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Atlanta

/beige-book-reports/2024/2024-05-at

"May 29, 2024\nSummary of Economic Activity\nThe economy of the Sixth District grew slowly since the previous report. Labor market tightness eased, and wage growth slowed somewhat. Cost growth continued to moderate, but most nonlabor costs remained elevated. Firms' pricing power was mixed. Widespread concerns about household finances were noted by nonprofits serving low- and middle-income communities. Consumer spending was healthy overall. Tourism remained strong, but softened somewhat. Home sales slowed amid declining home ownership affordability, and existing home inventories increased. Commercial real estate conditions were mixed. Transportation activity varied. Banking conditions were stable, and loan growth was flat, on balance. Energy activity was robust. Agriculture conditions weakened.\nLabor Markets\nOn balance, the pace of hiring grew slightly over the reporting period. Several staffing firms reported that job orders were down. Many contacts noted the supply of available talent continued to improve, and turnover rates declined; some firms described turnover as below pre-pandemic rates. However, pockets of shortages remained across the region, varying widely by position, location, and industry. Several Florida firms said that declining housing affordability hindered the ability to attract talent, and one non-profit noted that more employers were pondering building workforce housing. Some transportation, warehousing, and industrial development contacts said they were considering reducing headcount later this year to align with weaker demand. Others said that they had backfilled most of their open positions so hiring would be slower this year.\nMost contacts indicated wage growth continued to moderate and was in the range of 3.5 percent to 4 percent.\nPrices\nThough the pace of wage growth continued to stabilize, elevated labor costs and rising insurance premiums contributed to higher operating expenses. However, food and transportation costs decreased, on balance. Construction costs were highly volatile, with some contacts noting a wide range of bids on a given project. Firms also noted adjusting inventory levels down due to the high-interest rate environment. Some firms reported holding prices steady in response to increasingly price-sensitive consumers, and some firms sought efficiencies to preserve margins, while others maintained the ability to pass through rising costs. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit cost growth decreased in April to 2.6 percent, on average, from 2.8 percent in March; firms' year-ahead inflation expectations for unit cost growth ticked down to 2.3 percent, on average, in April, from 2.4 percent in March.\nCommunity Perspectives\nCareer counselors noted increased competition for available employment opportunities as cost-of-living considerations encouraged more people to re-enter the labor force. Several workforce service providers said that employers adopted more selective hiring processes and extended trial on-boarding periods for prospective employees. Though many workers expressed optimism in their ability to secure employment, contacts shared concerns about the quality of available jobs in terms of flexible hours, paid time off, and compensation sufficient to cover basic expenses. Concerns about household finances remained widespread among nonprofits serving low- and middle-income households. Rising insurance costs were cited as both an immediate financial burden for many individuals and a longer-term threat to economic resiliency as property owners reduced or eliminated coverage due to high costs.\nConsumer Spending and Tourism\nRetailers reported consumer demand was generally healthy, but most expect year-over-year sales growth to be flat. Shoppers were price sensitive and continued to be cautious with discretionary spending. Auto dealerships noted that inventory levels met demand, and manufacturers offered incentives to boost sales.\nTourism and hospitality contacts reported healthy demand for leisure travel, but booking windows were shorter and hotel rates moderated. Contacts noted strong youth sports-related travel, but families opted for short-term rentals with kitchens to forego dining out. Group, international, and business travel continued to improve but were not back to pre-pandemic levels. Hospitality contacts remained optimistic about activity for the summer season.\nConstruction and Real Estate\nDistrict home sales lost momentum in April as higher interest rates and rising home prices led to declining home ownership affordability. Though dampened by the \"mortgage rate lock-in effect,\" existing home inventory levels rose overall. Homebuilders maintained solid market share, although the use of rate buydowns and other incentives were more elevated than expected. Builders indicated less buyer urgency with rising interest rates and increased potential competition from higher existing home inventory levels. Home price appreciation in most District markets was in the single digits, consistent with longer term trends.\nCommercial real estate (CRE) conditions remained mixed. Activity in office (especially in highly urban areas) and multifamily sectors continued to slow. Oversupply in the multifamily and industrial segments weighed on market conditions amid delivery of new construction. Vacancy rates grew. Rising insurance costs impeded activity, particularly in coastal markets. Lenders continue to report tight underwriting standards, making access to loans more challenging. Rising CRE loan maturities in 2024 and beyond remained a source of concern.\nTransportation\nDemand for transportation services varied across industries. Trucking firms characterized volumes as in-line with or slightly below normal seasonal demand. Warehousing contacts indicated demand was modest overall. Railroads saw gains in automotive, chemicals, forest products and minerals freight volumes, as well as growing momentum in intermodal shipments. Inland barge carriers reported strong activity. District ports along the eastern seaboard noted that catastrophic weather events and the potential for an east coast labor strike in the Fall are the greatest risks to their outlook.\nBanking and Finance\nConditions at District financial institutions were stable. Overall loan growth remained relatively flat; however, consumer, industrial, and auto lending continued to contract. Credit conditions continued to normalize to pre-COVID levels with a minor uptick in the allowance for loan and lease losses as a percentage of total loans. Deposit balance growth was flat as compared with the previous report, with some institutions reporting increased reliance on borrowings. Financial institutions reported holding lower balances in cash accounts.\nEnergy\nActivity across most energy sectors remained robust. While liquefied natural gas exports and plant expansions were active, new development was stalled by recent federal permitting limitations, which contacts reported had already slowed some activity. Petrochemical manufacturers reported continued progress in carbon capture and storage projects. Utility companies across the southeast report growing electricity demand in commercial and industrial segments, largely attributed to new and expanded data centers, as well as clean tech manufacturing like electric vehicle battery plants, a trend expected to continue across the southeast.\nAgriculture\nAgricultural conditions weakened slightly. Row crop farmers struggled amid low demand and excess supply, and many do not expect to turn a profit this year. Demand for timber declined, leading some farmers to pause production. Demand for beef was strong, but supply of cattle remained limited; demand for dairy held steady. Poultry producers saw some improvement in revenues from domestic sales, attributed to reduced supply resulting from avian influenza, but foreign restrictions continued to limit exports. Citrus growers reported solid demand and crop yields slightly above expectations.\nFor more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2024/2024-05-ch

"May 29, 2024\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly overall in April and early May, and contacts generally expected a similar rate of increase over the next year. Employment and construction and real estate activity were up modestly; business and consumer spending rose slightly; nonbusiness contacts saw little change in activity; and manufacturing activity edged down. Prices and wages rose moderately, while financial conditions tightened a bit. Prospects for 2024 farm income increased slightly, though income is still expected to fall below its 2023 level.\nLabor Markets\nEmployment rose modestly over the reporting period and contacts expected growth to continue at that pace over the next 12 months. Some respondents, particularly in manufacturing, continued to report difficulty filling higher-skilled positions, and small business support organizations continued to report their clients were having difficulty filling lower-skilled positions. That said, several contacts reported that hiring was not as hard as it had been, and one financial services contact indicated that worker availability was now comparable to before the pandemic. Wages and benefits costs increased moderately, and there were again several reports of health insurance cost increases. Some contacts said that an updated Labor Department rule raising the minimum salary above which workers are exempt from being paid overtime had the potential to create wage pressures.\nPrices\nPrices rose moderately overall in April and early May and contacts expected a similar rate of increase over the next 12 months. Producer prices moved up moderately. Nonlabor input costs continued to rise, with contacts highlighting increases in energy and equipment costs. That said, there was a slowdown in the pace of cost growth overall. Several manufacturing contacts noted flat, and in some cases decreasing, input costs. Consumer prices rose moderately overall, though one retail sector contact indicated that deflationary price trends continued.\nConsumer Spending\nConsumer spending increased slightly over the reporting period. Nonauto retail sales were softer than usual in April, but this largely reflected sales pulled into March due to the early Easter. Spending on groceries and at restaurants rose, while outlays for items related to spring yardwork were up from a year ago. Discount store sales were also up. Contacts noted flat durable goods spending overall, with activity being dampened by high interest rates. Vehicle sales were unchanged on net. The sales mix remained concentrated in more affordable models such as compact and mid-size SUVs and crossovers. There was a further decline in travel-related spending.\nBusiness Spending\nBusiness spending increased slightly in April and early May. The pace of new capital expenditures ticked up, with contacts highlighting spending on facilities, including new hotels, office, and retail space. Several manufacturers reported that high borrowing costs led them to delay planned expansions or to purchase used equipment rather than new. There was a modest increase in demand for truck transportation services and little change in freight rates. Inventories for consumer goods decreased some and ended the reporting period at more comfortable levels, though auto dealers said inventories were somewhat elevated. Manufacturing inventories were also generally at comfortable levels.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly on balance over the reporting period. Residential construction was up slightly, led by growth in single family homebuilding. The bulk of in-progress multifamily construction projects proceeded without delay, though there were reports of new projects moving slowly because of financing challenges. Residential real estate transactions increased modestly, with growth concentrated in the mid-range segment. Contacts noted that when mid-priced homes come on the market, they often receive multiple bids and sell quickly. Home prices increased modestly, while rents increased slightly. Multifamily rent growth was faster than expected in many areas of the District. Nonresidential construction activity rose modestly, and prices and rents were mostly unchanged. In the retail sector, some malls were being converted to senior living while others saw child activity centers move into vacant spaces. Commercial real estate activity decreased slightly. Contacts noted that greater equity commitments were required to close large deals. Property values continued to trend lower, and rents were mostly unchanged. Vacancy rates moved higher.\nManufacturing\nManufacturing demand decreased slightly in April and early May. Machinery sales were down modestly, with reports of slower demand from the machine tools sector. Orders for fabricated metals decreased slightly and contacts highlighted a drop in sales to the heavy machinery industry. Steel volumes were unchanged on balance, and one contact noted that high interest rates were holding back sales to the construction and renewable energy sectors. Auto industry orders were up slightly overall, though there were multiple reports of slowing demand for electric vehicle parts. Heavy truck sales increased modestly, which was a faster-than-expected rate.\nBanking and Finance\nFinancial conditions tightened slightly on balance over the reporting period. Bond and equity values fell and volatility spiked at the start of the reporting period, but values recovered and volatility had receded by mid-May. Business loan demand was little changed overall, though contacts noted weakness in the trucking and commercial real estate sectors. Interest rates were flat, but terms tightened slightly. Business loan quality was unchanged. Consumer loan demand was stable, while borrowing rates rose slightly and terms tightened some. Consumer loan quality edged down, with one banking contact noting that credit card delinquencies were now above pre-pandemic levels. Another banking contact saw a decline in consumer deposits.\nAgriculture\nIncome expectations for District farmers increased slightly during the reporting period, as prices increased for several agricultural products. Widespread precipitation reduced the intensity of drought in Iowa, but also delayed corn and soybean planting after an early start. Corn, soybean, and wheat prices moved higher. Most livestock prices were up, though egg prices were down. Continuing concerns about the financial impact of avian flu in cattle were offset by additional support from the federal government. Butter and cheese prices rose, with reports of stronger exports. Several contacts noted increased costs for repairs, machinery parts, and fuel. Demand for operating loans was up, in line with lower levels of working capital for farms.\nCommunity Conditions\nCommunity, nonprofit, and small business contacts saw little change in economic activity overall, though activity continued at a solid level. Contacts' concerns shifted away from cyclical or pandemic-related issues to longer run, slow changing ones. State government officials reported solid tax revenues in line with growth in economic activity. Workforce development intermediaries said that employment opportunities, even for those who face barriers to employment, remained robust. Small business intermediaries again observed that hiring and retention of workers, particularly lower skilled ones, was the primary challenge for small businesses. Nonprofit and social service organizations struggled to right-size in response to decreased revenue as COVID-era funding sunsets, even as demand for services remains high. Contacts noted that many low-income tax filers received smaller refunds this year following the end of some COVID-era tax credits.\nFor more information about District economic conditions visit: https://chicagofed.org/cfsec .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2024/2024-05-da

"May 29, 2024\nSummary of Economic Activity\nEconomic activity in the Eleventh District was flat to up slightly over the reporting period. Some growth was seen in the manufacturing, banking and energy sectors, while activity in nonfinancial services was flat, and declines were seen in retail sales. Home sales remained solid. Employment levels held mostly steady overall, and price and wage growth remained fairly moderate. Outlooks were generally stable to slightly more pessimistic compared with the prior reporting period. Waning consumer demand was an ongoing concern for many businesses, and the continued conflict in the Middle East and further geopolitical tensions across the world were noted as a downside risk.\nLabor Markets\nEmployment levels were fairly flat over the past six weeks overall, according to contacts. Job gains were seen in leisure and hospitality, health care, and nondurable goods manufacturing, while headcounts were stable or down slightly in most other industries. Oil and gas companies said they were backfilling vacancies but not looking to materially expand their workforce. The uncertain economic environment has prompted some hiring reluctance. A few contacts expressed doubt whether they will be able to maintain their existing workforce, with a staffing firm noting they are \"on a cliff's edge\" where they may have to lay people off. There were scattered reports of labor shortages, not concentrated in particular industries other than health care, which contacts said remained significantly understaffed.\nWage growth remained moderate. A staffing services firm noted that wage pressures have eased as workers who have been unemployed longer than expected are more open to negotiation on the wage front. A technology company said wage trends have reverted to the typical average raise of about 3 percent overall.\nPrices\nPrices rose at a modest to moderate pace over the reporting period. A slight ebbing was seen on the manufacturing side, for both materials and finished goods price growth. Multiple manufacturing contacts noted that they were experiencing a strong resistance to price increases, with one saying that customers ask to hold prices to last year's level, which isn't possible given the increases in costs. In services, growth in input prices remained in line with a typical rate while selling price growth slowed to slightly below average. Airlines reported upward cost pressure, partly stemming from elevated maintenance to upkeep older aircraft in the face of supply issues for new aircraft.\nManufacturing\nOverall manufacturing activity grew modestly over the reporting period, with strength led by nondurable goods production. Food and chemical manufacturers noted a rise in demand, and Gulf Coast producers led year-over-year growth in U.S. industrial chemical output. Some weakness continued on the durable goods side, particularly machinery manufacturing. One contact noted that he \"keep[s] thinking we'll hit bottom and either level out or turn up, but we keep pushing those hopes out a month, and another month, and another.\" Manufacturing outlooks worsened slightly on net, weighed down by waning consumer confidence and election uncertainty. Chemical producers also noted a weak Chinese economy as a risk.\nRetail Sales\nRetail sales declined moderately over the past six weeks, with contacts reporting that elevated pricing hampered consumer goods demand. Wholesale activity was a bright spot, while auto dealers noted declining sales amid continued volatility. Overall retail outlooks worsened slightly on net, with contacts citing inflation, high interest rates and instability in the Middle East.\nNonfinancial Services\nService sector activity was mostly flat over the reporting period, with contacts saying economic uncertainty curbed consumer demand. Revenue growth was seen in administrative and support services as well as information services. Health care reported a further deterioration of revenue, and reports from transportation services were mixed. Several transportation firms noted a decline in business, while small parcel carriers reported increased volumes and airlines reported strong, stable revenues. Leisure travel continues to lead airline demand, though business travel is showing signs of growth after plateauing in late 2023. Outlooks remained fairly stable, but contacts cited concern over an economic slowdown, geopolitical tensions, and Federal Reserve policy decisions, particularly a delay in cutting interest rates. High borrowing costs remained a concern for some companies.\nConstruction and Real Estate\nHousing demand remained solid, though there were reports of rising rates impacting sales activity. Incentives such as rate buy downs remained prevalent, and some builders offered selected price discounts to move homes in inventory.\nCommercial real estate market conditions were little changed from the previous reporting period. Apartment leasing growth remained moderate, but there continued to be downward pressure on occupancy and rents due to elevated supply. In the office market, leasing activity stayed subdued and was largely concentrated in class A space. Industrial demand grew moderately, and rents were stable even as vacancy rose. Outlooks were mixed, with some commercial market segments expected to remain challenging in the near to medium term.\nFinancial Services\nLoan volumes grew for the first time in over a year despite credit standards continuing to tighten, and loan pricing continuing to rise. Credit tightening accelerated for commercial and residential mortgages while it decelerated for commercial and industrial loans and consumer loans. Loan nonperformance picked up slightly overall. Bankers' outlooks turned pessimistic: they expect a modest decrease in loan demand six months from now in addition to a deterioration in loan performance and overall business activity. Liquidity and net interest margins top the list of outlook concerns.\nEnergy\nOilfield activity was flat to slightly up over the reporting period. Oil prices are broadly expected to orbit $80 for the remainder of the year, a level well above what's needed to profitably drill new wells for most producers. Even still, contacts expect only modest increases in drilling and completion activity through year-end, which will limit U.S. production growth this year compared to 2023. Natural gas prices are expected to be \"below cost\" for many gas producers over at least the next few months.\nAgriculture\nDrought conditions remained in the western parts of the District, while other parts received ample rainfall, and some flooding was seen in scattered areas. Pastureland was in good condition, as were hay and wheat fields. Soil conditions are quite favorable for row crops this year. Better cotton production is expected this year compared with the past couple of years based on current conditions, though cotton prices have slipped. Most other crop prices rose over the reporting period while cattle prices eased off highs. The spread of avian influenza among dairy cows remains a concern for the supply of milk, though it is not a food safety issue due to the pasteurization process.\nCommunity Perspectives\nAffordability of housing and of quality childcare remained top concerns for lower-income families over the reporting period. Higher mortgage rates, property taxes, and insurance premiums are driving up costs of single-family homes, and a shortage of landlords willing to accept housing vouchers is affecting apartment availability. One contact noted that higher mortgage rates push middle-income homebuyers to the sidelines, diving up demand for rentals and pricing lower-income residents out of the buyer's market. Access to quality, affordable childcare continued to impede workforce participation among women in particular. One contact said that industries with shift work struggle to attract women since the work schedule often doesn't align with childcare hours. Several contacts expressed concern about the winding down of American Rescue Plan Act dollars and whether nonprofits and K-12 schools will be able to sustain certain programs without that funding. Contacts also noted that mental health continues to be a community concern.\nFor more information about District economic conditions visit: https://www.dallasfed.org/research/texas .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2024/2024-05-mi

