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South's economy bounces back from hurricanes

LAWRENCEVILLE - Economic activity in the South picked up steam in October and November, according to the Federal Reserve Bank.

In its report, commonly known as the Beige Book, the Federal Reserve said the economy is rebounding from the slowdown caused by hurricanes Katrina and Rita and that retailers improved their forecasts from earlier outlooks made in the aftermath of the storms.

Manufacturing also picked up as post-hurricane demand boosted production in several industries, according to the Fed.

The report suggested one key effect from the hurricanes may linger into winter. With many consumers bracing for higher utility costs, energy production in the Gulf of Mexico had not returned to normal for oil or natural gas by mid-November.

Much of the concern focused on natural gas production, which was down 40 percent. Many processing plants were still out of action.

The report from the Federal Reserve in Atlanta focuses on the sixth district, which is comprised of Georgia, Alabama, Florida, and parts of Louisiana, Mississippi and Tennessee. The sixth district is one of 12 Federal Reserve sectors in the United States.

Highlights from the sixth district report:

•Consumer Spending:

Retailers gave an upbeat report, with most saying their October and early November sales met or exceeded their expectations, though warm weather put a drag on apparel purchases.

October auto sales were weaker than last year because of Hurricane Wilma and a lack of new incentive programs to attract customers.

•Real Estate

Single-family home sales were either flat or up slightly from last year. Homebuilders said residential construction moderated in October and commercial real estate markets improved.

Significant Gulf Coast reconstruction is not expected to get under way until early next year.

•Manufacturing and Transportation

Factories said high costs for energy and raw materials did not force production cutbacks. Several manufacturers in areas damaged by the hurricanes said production resumed, including the New Orleans coffee processing plant and two large Louisiana seafood processors.

Northrop Grumman shipyards in New Orleans, Pascagoula and Gulfport said they were up-and-running, but projects would be delayed.

•Tourism

Gasoline prices continued to fall, as Atlanta's World Congress Center expected to increase staff to accommodate conventions forced to relocate from New Orleans.

•Banking and Finance

Deposits were up, especially as insurance claims were settled in hurricane-damaged areas. Demand for loans increased, mostly because of an active real estate market.

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