The outlook for 2011 is slightly more optimistic.’’

The survey collects anecdotal information from businesses around the country in advance of the Fed’s rate-setting meetings. Policy makers, who have slashed the Fed’s key short-term interest rate to near zero and began to make large scale purchases of government bonds to lower long-term rates, meet again on Dec. 14.

Nationally, the economy also continued to improve, with 10 of 12 Fed districts experiencing at least modest growth over the past several weeks, according to the survey.

In New England, manufacturers, technology service firms, and staffing services all reported stronger activity than a year ago, according to the Fed survey. Semiconductor makers reported “particularly robust sales,’’ while tech service firms said sales have increased as much as 20 percent from a year ago. Staffing firms said demand for labor is strengthening, with some reporting year-over-year revenue growth of up to 30 percent.

Just about all manufacturers said they were either increasing employment or holding it steady, according to the survey. Tech service firms also reported increased hiring, with one boosting staff by 10 percent and another adding jobs across the board.

Reports from retailers were mixed, with sales declining modestly for some firms, but rising slightly for others. Most expected a small sales increase during the holiday shopping season.

Commercial real estate conditions have improved recently, according to the survey. Leasing activity has increased modestly in Boston, while sales of commercial properties, particularly apartment buildings, are rising. The housing market, however, continues to struggle, with sales across the region declining from a year ago, according to the Fed survey. Real estate firms attribute the decline to the expiration of federal home buyer tax credits, as well as continued worries about job security and the economy.

Robert Gavin can be reached at rgavin@globe.com.