"May 29, 2024\nSummary of Economic Activity\nThe Ninth District economy grew slightly since the previous report. Employment grew slightly, and labor demand continued to moderate. Price pressures increased moderately, and wage growth was also moderate. Commercial and residential construction improved slightly. Consumer spending also rose slightly, with contacts noting some spending caution among customers. Manufacturing ticked slightly higher. Agricultural conditions remained weak amid some positive developments. Activity among minority- and women-owned business enterprises was slightly positive.\nLabor Markets\nEmployment grew slightly since the last report. Labor demand continued to moderate but remained positive. A monthly survey of District firms found that the share of respondents with job openings remained positive, but a slightly larger share noted staffing cuts. Labor demand in construction remained healthy despite widespread reports of slower activity. Hospitality and tourism firms reported increased hiring of seasonal workers in anticipation of rising spring and summer business. A Montana accounting firm noted that it had \"a lot of unfilled job openings at all levels.\" Employers were also reporting better labor availability. A Minneapolis-St. Paul hotel owner said the facility was sufficiently staffed and applicant quality \"seems to have gotten much better.\" A winery in central Minnesota said that it received \"a lot more applications for part-time [and] seasonal workers this year, which is very encouraging.\" Not everyone had the same experience. A Minnesota manufacturer said, \"I don't expect to fill any of my open jobs. We are increasing our capital expenditures to adapt our processes to smaller headcounts.\"\nWages rose moderately. District employers reported that median wages were generally growing between 2 and 3 percent. However, a monthly pulse survey found that a larger share of businesses reported higher wages compared with results from the previous two months. In separate surveys, construction and hospitality firms both reported that wages were rising overall, but at somewhat slower rates than the previous year.\nPrices\nPrice pressures were unchanged since the last report, as overall prices increased moderately. Most respondents to an April District business conditions survey reported no change to prices charged from a month earlier, while one-third said they increased prices. Input price pressures remained greater, as more than half of firms reported that they increased in April. Reports from contacts across the region indicated that businesses were less able to pass input cost increases to customers, who are feeling stretched budgets. Manufacturing contacts reported that metals prices spiked recently. Retail fuel prices in District states decreased slightly since the previous report.\nWorker Experience\nJob seekers in Minnesota shared that they were hesitant to accept a job offer if schedules were inflexible or pay was insufficient to meet their needs. They also listed training, time for job search, access to transportation, and affordable housing as important in helping them reach their career objectives. A contact in the Minneapolis-St. Paul area commented that students were facing difficulties finding summer internships this year because some employers had a shortage of available supervisors. A contact in the Upper Peninsula of Michigan shared that older workers in the region often feel discouraged to apply for jobs because of the listed requirements. They added that many older workers wanted more schedule flexibility instead of retirement.\nConsumer Spending\nConsumer spending grew slightly since the last report, with contacts noting some spending caution among customers. Hospitality and tourism firms overall reported modestly higher revenues of late. Hotel demand rebounded somewhat from a poor winter, but contacts reported that they were reducing prices to bump up demand. Contacts were also cautious in their outlook for summer business compared with last year. A Minnesota winery and restaurant said it was seeing lower average spending among patrons. \"Guests are being very careful with their money. We see less of our regulars and [more] moderate spending.\" A Montana restaurant and hotel owner was trying to avoid passing further cost increases to customers. \"At some point, they will say, \u2018I am not paying $20 for a hamburger.'\" Vehicle sales have flattened overall. New-vehicle sales were still growing, but dealer incentives returned. A Montana dealer said used vehicles were \"on a big slide\" due to higher interest rates. Airline traffic grew, but more slowly than in previous months.\nConstruction and Real Estate\nConstruction activity improved slightly since the last report. Industry data showed that recent activity increased as the sector moved into the traditionally busier spring season. A larger share of firms also expected increased activity going forward compared with those who expected a decline. However, other metrics were more cautious. Firms overall reported a decline in new projects out for bid for this time of year; project backlogs were also shorter, and cancellations continued to challenge the sector. Firms doing infrastructure work reported more activity and a better outlook; those in residential and commercial reported mixed but improving activity, and industrial firms reported slowing business. Large firms also reported consistently stronger activity than smaller firms.\nCommercial real estate was flat and remained soft overall. Office vacancy in Minneapolis-St. Paul stabilized, but loan renewals were reportedly seeing discounted property appraisals and high loan-to-value ratios. Vacancy rates for industrial space nudged higher, though from low levels. Multifamily property benefited because new construction \"has stopped in its tracks,\" according to a Minnesota source. Residential real estate was strongly higher, as many regions saw sales in April increase from 20 to 40 percent year over year, along with strong increases in new listings.\nManufacturing\nDistrict manufacturing activity increased slightly on balance since the previous report. A regional manufacturing index indicated increased activity in Minnesota and South Dakota in April from a month earlier, while activity decreased in North Dakota. The number of manufacturing contacts who reported increased recent orders was similar to the number who reported decreases. A food producer added staff in expectation of increased sales. In contrast, a producer of construction equipment reported its sales were very weak compared with seasonal norms.\nAgriculture, Energy, and Natural Resources\nAgricultural conditions in the District remained weak amid some positive developments. Lenders responding to an agricultural credit conditions survey overwhelmingly reported decreased farm incomes in the first three months of 2024 relative to a year earlier, with expectations for further declines in the second quarter. However, contacts in the industry reported that some moderation in input costs was expected to benefit producer margins. Recent precipitation alleviated drought conditions in much of the region, and crop planting and progress was generally near average for early spring. However, poor snow cover over the winter negatively impacted the quality of the winter wheat crop in the western parts of the District. District oil and gas exploration activity was unchanged since the previous report.\nMinority- and Women-Owned Business Enterprises\nActivity among minority- and women-owned business enterprises was slightly positive over recent weeks. More contacts reported increases in sales than those who reported flat or lower activity. Some businesses saw a decline in job openings, and others continued to struggle to find qualified candidates. Profits remained under pressure among contacts due to increased input costs, but some were optimistic that pressure would lessen in the coming weeks.\nFor more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2024/2024-05-su

"Beige Book: National Summary\nMay 29, 2024\nThis report was prepared at the Federal Reserve Bank of Dallas based on information collected on or before May 20, 2024. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nNational economic activity continued to expand from early April to mid-May; however, conditions varied across industries and Districts. Most Districts reported slight or modest growth, while two noted no change in activity. Retail spending was flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers. Auto sales were roughly flat, with a few Districts noting that manufacturers were offering incentives to spur sales. Travel and tourism strengthened across much of the country, boosted by increased leisure and business travel, but hospitality contacts were mixed in their outlooks for the summer season. Demand for nonfinancial services rose, and activity in transportation services was mixed, as port and rail activity increased whereas reports of trucking and freight demand varied. Nonprofits and community organizations cited continued solid demand for their services, and manufacturing activity was widely characterized as flat to up, though two Districts cited declines. Tight credit standards and high interest rates continued to constrain lending growth. Housing demand rose modestly, and single-family construction increased, though there were reports of rising rates impacting sales activity. Conditions in the commercial real estate sector softened amid supply concerns, tight credit conditions, and elevated borrowing costs. Energy activity was largely stable, whereas agricultural reports were mixed, as drought conditions eased in some Districts, but farm finances/incomes remained a concern. Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks.\nLabor Markets\nEmployment rose at a slight pace overall. Eight Districts reported negligible to modest job gains, and the remaining four Districts reported no changes in employment. A majority of Districts noted better labor availability, though some shortages remained in select industries or areas. Multiple Districts said employee turnover has decreased, and one noted that employers' bargaining power has increased. Hiring plans were mixed\u2014a couple of Districts expect a continuation of modest job gains, while others noted a pullback in hiring expectations amid weaker business demand and reluctance due to the uncertain economic environment. Wage growth remained mostly moderate, though some Districts reported more modest increases. Several Districts reported that wage growth was at pre-pandemic historical averages or was normalizing toward those rates.\nPrices\nPrices increased at a modest pace over the reporting period. Contacts in most Districts noted consumers pushed back against additional price increases, which led to smaller profit margins as input prices rose on average. Retail contacts reported offering discounts to entice customers. Many Districts observed a continued increase in input costs, particularly insurance, while some noted price declines in certain construction materials. Some Districts observed declines in manufacturing raw material costs. Price growth is expected to continue at a modest pace in the near term.\nHighlights by Federal Reserve District\nBoston\nEconomic activity was about flat on balance. Prices increased modestly, and wage growth was slow-to-moderate amid stable employment levels. Real estate activity, for both commercial and residential properties, weakened slightly after showing signs of improvement earlier in the year. The outlook became more uncertain for some contacts but remained cautiously optimistic overall.\nNew York\nOn balance, regional economic activity grew slightly. Labor market conditions remained solid, and labor demand and labor supply continued to come into better balance. Consumer spending picked up slightly after slow sales in the spring. Housing markets remained solid, though low inventory continued to restrain sales. Selling price increases remained modest.\nPhiladelphia\nBusiness activity grew slightly in the current Beige Book period, up from no change last period. Employment edged up slightly, owing to increased demand and supply of labor. Wage and firm price inflation were up modestly. Existing home sales grew slightly, and new-home sales held steady at high levels. Expectations for future growth edged down and were less widespread for nonmanufacturers but remained positive overall.\nCleveland\nDistrict business activity increased slightly but somewhat more slowly than it had in the prior reporting period. Some contacts attributed the slowdown to interest rates staying higher for longer than anticipated. Consumer spending declined modestly, which some manufacturers said dampened demand for their goods. The majority of contacts indicated that wages, input costs, and selling prices continued to stabilize in recent weeks.\nRichmond\nEconomic activity in the region expanded modestly this period. Consumer spending rose moderately, overall, which was driven by individuals with discretionary income as lower income individuals pulled back or traded down to lower priced goods. Import activity increased and the port of Baltimore was able to reopen one channel into the port. Manufacturing and nonfinancial services firms reported no change in demand in recent weeks.\nAtlanta\nThe Sixth District economy grew slightly. Labor markets continued to stabilize; wage pressures eased. Growth of some nonlabor costs slowed. Consumer demand was generally healthy. Tourism remained strong. Commercial real estate conditions were mixed. Transportation activity varied. Loan demand was flat. Energy activity was robust. Agricultural conditions softened.\nChicago\nEconomic activity increased slightly. Employment and construction and real estate activity increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw little change in activity; and manufacturing activity edged down. Prices and wages rose moderately, while financial conditions tightened a bit. Prospects for 2024 farm income increased slightly.\nSt. Louis\nEconomic activity across the Eighth District continued to increase slightly since our previous report. The outlook among contacts was slightly pessimistic, which is weaker than our previous report but better than one year ago.\nMinneapolis\nDistrict economic activity grew slightly. Employment grew but labor demand softened. Wage pressures were present but eased, while prices ticked up. Consumer spending rose but contacts were cautious, and manufacturing rose slightly. Commercial and residential construction improved slightly, and home sales grew strongly. Agricultural conditions remained weak but saw some positive developments.\nKansas City\nThe Tenth District economy expanded at a moderate pace. Household spending rose moderately, driven by increases in hotel stays, outings to restaurants, and auto maintenance. Job gains were modest, yet contacts indicated their employment outlooks were less vulnerable to a deterioration in conditions compared to six months ago. Prices grew slightly with broad reports that strategies regarding price changes were shifting.\nDallas\nEconomic activity was flat to up slightly over the reporting period. Some growth was seen in the manufacturing, banking, and energy sectors, while activity in nonfinancial services was flat, and declines were seen in retail sales. Employment levels held mostly steady overall, according to contacts. Outlooks were generally stable to slightly more pessimistic compared with the prior reporting period.\nSan Francisco\nEconomic activity and employment levels were largely unchanged. Prices, wages, and retail sales grew slightly. Activity in services sectors and residential real estate markets weakened a bit. Commercial real estate activity and financial sector conditions were largely unchanged. Demand for manufactured products picked up slightly, and conditions in agriculture were mixed.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

