Federal Reserve survey says Boston region’s economy grew moderately at end of 2012
Despite concerns about the so-called fiscal cliff, the region’s economy grew moderately during the final months of 2012, the Federal Reserve said Wednesday.
Housing, tourism, manufacturing and advertising all posted revenue or sales gains from a year ago, according to the report, which is based on a survey of employers.
Many companies remained cautious about adding more employees, however, citing the threat of government spending cuts, as well as ongoing political uncertainty regarding budget negotiations in Washington, D.C.
Overall, the report said, “modest growth” is expected this year.
The survey, conducted by the Federal Reserve eight times a year and known as the Beige Book, found hiring across the region was uneven. While most businesses are doing “little to no” hiring, it said, some are “expanding their headcounts substantially.”
The Boston region’s housing market recovery remains on track, with both sales volume and prices were up from a year ago. Low interest rates, rising rents and a generally healthier economy all contributed to the gains, the report said.
The area’s tourism industry also ended 2012 on a high note with record-level hotel room occupancy rates and revenues. Strong domestic and international corporate business travel and international leisure travel accounted for much of the improvement.
But restaurants reported less spending on corporate entertaining and end-of-year holiday events, the Fed said.
Manufacturing expanded at a modest pace, although two semiconductor companies reported a downturn in business.
One employer in the chemical industry said he was having difficulty filling low-skill jobs because of the number of candidates who failed drug-screening tests and new hires who quit almost immediately after starting work. The employer speculated those problems may be the result of “behaviors developed during extended periods of unemployment.”
Marketing and advertising firms reported a slight uptick in business during the fourth quarter and are confident their industry has finally stabilized after the recession.
Economic consulting remained strong because of high levels of complex high-stakes litigation, while management and strategy consulting firms reported flat business conditions because clients were uncertain about the direction of the economy and fiscal policy.
Demand for commercial real estate loans in the region softened, the survey found, and the pipeline of new construction projects in Boston appeared to diminish significantly at the end of the year.Megan Woolhouse can be reached at firstname.lastname@example.org.