WASHINGTON — The Federal Reserve’s Beige Book report on Wednesday showed a modest expansion in economic activity from mid-July through Aug. 26 as retailers saw a boost in back-to-school business in many regions, driven largely by apparel and accessories sales.
The Fed highlighted sales of apparel and luxury items as a growth area, which were “characterized as strong” in several regions it tracks.
Despite the uptick in overall economic activity in the report, some regions tracked by the Fed reported mixed or weakening activity as businesses in several regions expressed concern over recent stock market volatility and increased economic uncertainty.
Retailers in Minneapolis and Kansas City reported moderate increases in sales, while results in San Francisco, Cleveland, Chicago and Dallas were up, with many stores reporting strong b-t-s sales. But sales growth slowed or was flat in Atlanta, Boston and Philadelphia, Richmond and St. Louis.
Retailers in Boston, Chicago, Kansas City and Dallas all reported strong b-t-s sales in apparel and accessories due to deep discounting and widespread promotions, while big-ticket items were sluggish in most of those regions.
“Apparel, especially women’s clothing, and fine jewelry are segments that have shown strength recently,” the Fed said in its analysis of Dallas. “There is some concern regarding recent stock market volatility and its potential impact on consumer confidence, but this has not affected store activity, retail contacts reported.
“Consumers responded more than expected to the increase in early back-to-school promotions on items such as apparel, and expanded their purchases even on non-back-to-school items,” the Fed said in its analysis of Chicago.
The Fed’s survey of stores ended shortly before Hurricane Irene slammed the Eastern Seaboard, but the central bank noted that massive evacuations in New York caused “widespread retail disruptions.”
According to the report, economic growth in New York had remained sluggish since the last report in late July. The Fed noted that the disruptions from the hurricane are likely to “adversely affect sales tallies for the full month,” in New York.
Meanwhile, retailers in New York reported stable prices, although some merchants said they were implementing moderate price hikes on cotton apparel to “counter sharply rising costs.”
Price pressure from higher cotton prices was also cited by retailers in Cleveland, while merchants in Atlanta said costs of cotton-based inputs for the spring selling season will not be “as high as initially feared.”