/beige-book-reports/2024/2024-05-cl

"May 29, 2024\nSummary of Economic Activity\nOn balance, the Fourth District economy expanded slightly in recent weeks, somewhat more slowly than it had during the prior reporting period. Moreover, contacts expected slower growth to continue in the months ahead. Contacts often attributed both the slowdown in growth and lowered expectations to diminished hopes for interest rate cuts in the near future. Consumer spending declined modestly, which some manufacturers said dampened demand for their goods. By contrast, nonresidential construction activity picked up, with increased demand for public sector projects. Employment levels increased slightly in recent weeks, with many firms focused on hiring for key positions. On balance, wage and nonlabor input costs increased moderately, and selling prices increased slightly.\nLabor Markets\nOverall, employment increased slightly in recent weeks. Some contacts reported hiring more entry-level and management workers to staff long-term projects, meet higher demand, or facilitate business expansions. One manufacturer said they were hiring now in anticipation of increased demand in the second half of the year. By contrast, some contacts indicated that they had slowed or \"paused\" hiring to control costs amid decreased demand and declining margins. Most contacts expected only modest hiring for their organizations in the near term.\nWage pressures continued to be moderate in recent weeks. Many contacts across industries continued to report that new-hire wages had leveled off and annual wage adjustments had again become the norm. One auto dealer said that wage pressures had eased to the point that they were offering wage adjustments only \"when necessary.\" Nevertheless, many financial services and construction contacts noted strategically raising wages to attract and retain staff with specialized skills.\nPrices\nOn balance, nonlabor input costs continued to increase moderately in recent weeks. However, over half of contacts reported no change in input costs. Some restaurateurs said that food costs were increasing at a slower rate or leveled off after a period of rapid increases, and many contacts in other industries reported that the pace of cost increases continued to slow. Some manufacturers noted that they were starting to negotiate with suppliers to bring down costs, with one stating, \"We have been able to partially roll back some select suppliers' prices after two years of substantial price increases.\" Still, many contacts across sectors continued to report cost increases for most services, including legal, accounting, and insurance services.\nSelling prices continued to increase slightly, though most contacts indicated that they had not changed prices recently. Some firms did not adjust prices because they had previously implemented annual price increases, while others noted that increased competition prevented them from raising prices. One business services contact said that passing along cost increases had become more difficult as customers were more closely managing their costs. Some manufacturing, construction, and retail contacts increased prices selectively, while other retailers reported decreasing prices or offering larger discounts because of decreased demand.\nConsumer Spending\nConsumer spending declined modestly following modest increases during the prior reporting period. While restaurateurs reported stronger demand because of warmer weather, the bulk of retailers reported softer sales. Multiple retailers indicated that customer foot traffic was lower. Reports from auto dealers were mixed, with one reporting higher new vehicle sales because of more manufacturer incentives, while others continued to report slow sales because of high interest rates and vehicle prices. Retailers generally expected consumer spending to remain unchanged in the coming months.\nManufacturing\nOn balance, demand for manufactured goods remained flat during this reporting period. Some manufacturers reported stronger orders related to ongoing federal spending or the construction of data centers. By contrast, others noted lower order volumes because of softer consumer spending or general economic and political uncertainty. For example, reports from primary and fabricated metals producers indicated lower order volumes because their customers faced softer demand or managed inventories cautiously because of uncertainty about how well demand would hold up in the coming quarters. Manufacturers generally expected demand to increase slightly in the coming months.\nReal Estate and Construction\nResidential home sales and construction increased at a modest pace in recent weeks, with one homebuilder indicating that \"We're still writing contracts on houses, but it's not like it was when mortgage rates were lower.\" Contacts expected demand to continue growing at a modest pace in the coming months. Still, as one contact stated, \"It's all going to depend on interest rates. If they go down, business will get better. If rates stay the same, I don't expect any change.\"\nNonresidential construction activity increased moderately in recent weeks. Construction firms experienced an uptick in activity for public projects, and another contact saw more demand related to green energy projects. By contrast, some commercial real estate developers reported that demand continued to be dampened by higher borrowing costs. On balance, contacts expected activity to continue at a moderate pace in the coming months.\nFinancial Services\nOverall, bankers indicated that loan demand increased modestly. One banker reported that, because of elevated interest rates, \"demand for loans remained steady although not robust.\" Looking ahead, bankers expected loan demand to soften somewhat because of interest rate uncertainty. For example, one banker opined that loan demand would not increase further until households and businesses \"get a better feel for the direction of our economy and [see] a cut in interest rates.\" Core deposits were flat, and there was continued movement from traditional savings accounts into higher-interest accounts. Bankers reported that delinquencies were little changed and remained at generally low levels.\nNonfinancial Services\nProfessional and business services contacts reported that demand remained robust as businesses moved forward with technology upgrades and capital projects. Overall, contacts anticipated that demand would increase in the coming months; however, a couple of consultants expected clients to pull back on spending as the upcoming presidential election has increased economic uncertainty. Freight contacts reported that demand increased slightly in recent weeks. One hauler noted that, despite increasing truckload volumes, both contract and spot rates declined. In the months ahead, haulers anticipated that demand would be flat as clients work through inventories.\nCommunity Conditions\nAffordable housing developers said that demand remained high but that community opposition and difficulty accessing financing were slowing housing production and could shut down some projects in the region. One contact reported that rising housing and food costs negated wage gains for many low-wage and entry-level workers. Moreover, increased housing costs contributed to a recent uptick in delinquent utility bill payments, according to some contacts. In addition, a nonprofit contact observed growth in the entrepreneurship space as people sought access to multiple income streams to cover elevated costs.\nFor more information about District economic conditions visit: https://www.clevelandfed.org/en/region/regional-analysis .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nMay 29, 2024\nSummary of Economic Activity\nEconomic activity across the Eighth District continued to increase slightly since our previous report. Employment was unchanged and wages increased slightly. Inflation pressures increased moderately due to higher input costs. Consumer spending was unchanged, with signs of weakness at higher price points. Real estate activity cooled slightly. Poor weather conditions slowed progress on District crop planting. Banking conditions remained stable. The outlook among contacts was slightly pessimistic, which is weaker than our previous report but better than one year ago.\nLabor Markets\nEmployment remains unchanged from our previous report. The labor market continues to be tight, with businesses still struggling to find employees. A manufacturing contact in southern Indiana reported not being able to fill open jobs, and an agriculture contact in the Memphis area noted that low labor force participation was a problem. Some signs of labor mismatch also appeared, with a real estate contact in Louisville reporting a struggle to find employees matching their qualifications.\nWages have increased slightly, with growth starting to level off to pre-pandemic rates. A Louisville human resources contact reported wage growth has been increasing at normal rates compared to the past few quarters. Other contacts reported wage increases have strained budgets, with a St. Louis construction contact reporting wage raises have increased costs.\nPrices\nPrices have increased moderately since our previous report. About one-third of District survey respondents reported higher or slightly higher prices since the first quarter. Just over half of contacts reported similar prices, with the remaining contacts reporting lower or slightly lower prices. These responses appear to be driven by increasing input costs, with over three-fourths of respondents reporting higher or slightly higher nonlabor costs and a similar share reporting higher or slightly higher labor costs. Contacts generally expect current cost pressures and pricing strategies to continue into the third quarter.\nConsumer Spending\nConsumer spending was generally unchanged since our previous report. Most retailers and auto dealers reported that overall sales met expectations; however, dollar sales were lower than the same period one year ago. Comments indicated slower growth in discretionary purchases due to smaller household budgets and increased price sensitivity. For example, auto dealers reported a significant decline in demand for high-end vehicles, while demand has increased for lower-priced vehicles. Tourism and hospitality contacts reported that sales were in line with expectations and overall activity is unchanged from the same period one year ago.\nManufacturing\nManufacturing activity was unchanged since our previous report. Manufacturers in the automotive, textile, and food processing industries also reported softer demand from consumers for their products. Firms in Arkansas and Missouri reported slight increases in delivery lead times, production, inventories, and new orders. However, employment has modestly decreased. On average, firms reported they expect slight decreases in employment in the coming quarter. Employee turnover remains high compared to previous years. Though there is a high demand for workers, several firms reported an inability to find people who are willing to work and that employees may voluntarily leave as quickly as one week.\nNonfinancial Services\nActivity in the nonfinancial services sector has weakened modestly since our previous report. The exception to this was the transportation sector, where the outlook has improved, with higher demand and sales exceeding expectations. One Arkansas contact reported unexpectedly high travel demand, and another St. Louis contact had success executing sales strategies. In most other nonfinancial services, the outlook has worsened. A Louisville consulting and management contact reported project delays. This sentiment was echoed by a St. Louis architecture and engineering contact, who reported steady client demand but longer project start and cancellation times, coupled with higher construction costs and higher interest rates. An Indiana health care contact reported a worsening outlook, while an education contact reported low public college enrollment. Overall, multiple contacts cited a worsening outlook due to some combination of higher interest rates, inflation, and political uncertainty.\nReal Estate and Construction\nResidential home sales have declined slightly since our previous report. About half of contacts reported sales did not meet expectations, with particularly weaker sales of higher-end homes. However, median-priced home sales were strong and continually sold for over their asking price. The District experienced a slight increase in home prices as the total inventory of homes for sale remains low across the District.\nCommercial real estate sales leasing activity has slowed since our previous report, and construction has remained stagnant. Contacts indicated that the prospect of higher-than-expected interest earlier this year has kept prospective developers on the sideline. A construction contact reported many have delayed projects due to higher interest rates. However, construction demand for transportation, federal, and lodging projects remains elevated.\nBanking and Finance\nBanking conditions and lending activities have remained stable from our previous report. According to contacts, demand for loans continues to be lower than one year ago, However, the growth of credit card, mortgage, and commercial and industrial loans has risen modestly since the past quarter. Contacts reported that competition for deposits continues to be intense as cash flow remains tight with high interest rates. Contacts provided mixed signals on nonperforming loans, with some banks reporting low credit risk and optimistic projections, while others reported signs of slow payments due to steady consumer spending; yet, they have not seen a significant rise in delinquent loans.\nAgriculture and Natural Resources\nAgriculture conditions have declined slightly since our previous report, with most contacts describing conditions as falling below expectations. District contacts were mixed on inventory, sales, and capital expenditures and noted increased labor costs as an additional stressor. Elevated rainfall and extreme weather events such as tornados continued to disrupt the planting progress for soy, cotton, and corn across all District states, while rice-planting progress remained similar to one year ago. The most-active planting periods have either ended or will end in the next two weeks; however, soy, corn, and cotton were all around 50 percent planted as of mid-May, down from over 90 percent planted at the same time one year ago, and slightly below average over the past few years. District contacts were mixed on inventory, sales, and capital expenditures and noted increased labor costs as an additional stressor.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nMay 29, 2024\nSummary of Economic Activity\nOn balance, economic activity in the Second District grew slightly in the latest reporting period. The labor market remained solid, with ongoing slight employment gains and moderate wage growth. Still, labor demand and labor supply continued to come into better balance. Selling price increases remained modest. Manufacturing activity declined modestly. Consumer spending grew slightly after slow sales in the spring. Tourism activity picked up in New York City. Housing markets remained solid, though low inventory continued to restrain sales. Commercial real estate markets weakened further. Activity in the finance sector declined slightly, with loan demand continuing to fall\u2014though delinquency rates edged lower. Optimism about the outlook became more subdued.\nLabor Markets\nLabor market conditions remained solid. On the whole, employment continued to increase slightly, with gains in leisure and hospitality, personal services, and health and education partially offset by ongoing reductions in information, construction, and manufacturing. A contact at an employment agency in New York City reported a notable uptick in hiring among financial services firms.\nLabor demand and labor supply continued to come into better balance. Still, businesses in the region reported ongoing difficulty finding the workers they need. These shortfalls are particularly acute in the service sector. Firms anticipate solid hiring in the coming months.\nWage growth remained moderate during this reporting period, though contacts from trade, personal services, and construction firms noted sharper wage increases. The increase in New York State's minimum wage earlier this year is being felt by some food service and manufacturing firms.\nPrices\nSelling price increases remained modest, and input price increases remained moderate. Still, the prices of some inputs have risen more rapidly, especially among service firms. Food and beverage businesses point to rapidly rising costs of cocoa and coffee, and contacts reported that obstructions to shipping in the Suez and Panama canals are causing shipping delays and pushing up the cost of freight, putting additional pressure on selling prices. Businesses expect little change in pricing pressures in the months ahead.\nConsumer Spending\nConsumer spending picked up slightly after slow sales in the spring. Spending on goods mostly held steady, while spending on entertainment and recreation ticked up. Auto dealers in upstate New York reported solid but slowing new car sales, as the high cost of credit and some shipping logistics issues have limited sales activity. Interest rates on auto loans have risen noticeably in the past several months, and coupled with higher car prices, new cars have become unaffordable for many. With improved inventory levels, manufacturer and dealer incentives have become somewhat more prevalent. Sales of used cars have been solid, as the price gap between new and used cars has normalized.\nManufacturing and Distribution\nManufacturing activity continued to decline modestly. Shipments were flat, and new orders continued to decline. Transportation and warehousing firms also reported a modest decline in activity, with a contact reporting that third party logistics companies have seen a particularly sharp decline in activity amid a retrenchment in consumer demand for goods. In contrast, wholesalers reported a strong increase in activity. Delivery times shortened, and supply availability was little changed. Still, contacts noted ongoing difficulty obtaining some supplies, including copper, various electronics, and heavy equipment. Manufacturers anticipate modest improvements in business conditions in the coming months.\nServices\nActivity in the service sector increased slightly. Business services and leisure and hospitality continued to grow modestly, but the information sector saw a moderate decline. Service firms remained optimistic about the outlook, particularly those in the health and education sector.\nTourism activity picked up in New York City. An industry expert reported that an unusually spread-out spring holiday calendar brought in a steady stream of international visitors, particularly from Europe and South America. Still, tourism from Asia has not fully recovered to pre-pandemic levels because of reduced flight availability due to more restricted flight patterns, and business travel was more limited during the spring holiday season. Hotel rates held steady but are notably more expensive than pre-pandemic levels. Many visitors are offsetting high hotel expenses with reductions in spending on retail and dining. Broadway show attendance continued to improve. While tickets for some shows were in very high demand, less successful productions have seen low attendance, and five Broadway theatres remain out of use.\nReal Estate and Construction\nHousing markets remained solid, though supply remains extremely constrained in most parts of the District. Although inventory has edged up, it is still too low to satisfy existing demand, and prices have continued to rise. Sellers are hesitant to list because of high prices and limited inventory when looking for a new home. Mortgage lock-in remains a significant factor, and many people are waiting for a modest decline in interest rates to consider listing. Manhattan is an exception, where inventory is near normal levels. Home prices on Long Island have risen significantly, particularly at the higher end of the market, while upstate New York has seen greater demand at the lower end and middle of the market.\nResidential rental markets continued to strengthen, and rents have risen across the District. Vacancy rates remain low, particularly in and around New York City, where rental vacancy rates are near long-term lows.\nCommercial real estate markets weakened further. The industrial market in Northern New Jersey saw significant increases in vacancy rates, with multiple tenants exiting leases and significant deliveries of new space. Activity in the Manhattan office sector edged up slightly after a notable worsening in the first quarter. Strong demand remains for new high-end office buildings, and rents in these buildings have been resilient, but lower quality buildings are seeing slowly declining demand. Rent concessions for office leases are at historic highs. Finance and legal firms continue to seek office space, while tech sector businesses continued to reduce their office footprints during this reporting period. Office markets in upstate New York and the New York City suburbs have remained more resilient. Sales of commercial real estate reached low levels, and were down significantly for office, retail, and multi-family, as the high cost of credit constrained demand and transactions.\nConstruction contacts reported that activity continued to fall following a sharper contraction earlier in the year. Office construction remained at low volumes. Multi-family construction starts remained low across the District. Industrial construction was solid in Northern New Jersey but declined in upstate New York.\nBanking and Finance\nActivity in the broad finance sector weakened slightly this period. On balance, small- to medium-sized banks in the District reported slightly weaker loan demand, particularly for residential and commercial mortgages. Banking contacts indicated that credit standards continued to tighten for business loans and commercial mortgages but held steady for consumer loans and residential mortgages. Deposit rates increased, and loan spreads narrowed. Delinquency rates edged down slightly on business loans, consumer loans, and residential mortgages.\nCommunity Perspectives\nAs the cost of providing services to communities has risen, federal, state, and local governments have responded with an array of grants and subsidies to help defray expenses for communities and populations in need throughout the District. With funds made available from the Infrastructure Investment and Jobs Act, the CHIPS Act, and remaining Covid subsidies, these grants and subsidies have been made to cover expenses for homeowners in disadvantaged areas, victims of natural disasters, and to communities in need of infrastructure improvements for utilities and broadband.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMay 29, 2024\nSummary of Economic Activity\nEconomic activity in the Twelfth District was unchanged on balance during the April through mid-May reporting period. Employment levels were generally flat, and labor was more available. Wages grew slightly, and contacts reported lower goods prices and higher services prices. Retail sales grew slightly. Activity in services sectors weakened a bit, as did activity in residential real estate markets. In contrast, commercial real estate activity was unchanged. Demand for manufactured products picked up slightly. Conditions in the agriculture and resource-related sectors remained mixed. Activity in the financial services sector remained largely unchanged. Communities across the Twelfth District sought services for mental health support as well as housing and food assistance. Looking ahead, contacts expect a modest decline in economic conditions overall.\nLabor Markets\nEmployment levels were generally flat over the reporting period. Reports of low attrition rates continued, and employers preferred to fill only critical positions. One contact described the labor market to be in a \"lock-in\" situation\u2014employers are generally not laying off workers, and workers are not quitting as often as in recent years. Employers across sectors reported receiving more applications for entry-level positions than before. However, they are still finding it difficult to attract experienced engineers as well as electricians and other skilled trades workers including machinists and welders. Several contacts in the hospitality industry reported hiring more foreign-born workers\u2014on permanent and temporary bases\u2014in recent months to address persistent labor shortages.\nReports indicated that wages grew slightly in recent weeks, in line with the prior reporting period. Wage pressures generally eased in many business services, such as consulting and financial services, but several contacts mentioned having to pay a premium to hire experienced workers. In addition, businesses needing workers knowledgeable in generative artificial intelligence technologies reported strong wage pressures and competition.\nPrices\nPrices continued to increase at a slight pace on net. Contacts emphasized the discrepancy between recent movements in goods and services prices. Good prices\u2014such as for food products, lumber, steel, and building materials\u2014fell or were unchanged, while services prices, particularly for insurance and utilities, rose notably. Several contacts in retail trades and leisure and hospitality reported limited ability to pass higher costs onto consumers, particularly in areas which experienced recent increases in state and local minimum wages.\nCommunity Conditions\nConditions in the community support and services sector worsened somewhat in recent weeks. Demand for mental health services, housing assistance, food assistance, and other related services remained high. Contacts across the District reported more difficulties obtaining funding for nonprofit organizations in recent weeks as government agencies, firms, and individuals scaled back support. Faced with these challenges, nonprofit organizations turned to other funding sources such as offering new fee-based services and drawing down endowments. Reports highlighted that small businesses continued to face challenges covering labor and other business expenses, and some opted to reduce operating hours to reduce costs.\nRetail Trade and Services\nRetail sales grew slightly over the reporting period. Consumers continued to buy lower cost items, and they reduced spending on nonessential goods, as sales of big-ticket items and luxury goods reportedly weakened. Retailers reported stable consumer demand for home goods and food and beverages, while sales of pet care products slowed somewhat.\nActivity in the consumer and business services sectors weakened a bit in recent weeks, after growing modestly in the previous reporting period. Demand for business consulting and accounting edged down, while demand for legal services was unchanged. Demand for health-care services remained strong, and supply was at or near capacity. Restaurants across the District reported slower consumer spending, with many customers replacing dining out with eating meals at home. Activity levels in the travel, entertainment, and hospitality industries were unchanged in most regions across the District, and business and leisure travel overall remained below pre-pandemic levels. Seattle tourism recently increased, which reportedly boosted sales for consumer-facing businesses.\nManufacturing\nManufacturing activity picked up slightly. Demand for capital equipment and fabricated metal strengthened. Seasonal maintenance projects and repairs led to a higher volume of new orders, and some previously delayed projects regained momentum and supported higher manufacturing activity. At the same time, a wood products manufacturer in the Pacific Northwest reported a slowdown in production due to a lower timber supply. More broadly, delivery times and availability of materials continued to improve but have not returned to pre-pandemic levels for some products.\nAgriculture and Resource-Related Industries\nConditions in the agriculture and resource-related sectors remained mixed. Current yields and past harvest inventories of food products, such as tree fruit, tree nuts, and seafood, remained high over the reporting period. Domestic demand from food services and retail sectors was stable but not sufficient to absorb domestic supply. As a result, prices fell for some agricultural products, such as apples, and exports increased. Harvesting restrictions, softening domestic sales, and slower international demand for lumber weakened logging activity, which resulted in some sawmill closures.\nReal Estate and Construction\nActivity in residential real estate slowed further. Single-family home sales fell amid continued low inventory. Several contacts noted that despite high mortgage rates, demand exceeded the supply of available homes for sale. Construction of single-family homes already in progress, though at a low level, was stable, and single-family housing starts picked up. Multifamily housing starts fell, but construction completions continued to expand the supply of rental units, slightly lowering rents, raising vacancy rates, and increasing leasing incentives. A contact in California noted that a recent change in state regulations has raised construction costs.\nCommercial real estate activity was unchanged on balance. Demand for retail space strengthened, which led to lower vacancies and higher rents in this subsector. Industrial leasing declined slightly, but activity remained robust. Construction of new commercial space was stable. Builders continued to work through a backlog of existing projects, although a contact in Arizona indicated that difficulties obtaining financing curtailed some new construction activity.\nFinancial Institutions\nLending activity was little changed on balance. Most banks continued to report soft demand for loans. Some contacts mentioned that clients deferred borrowing for new projects, while other contacts noticed subtle increases in loan originations, particularly to finance construction projects. Competition for deposits remained elevated as some clients reportedly moved their assets to nonbank alternatives offering higher interest rates. Lending requirements tightened further, and credit quality was strong.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"May 29, 2024\nSummary of Economic Activity\nOn balance, business activity in the Third District was up slightly, after being steady last period. Employment continued to grow at a slight pace, led by hiring among nonmanufacturers. Wage inflation continued at a modest pace, with wage pressures continuing to moderate. Firm price inflation ticked up to a modest pace, despite contacts reporting more pushback against price increases. Activity in staffing and recruitment was reported slightly up this period because of increased demand for labor and more candidates seeking out career opportunities. Sales of existing homes improved slightly, and new listings edged up steadily throughout the period. Average sales prices of homes continued to increase. Expectations for economic growth over the next six months edged down slightly, but there was continued widespread optimism among manufacturers, while expectations for nonmanufacturers moderated and optimism was less widespread.\nLabor Markets\nEmployment grew slightly, unchanged from last period. Based on our April and May surveys, nonmanufacturers reported slight increases in full-time jobs, unchanged from March, and a slight increase in part-time jobs, up from a slight decline. Manufacturing firms continued to report modest declines in employment and overall declines in the average workweek. Meanwhile, the average workweek for nonmanufacturers ticked up.\nStaffing and recruitment contacts reported a slight uptick in activity this period, after being steady last period. Contacts reported a stronger demand for labor, as some manufacturers and firms with seasonal staffing needs ramp up hiring. More candidates are also searching for jobs, as evidenced by increased visits to staffing contacts' offices. Several contacts reported less staff turnover and a wider candidate pool. For instance, one contact reported receiving 400 r\u00e9sum\u00e9s for a finance position within the first day of the vacancy being posted.\nWage inflation remained modest, as wage pressures continued to subside. On a quarterly basis, firms' expectations of the one-year-ahead change in compensation cost per worker fell further to a trimmed mean of 3.3 percent in the second quarter of 2024, down from 3.9 percent in the prior quarter.\nPrices\nOn balance, firm price inflation was modest this period, up from a slight pace in March. Firms reported that increases in prices received for their own goods and services over the past year edged up in the second quarter of 2024 compared with the first quarter. The trimmed mean for reported price changes, based on responses to our quarterly survey, rose to 2.3 percent from 2.0 percent for all firms. Price increases rose to 1.8 percent from 1.2 percent among nonmanufacturers and edged down to 2.8 percent from 2.9 percent for manufacturers.\nLooking ahead one year, the increases that firms anticipate in the prices for their own goods fell further. The trimmed mean for all firms fell to 2.3 percent in the second quarter of 2024, from 2.6 percent in the first quarter of 2024. The expected rate of growth fell from 3.5 percent to 2.4 percent for manufacturers and rose to 2.2 percent from 1.7 percent for nonmanufacturers.\nManufacturing\nOn average, manufacturing activity increased modestly over the April to May period, unchanged from the prior period. The index for new orders rose moderately in April and then declined slightly in May. The shipments index declined and turned slightly negative.\nExpectations among manufacturers for growth over the next six months edged down slightly from March but continued to be widespread. More than 55 percent of the firms expected increases in new orders and in shipments.\nConsumer Spending\nRetailers (nonauto) continued to report slight decreases in sales. In-store visits continued to be flat to down slightly. Contacts reported that consumers continued to spend less on each trip as they continue to adjust to higher prices.\nAuto dealers again reported slightly higher sales of new cars in the current period owing to continued strong consumer demand. Although auto prices have begun to moderate and dealers and manufacturers are offering promotions, affordability remains a concern because of high interest rates. While regulations at the federal level mandate increased sales of electric vehicles, auto contacts are worried about the potential mismatch between the increased supply and the weak demand for electric vehicles even with increased incentives.\nAlthough the start to the year was slow, tourism grew slightly this period, after slowing slightly last period. One contact reported April was a good month for leisure tourism in the Philadelphia area despite some local consumers being more price sensitive and a low number of international visitors. Hotel demand as measured by nights sold and total revenue rose modestly year over year. Corporate and group travel were up slightly but still below pre-pandemic levels.\nNonfinancial Services\nNonmanufacturing activity increased modestly over April and May, following a slight decline last period. The sales/revenues index increased moderately\u2014up from a near-zero reading. The index for new orders was flat on average, after being slightly negative in March.\nFirms' current sentiment improved this period. Nonmanufacturers' perceptions of general activity for the region have improved consistently since March but remained in negative territory in May. At the firm level, nonmanufacturers have reported moderate increases in the general activity index over April and May.\nExpectations among the nonmanufacturers for their own growth over the next six months were modest, significantly down from March and below historical averages.\nFinancial Services\nThe volume of bank lending (excluding credit cards) grew moderately during the period (not seasonally adjusted), up from slight growth last period and unchanged from the moderate pace of one year ago.\nDistrict banks reported strong growth in commercial real estate lending and home mortgages. Volumes of home equity lines increased moderately, while consumer lending (other than auto and credit cards) held steady. Auto lending grew modestly, and commercial and industrial lending grew moderately. Credit card volumes fell moderately after modest growth during the same period one year ago.\nBanking contacts continued to report good credit quality, with only minor upticks in delinquencies and charge-offs. An overarching concern among contacts was the high cost of capital that prevented capital expenditures and deterred many of their business clients' investment plans.\nReal Estate and Construction\nExisting home sales continued to grow slightly this period. The inventory of for-sale properties continued to edge up slightly through April\u2014with the spring market bringing a low but constant flow of listings after year-over-year declines last year. Average sales prices continued to grow, and some properties continued to attract multiple offers and above-asking prices.\nWith still lower-than-normal inventory levels of existing homes for sale and strong demand for housing, new-home builders continued to report strong sales. One contact noted that homes are sold out through May 2025, but with demand still strong, the firm reduced its marketing budget to slow that demand.\nIn nonresidential markets, leasing activity and transaction volumes continued a slight decline. One contact noted some strength in logistics and warehousing; however, the office subsector remains subdued.\nNonresidential construction activity remained muted in the current period. While some contacts reported less activity in this subsector, another contact that continued to be busy noted that several public infrastructure projects in planning and design could boost activity in the near term.\nFor more information about District economic conditions visit: https://www.philadelphiafed.org/regional-economy .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"May 29, 2024\nSummary of Economic Activity\nEconomic activity was about flat on balance, but performance was quite mixed both across and within sectors. Prices increased further at a modest pace, and employment was steady amid slow-to-moderate wage growth. Retail sales softened somewhat, and hospitality activity was stable or up modestly. Manufacturers reported strong revenue growth on average, while staffing firms reported only slight revenue gains. Residential home sales declined moderately compared with year-earlier levels despite some recent seasonal growth in sales. Commercial real estate activity decreased slightly, with new softness in the industrial leasing market, and the possibility of a surge in office foreclosures remained a significant concern. The outlook was cautiously optimistic on average, but selected contacts expressed either greater uncertainty or an uptick in downside risks.\nLabor Markets\nEmployment was unchanged overall, and wages increased at a slow-to-moderate pace. Labor demand weakened somewhat, as job openings fell slightly, and layoffs picked up a bit. A large clothing retailer let go 150 workers by closing a call center, citing the shift towards more automated customer service technologies as the driver. Headcounts were steady or up slightly among manufacturers. Demand fell for legal support roles but remained robust for convention-industry roles. Labor supply improved moderately in the medical sector and for retail and restaurant jobs. Employers enjoyed increased bargaining power relative to one year ago, and sign-on and retention bonuses have mostly reverted back to pre-pandemic levels. Among manufacturers, wages increased moderately on balance, although one contact said that recent wage growth had exceeded its typical pre-2020 levels. Wage pressures eased among retail and hospitality establishments, resulting in modest average wage increases. Hiring plans were muted across sectors, mostly aimed at offsetting retirements and other sources of attrition.\nWorkforce development contacts described new training programs teaching life skills and basic professionalism. One contact described efforts to match students with jobs before they graduated from the program as a way to reduce attrition.\nPrices\nPrices increased at a modest pace on average, and input cost movements were mixed. Restaurateurs reported modest increases across a range of food inputs but held menu prices steady, resulting in a further narrowing of profit margins. Hotel room rates increased from a year earlier at a pace of just under two percent, the slowest in recent years. Among manufacturers, input price pressures moderated, and costs were flat in some cases, but one contact noted that plastics and electronics prices remained elevated. Output prices increased by an above-average margin at one manufacturer, driven by robust demand and modest cost pressures, but otherwise manufacturers' output prices were up only modestly. Plans called for muted price growth on balance moving forward, as there was concern about consumer pushback from significant further price increases. In fact, one large clothing retailer, in response to recent input price declines, planned to enact modest price reductions on selected items in early fall in a bid to boost sales.\nRetail and Tourism\nRetail and tourism sales were slightly weaker overall in recent months, although results were mixed. A clothing retailer experienced softer sales this winter and spring, posting a moderate decline in sales from one year earlier. A discount retailer posted a weaker than expected March and April but pointed to late season snowstorms as the culprit, as recent weeks saw rebounding sales. A Massachusetts restaurant industry contact reported an exceptionally strong Mother's Day but said that sales had otherwise been flat. Hotel occupancy rates in Greater Boston were stable recently, with a year-over-year growth rate of two percent. Restaurants were optimistic for the summer months, and retailers were cautiously optimistic, but contacts in both industries emphasized that consumers remained highly price-conscious, and at least one retailer perceived that consumer spending risks were skewed to the downside.\nManufacturing and Related Services\nManufacturing revenues increased at a moderate pace on average but spanned a range of outcomes. A maker of veterinary care products posted robust sales growth amid strong demand for pet care but lamented that weak labor supply constrained the number of vet clinic visits. A small consumer goods manufacturer experienced remarkable growth in sales, exceeding already high expectations. Others reported flat or modestly lower sales that were nonetheless in line with or above expectations. Capital spending was steady and near-term plans were unchanged. Contacts expected modest to strong sales growth in the coming quarters, even those with relatively weak recent sales. Optimism for the second half of 2024 was driven in some cases by recent momentum in demand for AI-related products and other new technologies.\nStaffing Services\nFirst District staffing firms experienced mixed changes in activity, with revenues increasing slightly on balance. Contacts said that demand for direct hires was down sharply from one year ago, while demand for temporary hires and temporary-to-permanent conversions increased considerably for the same period. Expectations were split, in line with firms' own recent performance, but on balance revenues were expected to increase slightly in the second half of 2024. One contact expected that their recent acquisition of another staffing firm would enable them to expand their presence in New England.\nCommercial Real Estate\nAccording to industry contacts, commercial real estate activity in the First District decreased slightly since April. Industrial leasing activity softened modestly overall but declined sharply in Connecticut. Industrial rents continued to rise, albeit less rapidly than in previous months. In the office market, leasing activity was mostly flat at a subdued pace, vacancy rates edged up further, and rents were flat or down moderately. The retail class experienced stable activity and rents. Investment sales remained mostly frozen as borrowing rates remained high, and lending activity was very limited. Unfavorable borrowing terms also contributed to modest declines in construction activity. Banks continued to extend underperforming office loans in anticipation of eventual declines in interest rates, but contacts remained concerned that a significant uptick in foreclosures was inevitable, especially in the class B market. Contacts expected commercial real estate activity to remain largely static moving forward, or if anything to weaken slightly. The subdued outlook was attributed to uncertainty concerning the timing of rate cuts by the Fed as well as over the outcome of the presidential election.\nResidential Real Estate\nFirst District home sales, considering year-over-year changes, posted mixed results in March and April after increasing in February. Closed residential sales increased at an above-average pace in New Hampshire and Maine in April from a year earlier, in both cases buoyed by increased inventories. In both Rhode Island and Vermont, single-family sales fell moderately over the year, while condominium sales increased either slightly (in Rhode Island) or moderately (in Vermont). Massachusetts posted year-over-year declines in sales in March for all residential property types despite a modest seasonal upswing in sales from the previous month, as activity was held back by declining inventories. Contacts stressed that inventory levels remained very low across the region, leading to ongoing, moderate-to-robust increases in house prices, and realtors expressed support for policies that would make it easier to build accessory dwelling units on existing properties. The outlook was neutral to cautiously optimistic, with a contact in the Boston area encouraged by recent increases in pending sales.\nFor more information about District economic conditions visit: https://www.bostonfed.org/in-the-region.aspx .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2024/2024-05-ri

"May 29, 2024\nSummary of Economic Activity\nThe regional economy grew at a modest rate in recent weeks. Consumer spending on retail, restaurants, and leisure travel increased this period but new vehicle sales were down slightly. Import activity ramped up both from natural growth and from cargo that was diverted from Baltimore. Near the end of the reporting period, the Port of Baltimore was able to open a limited access channel, which would let most container ships traverse into the harbor. Residential real estate activity picked up in recent weeks, as did some commercial real estate leasing; however, very few new commercial construction projects were being started. Labor markets improved but labor supply remained tight. Price growth remained moderate, overall.\nLabor Markets\nEmployment in the Fifth District grew at a moderate pace in the most recent reporting period. Labor availability was mixed. A chartered bus company remained constrained by a lack of quality candidates, but they noted greatly improved conditions and that they were getting close to \"normal.\" A quick-service restaurant reported continued significant staffing challenges in their cafes. Many contacts cited the need for \"quality\" workers. A seasonal outdoor recreational company was not able to recruit some candidates because of a lack of affordable housing in the area. Firms continued to increase wages and offer bonuses to recruit and retain workers.\nPrices\nPrice growth increased slightly in recent weeks, but growth remained at a moderate year-over-rate. According to our most recent surveys, the rate of growth in the prices received by service providers remained elevated at around 4 percent compared to around 2.5 percent for manufacturers. In both sectors, businesses reported that input and labor costs continued to rise, and in some cases, their input costs increased at a faster rate than the prices they received because customers were pushing back on additional price increases. Firms generally expected for growth in prices received to moderate over the next six months.\nManufacturing\nFifth District manufacturing activity was unchanged in the most recent period. Several companies mentioned increased pressure on margins due to global competition. A precision metal fabricator reported all work had halted, and any new work must meet or beat international pricing. A dental implant manufacturer reported increased labor costs and competition from less expensive global competitors resulting in margin pressure. Future market uncertainty has created uneasiness for several contacts. A textile company's clients told them that they were not making big moves or long-term strategic decisions, which has affected the company's ability to plan for the rest of the year.\nPorts and Transportation\nPorts in Virginia and South Carolina reported moderate to strong (up to double-digit) increases in imports beyond the additional volume that they picked up from diverted Baltimore cargo. Exports of certain commodities like textiles and apparel were up, while exports of agricultural goods leveled or decreased. Freight rates decreased, but ocean carriers continued to add surcharges and fees for distance and hazards. The port of Baltimore opened a 45-foot limited access channel that will allow ninety percent of container vessels reentry to the port. Some container lines have waited for this depth clearance before loading new ships, and customers indicated an eagerness to return to Baltimore due to increased costs of getting cargo to the region from other ports.\nRail demand at inland ports was strong this period, continuing this year's record levels. Manufacturers in autos, auto parts, agriculture equipment and tools have favored rail due to lower carbon emissions and supply chain reliability. Trucking volume was up slightly, but spot rates continued to spiral downward due to oversaturation. Some firms noted that they picked up lost contracts because the service provider could not complete the routes as their operating costs exceeded their bid price.\nRetail, Travel, and Tourism\nConsumer spending on retail and travel increased moderately in recent weeks. Retail sales were up, but some retailers reported tighter profit margins due to rising input costs and an inability to pass along all of those costs to customers. On balance, spending on restaurants and leisure travel picked up and was largely driven by consumers with discretionary income. Conversely, low-to-moderate income consumers were reportedly pulling back on spending or trading down in the goods they purchased due to higher costs leading to tighter household budgets. New vehicle sales declined slightly this period.\nReal Estate and Construction\nResidential real estate activity picked up modestly in recent weeks. Total closed sales increased, and more homes came onto the market, which brought the total supply of homes for sale up slightly compared to prior months but remained below the pre-pandemic level of supply. Average sales prices rose modestly, and homes were selling at a slightly faster rate, particularly for low to mid-priced homes. An agent in South Carolina noted that home price escalation was pushing some potential buyers out of the market, but people moving to the area from higher-priced markets were unphased. New construction continued to expand in areas with population growth.\nCommercial real estate activity increased slightly this period. Retail leasing activity picked up and vacancy rates remained low as new inventory was quickly absorbed. Office leasing increased slightly for class A space but declined for class B and C properties, which drove up vacancy rates in those buildings. Leasing and absorption in new multi-family buildings were strong. Construction of existing projects continued but developers from across regions and across sub-markets of commercial real estate noted that very few projects were being green lit as interest rates made it hard for deals to be financially viable amid continued high prices of material and labor.\nBanking and Finance\nFinancial institutions reported that they continued to observe modest softening of loan demand over most loan types, but mainly in their commercial real estate and business loan portfolios. Higher interest rates were mainly noted as the primary driving force in this softening. Deposit levels continued to modestly decline with competition still high for any available balances. Some respondents noted that underwriting on new loan requests remained tight with most institutions decreasing their appetite for new loans. Loan delinquency rates remained stable, but one institution observed a slight decline in credit scores and credit quality for new consumer applicants.\nNonfinancial Services\nNonfinancial service providers continued to report that demand for their services as well as their revenues remained stable. A staffing firm noted that new orders for positions have started to increase from those in the first quarter, but finding qualified and willing-to-work applicants for these positions continued to be a challenge. Higher interest rates were still being noted as a limiting factor for new capital expenditures. Inflation and election year politics were also mentioned as factors impacting business expansion and overall confidence in the economy. Wages and workforce issues continued to be less of a challenge and to show modest stabilization.\nFor more information about District economic conditions visit: https://www.richmondfed.org/research/data_analysis .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

/beige-book-reports/2024/2024-05-kc

"Beige Book Report: Kansas City\nMay 29, 2024\nSummary of Economic Activity\nThe Tenth District economy expanded at a moderate pace, led by rising household consumption and growth in professional business service activity. Moreover, contacts indicated their employment outlooks were less vulnerable to a deterioration in conditions compared to six months ago. Hiring activity and expected job growth were modest, with some acute indications of rising barriers to work among low-wage occupations. Several contacts noted a willingness to accept elevated wage growth over the near-term, as the alternative of lost revenue due to vacant positions would be too costly. Price dynamics were reported to be changing due to a rise in the frequency of price adjustments as well as a greater use of clauses in supplier contracts to reduce the risk of outsized input cost growth. Consumer spending rose moderately. Spending on auto services and parts showed robust growth as households maintained their vehicles that faced lower trade-in values. Commercial real estate activity stabilized across the District, but at low levels. Conditions in agriculture and energy were mixed across segments.\nLabor Markets\nTenth District contacts reported hiring activity expanded slightly over the past month. Businesses indicated their priorities in hiring were generally unchanged, with ongoing focus on recruiting early-career and entry-level workers. Mismatches in between open jobs and workers' skills remained an ongoing concern, and many businesses reported they are devoting significantly more resources to training workers to close skill gaps. Wages continued to grow at a moderate pace. Several contacts noted their current willingness to accept wage growth that is higher than historical norms because the alternative of lost revenue due to vacant positions would be too costly. Looking ahead, manufacturing businesses continued to report expectations that the pace of wage growth will be slightly slower than, or similar to, last year. However, services contacts were more mixed in their expectations of wage growth, with consumer-oriented businesses expressing greater wage pressures.\nPrices\nBusiness contacts reported prices for finished goods and services grew slightly over the last month, with declines in auto prices being a notable exception. Growth in input costs continued to outpace selling prices. Amid difficulties to pass higher materials and input costs onto customers, many contacts reported being willing to change selling prices more frequently compared to last year to protect margins when possible. Contacts also reported implementing several new strategies to alleviate cost pressures arising from suppliers for the coming year. Specifically, many businesses reported they are entering shorter duration contracts with vendors, adding escalation clauses that cap cost growth, or including new clauses to allow for renegotiation upon unanticipated cost changes.\nConsumer Spending\nConsumer spending rose moderately driven by increases in hotel stays, outings to restaurants, and other services. Spending on services and parts for auto repairs grew at a robust rate as households increasingly repaired and maintained their vehicles. Recent declines in auto prices from pandemic-era highs reduced trade-in values for used cars purchased two to three years ago. Those lower trade-in values, combined with the propensity to purchase cars with extended term financing in recent years, meant that many car owners could not exit their loans and instead elected to repair and maintain their current vehicles in lieu of trading in for new cars.\nCommunity Conditions\nThe availability of jobs for low-wage workers was reportedly high, and contacts indicated the entry-level job market is still tilted in job seekers' favor. However, a few noted that some employers were bringing back restrictions on hiring such as background checks and drug testing. High prices of vehicles and rising costs of repairs and auto insurance continue to present barriers to work for low-wage workers. Additionally, contacts noted the preponderance of new jobs locating on the fringes of metro areas has made those jobs more difficult to reach for low-to-moderate income households. Contacts noted the benefits of switching jobs lessened considerably for workers, but the tendency to switch jobs for even marginal wage gains remains elevated.\nManufacturing and Other Business Activity\nBusiness activity expanded at a moderate pace, led by robust growth among both consumer and professional service providers. Manufacturing contacts continued to report moderate and broad-based declines in activity. Compared to 6 months ago, contacts generally reported more optimism about avoiding the need to lay off workers if activity were to meaningfully slow. Instead, more firms reported they would reduce the number of open positions and reduce hours worked if demand were to decline significantly. Slightly more businesses expressed they would likely reduce headcount through natural attrition if conditions were to deteriorate, even as turnover continued to decline. Given current conditions, most employers expected modest job gains over the next six months.\nReal Estate and Construction\nMany aspects of commercial real estate (CRE) activity that were declining for several quarters reportedly stabilized over the past month, albeit at low levels. However, ongoing increases in vacancy rates kept downward pressure on rents. Property sales rose moderately throughout the District with slight increases in transaction prices, though contacts noted more self-funded equity was needed to finance deals. Contacts reported only modest increases in private equity funding being deployed but generally indicated that substantial amounts of equity remained on the sidelines. Bank lending and lending from insurance companies to the CRE sector reportedly declined recently. Despite the reportedly tight financial conditions, District contacts' expectations regarding property valuations improved moderately compared to earlier in the year.\nCommunity and Regional Banking\nLoan demand was mostly unchanged at District banks from the previous month, except for CRE loans, which declined due to higher financing costs. Contacts also noted portfolio credit quality was mostly unchanged and they largely expected similar loan quality in the coming six months. Bankers indicated that less than 10 percent of their CRE borrowers had exercised extensions in the past six months and expect less than 5 percent to require an extension in the coming six months, highlighting contacts' cautious optimism about CRE loans despite elevated interest rates. Deposits were unchanged on net amid short seasonal fluctuations driven by tax payments.\nEnergy\nTenth District oil and gas activity declined slightly over the last month. The number of active rigs fell as oil prices declined, and production in the District's major basins decreased modestly. Coal production in Wyoming also fell moderately over the last month due to a continued decline in price. Contacts indicated capital expenditures to support coal mining were increasingly oriented toward maintaining equipment, rather than expanding capacity. Renewable energy capacity has grown at a moderate pace in the District this year, driven by wind installations in Oklahoma and solar installations in New Mexico. However, District growth in non-wind renewable capacity lags the U.S. and is expected to continue underperforming the national average in coming months.\nAgriculture\nConditions in the Tenth District agricultural economy softened through early May and farm finances tightened slightly. Corn, soybean, and wheat prices increased slightly since April, but remained weak, keeping profit opportunities narrow. Winter wheat conditions in Colorado and Kansas were particularly poor and raised concerns about reduced revenues while growing conditions in Oklahoma and Nebraska were comparatively better. Corn and soybean planting was delayed in some areas of the region, which also raised concerns about future crop conditions. In the livestock sector, cattle prices remained strong and supported profit opportunities for cow/calf producers. District contacts mentioned that financial stress has remained modest, but concerns about further deterioration were growing.\nFor more information about District economic conditions visit: https://www.KansasCityFed.org/research/regional-research .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2024/2024-04-ny

"Beige Book Report: New York\nApril 17, 2024\nSummary of Economic Activity\nOn balance, economic activity in the Second District held steady in the latest reporting period. Labor market conditions remained solid with labor supply and labor demand coming into better balance. Employment continued to grow slightly, and wage growth remained moderate. The pace of selling price increases remained modest. Manufacturing activity declined modestly. Consumer spending was flat, on the heels of weak sales earlier in the year. Tourism activity in New York City continued to move slowly towards pre-pandemic levels, and the solar eclipse brought an off-season boost to parts of upstate New York. Housing markets continued to strengthen, with the spring selling season picking up beyond the seasonal norm in much of the District. Commercial real estate markets deteriorated noticeably. Activity in the finance sector continued to weaken, with sagging loan demand and rising delinquencies on business loans and commercial mortgages. Nonetheless, businesses generally remained optimistic.\nLabor Markets\nLabor market conditions remained solid. Labor demand and labor supply have come into better balance as conditions continued to normalize. Employment grew slightly, with modest increases in the service sector offset by reductions in the construction and information industries.\nThough businesses continued to hire, there has been a slowdown in hiring among the fastest growing companies, in part due to the high cost of capital curbing expansion plans. Many businesses are hiring more selectively and deciding to make do with less rather than hiring workers who are not a good fit. Manufacturing firms cited ongoing difficulties hiring skilled machinists amid a wave of retirements, but otherwise it has become easier to find qualified workers. Outside of a few smaller businesses shutting down, layoffs remain fairly limited in the region. Businesses anticipate only modest increases in headcounts in the coming months.\nWage growth eased somewhat but remained moderate. Notably, a major payroll firm in the District noted that pay increases received by those switching jobs have returned to normal. Firms do not anticipate significant change in the pace of wage growth in the months ahead.\nPrices\nThe pace of selling price increases remained modest, and the pace of input price increases remained moderate. Still, manufacturing firms pointed to more significant price increases for some raw materials, along with pricing volatility for electronics components. Looking ahead, input price increases are expected to pick up, with some contacts expressing concern about potential shipping route obstructions due to the Key Bridge collapse in Baltimore and obstacles in the Middle East.\nConsumer Spending\nConsumer spending was flat, on the heels of weak sales earlier in 2024. Spending on goods remained sluggish and declined for services such as restaurant meals and entertainment after a sustained period of strength. By contrast, auto dealers in upstate New York pointed to a pickup in auto sales, with solid increases in both new and used vehicle sales. Buyers have enjoyed greater choice with improved inventory levels. Some auto manufacturers have begun subsidizing interest rates\u2014even offering zero percent financing\u2014to help boost sales and manage inventories, and borrowers are turning to leasing amid the high price of new cars.\nManufacturing and Distribution\nManufacturing activity declined modestly, following pronounced weakness in early 2024. Shipments and new orders fell, and some firms have reduced employee hours. In contrast, transportation and distribution firms reported strong business activity. Supply availability continued to improve, and delivery times shortened, though some contacts noted new challenges receiving inputs in a timely manner. Manufacturers generally expect conditions to improve, though optimism has become subdued.\nServices\nOn balance, service sector activity was flat. Though the business services and leisure and hospitality sectors grew modestly, activity in the education & health sector edged down, and activity fell noticeably in the personal services and information sectors. Nonetheless, service firms remained fairly optimistic about the outlook.\nA New York City tourism contact reported that the spring travel season has been slow, and the number of visitors is only slightly above levels seen last spring. Still, business travel and international tourism have both increased, with a notable uptick in visitors from Europe and South America during the Easter holiday week boosting attendance at Broadway shows. Hotel rates in New York City have remained high, in part reflecting a compositional shift towards higher-end rooms as more modest rooms have been set aside as housing for asylum seekers, reducing options for tourists. Visitors seeking the path of totality to observe the solar eclipse provided a sizeable boost to hotel and restaurant establishments in parts of upstate New York.\nReal Estate and Construction\nHousing markets continued to strengthen, with the spring selling season picking up beyond the seasonal norm in much of the District. Though mortgage rate lock-in has continued to limit new listings, inventory edged up. Still, low inventory remains the key factor restraining sales, and strong demand has generally kept sales prices above ask in both upstate New York and the New York City suburbs as bidding wars increased.\nResidential rental markets continued to firm, with rents increasing modestly at high levels. Contacts from across the District noted that many former homeowners have turned to renting because of limited options on the purchase market, augmenting rental demand. Bidding wars on rentals remained common.\nCommercial real estate markets weakened noticeably, with a strong decline in demand for office space. Vacancy rates in Manhattan increased sharply, due in part to a decline in both lease and sublease renewals. While Manhattan saw the brunt of the decline, office markets in Brooklyn, Northern New Jersey, Westchester, and Fairfield also weakened. Although rents were unchanged, rental concessions remained historically high. Office markets in upstate New York, where supply is more limited, remained more steady. The industrial sector also weakened, with continued declines in new leasing. Northern New Jersey, the key market for the New York City metro area, saw a sharp decline in demand. Still, industrial rents have held steady. Multifamily markets held steady, but credit cost and availability remained a challenge. All in all, financial strain among property owners in New York City continued to build as debt service payments rose.\nConstruction contacts reported sharply declining activity. Office construction remained at low volumes. Multi-family construction starts have been low across the District. Industrial construction was solid in Northern New Jersey but declined in upstate New York.\nBanking and Finance\nActivity in the region's broad finance sector continued to weaken in the latest reporting period. On balance, small- to medium-sized banks in the region reported slightly weaker loan demand, particularly for consumer loans and residential mortgages. Banking contacts indicated that credit standards continued to tighten for business loans and commercial mortgages but held steady for consumer loans and residential mortgages. Deposit rates declined slightly, and loan spreads narrowed. While delinquency rates were unchanged for consumer loans and residential mortgages, delinquencies continued to rise for business loans and commercial mortgages.\nCommunity Perspectives\nCommunity leaders noted that non-profit operations have been strained. Inflation has caused the cost of providing services to increase, but there has not been a corresponding increase in funding. Further, many non-profits have endured higher employee turnover and vacancies as many workers have left for more lucrative and less stressful roles in the public and private sectors. With shortfalls in funding and staffing, recipients of social services such as childcare, mental health, housing placement, and senior ambulettes have experienced increasing wait times and service reductions.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2024/2024-04-sf

"Beige Book Report: San Francisco\nApril 17, 2024\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to grow at a slight pace during the mid-February through March reporting period. Employment levels were little changed, and labor was more available. Wages and prices continued to rise at a slight pace on net. Retail sales were largely unchanged, while activity in the services sectors grew modestly. Demand for manufactured products remained flat on balance, and conditions in the agriculture and resource-related sectors were mixed. Both residential and commercial real estate activity weakened slightly. Activity in the financial services sector remained largely unchanged. Communities across the Twelfth District continued to report housing affordability issues and elevated demand for support services. Looking ahead, contacts expect slightly weaker economic conditions overall.\nLabor Markets\nEmployment continued to rise at a slight pace this reporting period. Employers across the District generally reported holding their head counts steady or increasing it marginally, although some technology, financial industry, and real estate firms reduced the size of their workforce through layoffs and attrition. Some of the layoffs, particularly in the mortgage lending sector, were the result of bank mergers and acquisitions. Hiring was strong in agriculture and for some nonprofit community services but remained muted in the entertainment sector due to lower production volumes. The aviation and hospitality sectors increased their hiring pace because of higher staff turnover. Some firms reported that it was generally easier to fill open positions due to a larger pool of qualified candidates, while others still found it difficult to attract workers for on-site positions, particularly those located in high-cost areas. Many contacts highlighted deploying generative artificial intelligence (GenAI) tools to augment rather than replace workers. Nonetheless, a contact in the Pacific Northwest noted that several technology firms began using GenAI tools to replace some staff working in mid-level positions.\nWages continued to rise at a slight pace, as labor availability continued to improve. Annual pay increases moved closer to historical averages and in line with moderating inflation. Some contacts reported employees' willingness to take a pay cut in exchange for work flexibility and remote work. Wage pressures persisted in agriculture, as larger crop yields expanded the demand for workers.\nPrices\nPrices increased slightly on net for most products and services over the reporting period. Price levels were stable in retail, higher education, and health services and reportedly fell in the agriculture and lodging sectors. Input costs were generally stable, although some reports indicated higher costs for utilities, energy products, electrical supplies, lumber, and insurance. In some instances, the higher costs were passed through to prices, but some firms in food and beverages and consulting services observed resistance to price hikes from their increasingly price-sensitive consumers.\nCommunity Conditions\nDemand for community support and services remained high amid limited funding and strained resources. Households and community members sought assistance as they faced challenges with the cost of housing, utilities, food, and health services. Some contacts reported that government funding partially compensated for a decline in financial support from private-sector grants and individual donors. In some cases, public-sector funding was restricted to address specific issues, such as housing security, which limited their ability to address multiple issues facing community members. Small businesses across the District continued to face high borrowing costs, which limited access to funding and loans.\nRetail Trade and Services\nConsumer spending on retail goods remained largely unchanged. Demand for durable goods was strong, and sales at home improvement stores picked up. However, reports from across the District indicated that consumers have become more price sensitive in recent weeks, particularly for groceries and fresh produce, as they favored discounted products and focused on necessities. The prevalence of hybrid work arrangements continued to limit retail sales in downtown urban areas.\nActivity in the consumer and business services sectors continued to grow modestly in recent weeks. Several contacts highlighted that demand for leisure and hospitality services improved in March following weak activity earlier this year. Business travel was up moderately as more conventions and conferences showed preference for in-person attendance. Restaurant activity was mixed during the reporting period as more consumers exhibited price-sensitive behavior. Demand for janitorial and security services remained robust, while demand for consulting services was muted.\nManufacturing\nManufacturing activity remained flat in recent weeks, on balance. Contacts generally pointed at slightly lower demand for manufacturing products, although capital equipment and heavy machinery demand improved with a stronger orders pipeline. Several manufacturers highlighted ongoing investments in productivity-enhancing technologies, with a focus on GenAI tools. Inventory levels were generally lean and close to historical levels. Nevertheless, an automation equipment manufacturer noted that they have been holding a large order of custom-built industrial robots for a customer that put all automation projects on hold due to elevated costs and inflationary pressures experienced over the past few years.\nAgriculture and Resource-Related Industries\nConditions in the agriculture and resource-related sectors were mixed, similar to the previous reporting period. Logging activity rose slightly on account of stronger domestic demand and more limited supply from international producers of lumber and plywood. Seafood stocks and yield crops, such as those of nuts and apples, remained high and exceeded domestic demand, leading producers to export excess supply. Retail and food service demand for agricultural products was flat to down. Transportation and packaging costs were stable to down, and growers noted that recent rainfall, while providing much-needed water for crops, caused flooding and damage. One contact in the Pacific Northwest noted that more growers have utilized temporary foreign worker programs to address domestic labor shortages in hiring for this year's harvest season.\nReal Estate and Construction\nConditions in the residential real estate market softened a bit relative to the prior reporting period. Demand for single-family homes was subdued amid elevated mortgage rates and limited inventory. Demand for multifamily housing softened in recent weeks while supply grew further as more construction projects were completed. As a result, vacancies rose, rents fell, and landlords offered more concessions to renters. Single-family construction activity was slow as construction costs rose somewhat. However, in Hawaii, rebuilding efforts and government-supported projects bolstered construction activity. Materials and components were largely available, though delays persisted for electrical equipment.\nConditions in the commercial real estate market weakened slightly overall. Office leasing activity was weak, in part due to the elevated costs of renovating old spaces to meet prospective tenants' needs. Demand for industrial space eased somewhat but still remained above pre-pandemic levels. Transaction volumes of commercial property sales fell somewhat. Commercial construction was stable overall, though a contact in California observed some slowing due to high financing costs. A contact in the food services sector reported a shift away from construction of new food service establishments towards renovations of existing properties.\nFinancial Institutions\nActivity in the financial services sector remained largely unchanged. Loan demand was weak across business and consumer categories, with the exception of credit cards. Deposit growth was muted during the reporting period, and competition for deposits was strong. Credit and asset quality were reportedly high, although delinquencies for credit cards and auto loans continued to tick up.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2024/2024-04-su

"Beige Book: National Summary\nApril 17, 2024\nThis report was prepared at the Federal Reserve Bank of Boston based on information collected on or before April 8, 2024. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nOverall economic activity expanded slightly, on balance, since late February. Ten out of twelve Districts experienced either slight or modest economic growth\u2014up from eight in the previous report, while the other two reported no changes in activity. Consumer spending barely increased overall, but reports were quite mixed across Districts and spending categories. Several reports mentioned weakness in discretionary spending, as consumers' price sensitivity remained elevated. Auto spending was buoyed notably in some Districts by improved inventories and dealer incentives, but sales remained sluggish in other Districts. Tourism activity increased modestly, on average, but reports varied widely. Manufacturing activity declined slightly, as only three Districts reported growth in that sector. Contacts reported slight increases in nonfinancial services activity, on average, and bank lending was roughly flat overall. Residential construction increased a little, on average, and home sales strengthened in most Districts. In contrast, nonresidential construction was flat, and commercial real estate leasing fell slightly. The economic outlook among contacts was cautiously optimistic, on balance.\nLabor Markets\nEmployment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment. Most Districts noted increases in labor supply and in the quality of job applicants. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms. Despite the improvements in labor supply, many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Wages grew at a moderate pace in eight Districts, with the remaining four noting only slight to modest wage increases. Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels.\nPrices\nPrice increases were modest, on average, running at about the same pace as in the last report. Disruptions in the Red Sea and the collapse of Baltimore's Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Contacts in several Districts reported sharp increases in insurance rates, for both businesses and homeowners. Another frequent comment was that firms' ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases. On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts\u2014mostly manufacturers\u2014perceived upside risks to near-term inflation in both input prices and output prices.\nHighlights by Federal Reserve District\nBoston\nBusiness activity expanded at a modest pace in recent weeks, and prices rose slightly. Employment was flat overall, but one retailer reported significant layoffs. Convention and tourism activity grew at a robust pace. Home sales increased on a year-over-year basis, marking a turnaround. The outlook ranged from cautiously optimistic to bullish.\nNew York\nOn balance, regional economic activity remained flat. Labor market conditions were solid and continued to normalize as labor supply and labor demand came into better balance. Consumer spending was unchanged after a weak first quarter. Housing markets strengthened, with the spring selling season picking up beyond the seasonal norm. The pace of selling price increases remained modest.\nPhiladelphia\nOn balance, business activity was flat in the current Beige Book period\u2014after declining slightly last period. Employment edged up, despite staffing and recruitment efforts slowing to a crawl. Wage and price inflation continue to moderate; however, housing affordability continues to be a concern. Overall, the outlook is positive, as firms remained optimistic about expectations for future growth.\nCleveland\nDistrict business activity increased modestly, as did employment. Firms anticipated greater ease filling open positions, including those that have been particularly challenging, because of increased labor availability. Wage pressures continued to normalize, and some contacts reduced starting wages for new roles. Cost and price pressures changed little.\nRichmond\nThe regional economy grew at slight pace since our previous report. Consumer spending on retail goods was mixed but spending on travel and tourism was up slightly. Fifth District port activity slowed and was impacted by the collapse of the Francis Scott Key Bridge. Employment growth slowed from a moderate to a modest rate in recent weeks, but wages continued to grow moderately. Price growth also remained moderate.\nAtlanta\nThe Sixth District economy grew modestly. Labor markets continued to stabilize; wage pressures eased. Many nonlabor costs moderated. Retail sales were steady, but consumers remained price conscious. Tourism remained robust. Commercial real estate conditions slowed. Transportation activity was mixed. Manufacturing grew slightly. Loan demand was flat. Energy activity improved.\nChicago\nEconomic activity increased slightly. Employment increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw no change in activity; and manufacturing and construction and real estate activity were flat. Prices and wages rose moderately, while financial conditions were stable. Prospects for 2024 farm income were unchanged.\nSt. Louis\nEconomic activity has continued to increase slightly since our previous report. Prices have increased modestly, as contacts are broadly feeling the pressures of increases in both labor and non-labor costs. The outlook was neutral to slightly optimistic, which is generally unchanged from our previous report, but better than one year ago.\nMinneapolis\nDistrict economic activity grew slightly. Employment grew some, but labor demand was softer. Wage pressures were present but continued to ease, while price pressures ticked up. Consumer spending was mostly flat, and manufacturing slowed modestly. Commercial and residential construction improved slightly. Agricultural conditions were steady at low levels.\nKansas City\nThe District economy expanded modestly. Demand for auto loans and residential mortgages rose as borrowing rates declined. Demand for HELOC also increased as a means to consolidate or refinance household debt. Job gains were modest even as worker availability improved slightly.\nDallas\nThe Eleventh District economy expanded modestly. While activity in services and housing grew, manufacturing output, retail sales, and loan demand declined slightly. Employment growth slowed as wages, input costs, and selling prices grew at a moderate pace. Overall, Texas firms noted an uptick in uncertainty.\nSan Francisco\nEconomic activity continued to grow at a slight pace, employment levels were little changed, and prices and wages rose slightly. Retail sales were unchanged, and demand for services grew modestly. Demand for manufactured products changed little, and conditions in agriculture were mixed. Real estate activity was slightly down. Financial sector conditions were largely unchanged.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2024/2024-04-mi

"April 17, 2024\nSummary of Economic Activity\nThe Ninth District economy grew slightly since the previous report. Employment grew slightly, and labor demand was softer. Price pressures increased, while wage pressures were moderate and continued to ease. Business survey respondents reported that demand increased on balance. Commercial and residential construction improved slightly, consumer spending was mostly flat, while manufacturing slowed modestly. Agricultural conditions were steady at low levels. Activity among minority- and women-owned business enterprises was mixed.\nLabor Markets\nEmployment grew slightly since the last report. Recent surveys suggested that hiring sentiment continued to soften modestly but remained positive overall. Staffing contacts reported slower, but variable, demand for workers; demand for entry-level, low-skill jobs had softened in North Dakota, but demand for skilled and professional workers was still healthy. In Montana, job orders from manufacturers were lower. In Michigan's Upper Peninsula, demand for permanent, full-time jobs slowed, but rose for temporary and seasonal positions. A Wisconsin staffing contact said the current job market was more unpredictable than it ever has been, with some businesses slowing while others were \"ramping up out of nowhere.\" Labor availability continued to improve. A Minnesota contact said businesses were \"reporting less ghosting and more applicants following through with the hiring process.\" Traffic was also higher at job fairs and workforce offices.\nWage increases were moderate overall, but were easing compared with previous levels, according to recent surveys. Staffing contacts said wage pressures were easing, but still evident in high-demand jobs. In Montana, trade workers saw strong wage increases in recent contract settlements, while public unions saw 2 to 4 percent raises. A Wisconsin manufacturer said that \"wage competition has moved from a hard boil to a gentle simmer. It's not the factor that it was 12 to 18 months ago.\"\nPrices\nPrices increased moderately since the last report, which was a slight uptick in the pace of growth. While most respondents to a District business conditions survey reported no change to prices charged in March from a month earlier, more than a third said prices increased. Input price pressures remained greater than final price pressures. A professional services firm indicated that it was approaching a limit in its ability to pass on labor cost increases because customers were pushing back on pricing. Retail fuel prices in District states increased briskly since the previous report. Prices received by farmers increased in February from a year earlier for chickpeas, lentils, chickens, eggs, milk, hogs, and cattle; prices decreased from a year earlier for corn, wheat, soybeans, potatoes, canola, and turkeys.\nWorker Experience\nRespondents to a recent survey of workers, most of whom were employed in social services, were overall satisfied with their work schedule flexibility. About one-third expressed dissatisfaction with their pay. Some were advocating for better pay, working toward a promotion, or looking for another job. Most of those looking for jobs were likely to reject an offer if the pay was insufficient to meet their needs. Many respondents reported experiencing notably high prices in groceries, food away from home, rent, fuel, and electricity. As the health care industry continued to add jobs across most of the District, traveling nurses were reportedly becoming less common, but their \"optimism in the job market remains high,\" said a labor contact. They were said to be receiving attractive sign-on bonus offers from nursing homes, a trend that was categorized as unusual for their budgets.\nConsumer Spending\nConsumer spending was flat overall since the last report, with some variability among sectors. Unseasonably warm weather devastated firms catering to winter tourism. Hotel occupancy in February fell significantly across the District for a second consecutive month. Firms serving other retail segments reported better activity. Many South Dakota retailers reported healthy traffic and customer spending in the first quarter, though many individual owners reported challenges. Still, a contact there said, \"the outlook for most seems better than a year ago.\" A contact with a large retail center in Minnesota said that customer traffic was increasing but \"consumers are not spending quite as much per visit.\" Contacts also reported that consumers were trading down on purchases, particularly in groceries. \"Lots of staples and fewer splurges, and more store-brand or generics. Some trading down in apparel as well,\" said one contact. Vehicle sales saw continued growth. One dealership with multiple locations saw recent sales rise by 14 percent over last year. Airline traffic continued to improve, rising across the board in February at District airports year over year, with some increases of 10 percent or more.\nConstruction and Real Estate\nConstruction activity improved since the last report. Construction starts in the District rose over year-ago levels, according to industry data. A majority of contacts also reported increased project activity, and future sentiment was even more optimistic. Local permitting across the District suggested some lumpiness in activity, even in the same state. Residential construction increased overall, though growth was not seen everywhere. Certain markets, like Minneapolis-St. Paul and Sioux Falls saw sizable increases, while other markets were flat. Multifamily activity slowed in many markets; in March, Minneapolis-St. Paul saw just six permitted units.\nCommercial real estate improved slightly. Industrial vacancy rose slightly in the first quarter, but sources suggested that demand remained healthy, particularly in light of an expected slowdown in new construction. The office sector has \"stabilized,\" according to one source; subleasing fell modestly, and workers were gradually returning to the office. Other commercial markets were mostly steady. Residential real estate continued to improve overall from low levels, with many markets seeing increases in monthly year-over-year sales.\nManufacturing\nDistrict manufacturing activity slowed modestly from the previous report. Manufacturing contacts who responded to a monthly District survey indicated that their sales decreased on balance in March from the previous month. A regional manufacturing index indicated decreased activity in Minnesota and North Dakota in March from a month earlier, while activity increased in South Dakota. A metal fabricator reported, \"We are in the midst of the deepest slow-down in my 35 years with our company.\"\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. Contacts expected decreased farm incomes in the region for the 2024 growing season. Warm weather along with widespread mild drought conditions led to a mixed outlook heading into spring planting. District oil and gas exploration activity was unchanged since the previous report.\nMinority- and Women-Owned Business Enterprises\nActivity among minority- and women-owned business enterprises (MWBE) was mixed. An equal share of contacts reported lower, unchanged, or higher sales. More contacts reported increases in employee headcount over the last four weeks than those who reported reductions. Almost half reported strong hiring demand. A Minnesota contact in the construction industry said they were struggling with high turnover, labor availability, applicant qualifications, and training costs. Nonlabor input prices and average selling prices were mostly flat. Similar shares of contacts expected business activity to increase and decrease in the coming weeks. Unseasonably warm temperatures also affected MWBEs whose businesses depend on winter tourism. The owner of a restaurant in Minnesota shared having to close for the season due to the lack of snow.\nFor more information about District economic conditions, visit https://www.minneapolisfed.org/region-and-community .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2024/2024-04-ph

"April 17, 2024\nSummary of Economic Activity\nBusiness activity in the Third District was steady this period, after a slight decline last period. Employment continued to edge up, with increases in full-time nonmanufacturing jobs offsetting a modest decline in manufacturing jobs. Wage pressures and price inflation continued to moderate, to a still-modest pace for wages and to a still-slight pace for prices. Contacts reported less ability to pass on price increases. Activity in staffing and recruitment was constrained this period, in part because of lower demand for labor. New listings and sales of existing homes improved slightly. Housing affordability remained a concern because home price appreciation and high interest rates persisted. Lower-income households were especially burdened by the high-price, high-rate environment. Expectations for economic growth over the next six months modestly improved, rising among manufacturers and holding steady among other firms.\nLabor Markets\nEmployment continued to edge up in March. Since our February survey, nonmanufacturing firms have reported slight increases in full-time jobs and modest decreases in part-time jobs. Firms in the smaller manufacturing sector continued to report a modest decline in employment. On average, all firms responding to the survey reported little change in the average workweek.\nActivity in staffing and recruitment was muted this period, after a slight increase last period. Staffing contacts have noted less demand for labor, as firms have been choosing to maintain their current labor force. Further, some firms have been more selective in the candidates they choose to hire.\nOverall, wage inflation continued at a modest pace, and firms reported less competitive wage pressures. Among nonmanufacturers, the distribution of reported changes in wage and benefit costs per employee was similar to the distribution in the years before the pandemic. Most firms reported no change, 38 percent reported increases, and 3 percent reported decreases. Our contacts, including several manufacturers, reported that wage pressures continue to moderate across industries and that wage increases are now in the range of 3 to 5 percent.\nPrices\nOn balance, inflation continued at a slight pace. In our March survey, the prices received index for nonmanufacturers rose to a level near its long-run average\u2014associated with a period of modest increases. Over the prior two months, relatively few firms reported increases, and those increases were slight. The prices paid index remained near its long-run average. Some contacts reported being unable to pass on increasing input prices, as customers have become more price sensitive.\nThe prices paid and prices received indexes for manufacturing firms remained below their long-run averages. The manufacturers' prices paid index declined to its lowest reading since May 2020, while the prices received index declined slightly.\nHowever, manufacturers continued to expect prices to increase. The future prices received index rose above its long-run average, while the future prices paid index remained near its average.\nManufacturing\nOverall, manufacturing activity increased modestly during the period, after a slight decline in the prior period. The indexes for new orders and shipments were positive, at levels somewhat below their nonrecession averages.\nExpectations among manufacturers for growth in the next six months were much more widespread in March. Nearly 60 percent of the firms expected increases in new orders and in shipments.\nConsumer Spending\nOn balance, retailers (nonauto) continued to report slight declines in real sales. Despite consistent foot traffic, customers are trading down and purchasing cheaper products during store visits to offset price increases.\nAuto dealers reported slightly higher sales of new cars in the current period and continued strong consumer demand. According to contacts, although the industry's patterns of production, inventory, and sales have nearly normalized following the pandemic, the emerging growth of all-electric vehicles has further disrupted the sector. Affordability continues to be a concern, with high prices and high interest rates, despite promotions from dealers and manufacturers.\nTourism continued to slow slightly from the strong recovery in recent years. Contacts reported having less pricing power and lower demand, despite offering more promotions. Leisure travel continued to fall from high levels, despite a minor uptick in March due to spring break. The recovery continued in business travel.\nNonfinancial Services\nOn balance, nonmanufacturing activity declined slightly, following slight growth in the prior two periods. The sales/revenues index fell to a near-zero reading, from a modest increase, while the index for new orders remained slightly negative. A building equipment contractor reported that customers are deferring projects and ordering minimum quantities because of tighter budgets.\nCurrent sentiment of firms appeared to deteriorate again. The firms' perceptions of general activity for the region fell further into negative territory in March, and the index of general activity at the firm level turned slightly negative. In contrast to manufacturers, expectations among nonmanufacturing firms for their own growth in the next six months changed little and remained well below historical averages.\nFinancial Services\nThe volume of bank lending (excluding credit cards) continued to grow slightly during the period (not seasonally adjusted), unchanged from the last period and down from the moderate pace of one year ago.\nDistrict banks reported moderate growth in commercial real estate lending and modest growth in home mortgages. Volumes of home equity lines held steady, as did consumer lending (other than auto and credit cards). Auto lending edged lower, and commercial and industrial lending fell moderately. Credit card volumes continued to fall back\u2014this time slightly, after significant seasonal declines last period.\nBanks and business clients continued to report stringent lending criteria, which have hampered some business plans. Banking contacts continued to report good credit quality, and delinquencies remained low. However, contacts from many sectors noted that lower-income households are struggling with high prices and high interest rates. Contacts reported upticks in repossessions and delinquencies on auto loans, especially for low-income households.\nReal Estate and Construction\nBrokers reported that existing-home sales edged up slightly but remained at historically low levels. The inventory of for-sale properties improved slightly through February; however, contacts were uncertain whether listings would continue to rise through the spring buying season. Meanwhile, it remains a seller's market, with sales prices continuing to climb. Contacts continued to report multiple offers, cash sales, buyers paying above the asking price, and homes selling quickly, as evidenced by reduced time on the market.\nNew-home builders continued to report steady sales. Builders noted that the ongoing pent-up demand for housing and the historically low inventory of existing homes for sale continued to bolster market demand for new construction. Some builders are constructing more speculative houses\u2014confident that the pent-up market demand will spur buyers when their houses are completed.\nIn nonresidential markets, leasing activity and transaction volumes continued to decline slightly, especially in the office subsector, where investors are waiting for discounts on distressed properties.\nNonresidential construction activity slowed slightly in the current period. One contractor noted some softening in the construction trades recently, and another noted that construction bidding is significantly lower. Many contacts noted that projects have been deferred in anticipation of lower interest rates. Some firms continued to be busy, despite lower backlogs, and have noticed some growth in the planning and engineering phases of public infrastructure projects.\nFor more information about District economic conditions visit: https://www.philadelphiafed.org/regional-economy .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

/beige-book-reports/2024/2024-04-kc

"Beige Book Report: Kansas City\nApril 17, 2024\nSummary of Economic Activity\nThe Tenth District economy expanded slightly over the past month. Job gains were modest and concentrated in service sectors. Employers reported that both wage and non-wage labor costs rose, but more slowly than in past years. Although worker availability continued to improve, employers indicated the performance of new low-skill hires was below their expectations and past experiences. The number of foreign-born workers available for hire rose in the District, yet only a few contacts indicated that a greater number of immigrants translated to more hiring activity. Consumer spending increased modestly, with long-subdued auto sales picking up as borrowing rates moderated. Many contacts noted an increase in demand for home equity lines of credit as a means to cash-out equity and pay off debt. The supply of housing was reported to have increased, slowing the pace of housing price growth. Business activity expanded slightly according to most contacts, with notable gains in productivity reported across sectors. However, high credit costs and staffing issues suppressed hiring and capital reinvestment plans among small, minority- and women-owned businesses. Energy activity continued to decline due to low price expectations. Agricultural bankers reported mild deterioration in farm borrower liquidity and gradual softening in farm loan repayment rates.\nLabor Markets\nOverall hiring activity rose slightly across the District, as moderate job growth among service companies was offset by mild decreases in employment at manufacturing firms. Business contacts reported wide differences in their satisfaction with recent hires across job and skill types. Most contacts reported lower levels of satisfaction and worker performance among new low-skilled hires as compared to higher-skilled workers. The number of foreign-born workers available for hire rose in the District. However, few contacts indicated that immigrant workers were a notable source of new labor supply, as barriers to hiring were difficult to overcome. Non-wage benefit costs grew at a modest pace. Most employers indicated increases in healthcare benefit costs were smaller than in recent years. However, several contacts noted that recent enhancements to non-wage benefits\u2014such as, subsidized childcare, higher contributions to retirement plans, and expanded coverage for healthcare\u2014were \"sticky\" labor expenses, not likely to be reduced. As labor market tightness continued to ease, business contacts reported little willingness to provide mid-year wage increases for employees. Still, wages continued to rise at a moderate pace.\nPrices\nManufacturing businesses reported the price of finished goods grew at a modest pace over the last month. However, contacts reported that price pass-through remains a challenge as the price of raw materials continued to grow at a robust pace. Both manufacturing and services contacts indicated they expect moderate price pressures over the next six months. Several business contacts reported a significant increase in their operating expenses, highlighting notable growth in business insurance costs. Contacts anticipate greater difficulty passing along those operating costs to customers, thus further compressing profit margins.\nConsumer Spending\nConsumer spending increased modestly, but reports were mixed across categories of spending. Retail spending softened slightly, but spending on non-discretionary essential items was reportedly strong. Restaurants indicated spending increased notably from previous declines, but hotel bookings and recreation spending was mostly unchanged. Auto dealers reported a moderate increase in sales following a prolonged period of declines over the past year. Businesses expected slight declines in revenue growth over the next six months due to ongoing price sensitivity among consumers.\nCommunity Conditions\nHigh credit costs and staffing issues suppressed hiring and capital investment plans among small, minority- and women-owned businesses. Despite some broader easing of labor market tightness, the limited availability of workers led to heightened business uncertainty and reduced operating hours among smaller businesses. One contact reported it was not unusual for them to hear of small businesses hiring five people, having three show up on the first day, and only one remaining by the end of the week. There were also reports of increasing small-business owner burnout from trying to make up for staffing and revenue shortages. While many contacts reported businesses have had success in obtaining grants, the help has often been temporary with those businesses either coming back for more assistance or closing after the funding ran out.\nManufacturing and Other Business Activity\nBusiness activity expanded slightly over the last month, with manufacturing contacts reporting a modest contraction, offset by slight expansion reported among service contacts. Businesses across most sectors reported notable gains in productivity in recent quarters, driven by several factors: lower worker turnover, greater utilization of technology, and enhanced worker training efforts. Most manufacturing contacts indicated a continued, or growing, interest in investing in labor-saving or productivity-enhancing technologies. Specifically, manufacturing firms expressed an elevated interest in automating costly labor-intensive skills like welding and metal fabrication. In services, consumer-oriented businesses expressed limited ability to invest in labor-saving technologies. In contrast, contacts in professional business services sectors highlighted the use of artificial intelligence (AI) as a strategy for improving business productivity. Specifically, contacts in the marketing industry reported notable productivity gains for rudimentary time-intensive tasks and technology contacts report AI is replacing entire teams of software engineers, resulting in lower costs and greater profitability.\nReal Estate and Construction\nIn residential real estate, the inventory of single-family homes for sale was significantly higher in most District states. Ongoing construction of multi-family housing also moderately increased the availability of housing. However, contacts indicated development activity for new multi-family housing remains at a multi-year low due to subdued expectations for rent growth that challenge the profitability of new construction. Though growth in housing prices slowed, reports of robust growth in property insurance premiums were widespread. Many contacts noted a modest increase in demand for home equity lines of credit (HELOC) as a means to cash-out equity in order to pay off auto debt, credit card debt, and other non-bank loans.\nCommunity and Regional Banking\nLoan demand at District banks was unchanged from the previous month. While high interest rates muted demand for commercial deals in recent months, residential mortgage demand increased slightly as prospective borrowers have become more accustomed to the prospect of higher interest rates compared to past years. Demand for mortgages was further buoyed by slight declines in mortgage rates in recent months. Credit standards were unchanged across loan types. More contacts expected credit quality to remain stable over the coming six months, but concerns about the performance of maturing commercial real estate deals remained. Bankers reported moderately stronger deposit levels and noted that deposit rates stabilized.\nEnergy\nTenth District energy activity continued to decline slightly. The number of active rigs in the District fell only modestly, but firms do not expect a rebound in drilling activity as near-term price expectations are lower than the price needed for a substantial drilling increase. Revenues, profits, and capital expenditures continued to fall as drilling for oil remains profitable for the average District firm, but drilling for gas is still unprofitable. Despite the subdued outlook for production, firms continued to increase employment to make up for past shortfalls in headcount and expect the number of jobs and employee hours to increase somewhat in the next six months.\nAgriculture\nAgricultural economic conditions in the Tenth District continued to moderate through the end of March. Agricultural bankers reported a mild deterioration in farm borrower liquidity and a gradual softening in farm loan repayment rates. Crop prices were subdued, and some contacts reported slightly higher instances of carryover debt than a year ago. Cattle prices remained strong, however, and provided ongoing support to the sector. Elevated production expenses and high financing costs remained ongoing concerns for all types of operations. Drought was also cited as an issue in some areas of the region. Farm real estate values increased at a slower pace compared to recent months, but valuations were strong despite the moderation in the farm economy.\nFor more information about District economic conditions visit: http://www.KansasCityFed.org/research/regional-research .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2024/2024-04-ri

"April 17, 2024\nSummary of Economic Activity\nThe Fifth District economy grew slightly since our previous report. On balance, consumer spending was flat to up slightly this period. Reports from retailers were mixed as some shops and restaurants reported declines while others, namely furniture and hardware stores, reported increased sales. Spending on travel, on the other hand, picked up as hotel occupancy increased and future bookings were strong. Port activity declined slightly, and the collapse of the Francis Scott Key Bridge led to the shutting down of traffic coming in and out of the Baltimore harbor and main port terminal and the diversion of shipments to other East Coast ports.\nLabor Markets\nEmployment in the Fifth District grew at a modest pace in the most recent reporting period. Contacts continued to report difficulty finding workers but mentioned some improvement. A sandwich shop reported that it was still very difficult to find labor, but the applicant pool was increasing, and they were experiencing less attrition. An office equipment wholesaler reported that \"good\" workers were hard to find, but when they were found, they were hired regardless of there being an open position. There was still difficulty finding workers in the trades. An HVAC company, for example, could not find skilled or trainable workers and was not optimistic about this changing due to a lack of a reliable training sources. Wage growth remained moderate.\nPrices\nPrices continued to grow at a moderate annual rate this reporting cycle. According to our most recent surveys, growth in prices received by service providing firms was little changed as growth has remained around four percent for several months. Growth in prices received by manufacturers remained between two and three percent. Some contacts noted that the higher cost of borrowing as well as higher energy costs have led to increased operating costs. Increasing labor costs, however, were the most cited factor leading to price growth remaining elevated.\nManufacturing\nFifth District manufacturing activity declined modestly in the most recent period. A precision sheet metal manufacturer reported that new orders barely reached a level where they didn't have to cut hours. Several contacts mentioned interest rates negatively affecting their business. For example, a cabinet manufacturer reported that clients could no longer wait for interest rates to drop, so they were cancelling projects. A pump and commercial equipment producer reported a slowdown in sales because their customers delayed capital expenditures until interest rates decline. Other contacts mentioned increased cost pressure from non-production services such as legal, medical, and other insurance services.\nPorts and Transportation\nTotal loaded container volumes at Fifth District ports were down slightly this period. Import volumes increased mainly due to retail restock of consumer goods. Spot rates for Asia to East Coast decreased slightly this period but remained elevated compared to last year. Both imports and exports of rolling stock were down this period. Airfreight volumes remained flat and shipping rates continue to be low due to overcapacity. The March 26th collapse of the Francis Scott Key Bridge led to the temporary closure of the main Baltimore port terminal with an uncertain timeline to reopen the shipping channel. Ships that were due to come into the port were diverted to other East Coast ports. Businesses we talked to said they can manage a short-term disruption but if the effort to reopen the channel takes longer, they then expressed greater concerns about lead times and increased costs.\nTrucking demand continued to increase slightly because of retail restocking but still reflected lower seasonal volumes. In the truckload segment, industry oversaturation pushed rates down, while in the less-than-truckload segment, firms were able to negotiate flat to slight increases in contract rates due to decreased capacity. Driver turnover remained at the industry average and several respondents relied on in-house training programs to augment the labor pipeline. However, positions requiring some specialized skills, such as mechanics, were still difficult to fill. There were no significant backlogs on new equipment and parts availability improved.\nRetail, Travel, and Tourism\nRetail spending was little changed in recent weeks. Several retail and restaurant contacts noted that customer traffic was unseasonably low. One shop owner located in a pedestrian market said that rainy weather, particularly on the weekends, hurt their sales. A furniture store and a hardware store, on the other hand, saw an increase in sales and foot traffic and attributed it to the start of the spring season when the housing market starts to pick up and people start working in and on their yards. Hotel contacts reported only a slight increase in occupancy in recent weeks but expected things to pick up soon as they were seeing strong future bookings for the next several months. An airport reported increased passenger traffic in recent months, particularly for leisure travel.\nReal Estate and Construction\nIn residential real estate, respondents noted that so far it hasn't been a robust spring market; however, there remained pent up demand in the housing sector. Total closed sales dropped month-over-month. Days on market increased slightly but was still below the historic average; housing inventory remained tight. Listing prices were flat, but many homes were still selling above asking price. Single family homes for first time home buyers remained in short supply. Construction cost increases continued to moderate in the Fifth District. Demand for home improvement projects declined considerably from this time last year.\nIn the Fifth District, overall market activity in commercial real estate improved slightly this period. Retail and industrial/flex space leasing remained robust with higher rental rates and low vacancy rates. In the office sector, there was greater leasing activity related to firms looking for more efficient space and moving to suburban locations. However, an increasing number of commercial office buildings were unable to qualify for refinancing this period. Commercial real estate sales slowed, and capital markets activity was negligeable, which resulted in declining commercial real estate values. Commercial contractors cited a lack of qualified candidates to fill positions as well as rising material and labor costs.\nBanking and Finance\nMost financial institutions reported that they are observing a slight increase in loan demand within their business and commercial real estate loan portfolios. One banker noted that this slight increase was due to \"pent up\" demand and businesses were only borrowing for immediate business needs. Deposit levels continued to decline modestly with competition high for any available deposits in the marketplace. Institutions that were once reluctant to have deposit specials began offering these promotions to maintain their balances. Loan delinquency rates remained stable from the last report with no changes noted in customer credit quality.\nNonfinancial Services\nNonfinancial service providers continued to report that demand for their services as well as revenues remained stable. An engineering firm stated that they were issuing an average number of proposals for work, but less were being accepted because clients were hesitant to move on any new projects. A law firm noted that clients' anticipation of lower interest rates later in the year was slowing any new real estate transactions, or other transactions impacted by interest rates, by their clients. Wages and workforce issues were less of a challenge with both continuing to show modest stabilization.\nFor more information about District economic conditions visit: https://www.richmondfed.org/research/data_analysis .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2024/2024-04-at

"April 17, 2024\nSummary of Economic Activity\nEconomic activity in the Sixth District grew modestly. Labor markets eased further, and wage pressures moderated. Many nonlabor cost increases stabilized, while the cost of others, like food and insurance, continued to rise. Consumer spending was steady, but sales of discretionary items slowed. Leisure and business travel remained healthy. District housing inventories grew, and affordability improved somewhat. Commercial real estate activity slowed. Transportation demand remained mixed. Manufacturing grew at a modest pace. Lending was flat, on balance. Activity in the energy sector increased somewhat since the previous report.\nLabor Markets\nOn balance, the pace of hiring grew modestly over the reporting period. A few firms slowed hiring in response to weaker demand and were downsizing through attrition. Most contacts reported that it was easier to fill open roles but there were pockets of shortages noted across the region, varying widely by location and industry. Such shortages had firms focused on workforce training and strategically building pipelines for talent; this was especially true among businesses facing a wave of retirements. Current or expected labor shortages continued to drive the search for efficiencies and cost savings. Most firms reported investing in automation, and several said they were exploring the use of AI to drive efficiencies and free up workers for other tasks.\nMost contacts indicated that wage pressures continued to ease, and wage growth was more closely aligned with historical averages.\nPrices\nMost nonlabor cost increases stabilized, though the stabilization was uneven across inputs. Transportation costs, along with some commodities like lumber and steel, saw prices hold or even decrease. Construction delays, however, added to the final cost of projects. Food prices continued to rise, and increases in insurance premiums were notable. Pricing power was characterized as \"lumpy,\" with some firms maintaining the ability to pass through costs while others, particularly retailers and restaurants, struggled to preserve margins. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit cost growth increased in March to 2.8 percent, on average, from 2.6 percent in February; firms' year-ahead inflation expectations for unit cost growth were relatively unchanged in March at 2.4 percent, on average, from 2.3 percent in February.\nConsumer Spending and Tourism\nRetailers continued to report a normalization of consumer demand as compared with pandemic levels; \"flat is the growth in 2024 for retail.\" Contacts noted that consumer demand was generally healthy, but discretionary purchases declined, and sales reflected ongoing price sensitivity by shoppers. Auto dealerships described activity as stabilizing\u2014inventory levels met demand and manufacturers offered incentives to boost sales.\nTourism and hospitality contacts reported that strong spring break travel was in line with expectations. Appetites for cruising increased, with several Florida ports reporting strong passenger counts. Business travel continued to improve. Industry contacts remain optimistic about activity for the balance of the year.\nConstruction and Real Estate\nThough home ownership affordability improved amid lower mortgage rates, home price appreciation increased or stabilized in most markets, consistent with national trends. Rising insurance premiums and HOA fees in coastal markets remained a challenge for homeowners on fixed incomes. While still below historic norms, rising existing home inventory, new subdivision developments, and an increase in spec-home availability in the new home market led to higher inventory levels. Housing inventories in southwest Florida increased at a sharper rate than the rest of the District due to weaker demand and the lingering effects of Hurricane Ian.\nCommercial real estate (CRE) conditions were mixed. Office and multifamily sectors cooled as occupancies declined. Oversupply in the multifamily and industrial sectors weighed on market conditions, as sizable amounts of new construction were delivered. Firms reported that imprecise CRE appraisals were leading to valuation accuracy challenges. Like the rest of the nation, Sixth District markets will contend with rising CRE loan maturities in 2024.\nTransportation\nTransportation activity remained mixed. Railroads reported significant year-over-year increases in intermodal shipments and overall traffic. Third party logistics contacts noted that both demand and shipping rates appeared to have bottomed out following what was characterized as an 18-month freight recession. Cargo volumes at District ports were generally below 2023 levels and are expected to slow further as freight normalizes down from inflated levels in 2022. Freight forwarding companies reported declines in volumes, revenue, and profits as customers worked through \"bloated inventories.\" Some transportation contacts expect conditions to improve in the second half of 2024.\nManufacturing\nManufacturing activity grew modestly since the previous report. Most firms reported stable to slightly growing demand, with some optimism for stronger growth later in the year. Manufacturers of products tied to government and infrastructure projects saw higher demand. However, a few producers of consumer goods reported some softening. The Manufacturing Sector Report of the Atlanta Fed's Business Inflation Expectations Survey showed that for the majority of respondents, demand remained at or below \"normal\" levels but found that sales growth is mostly positive.\nBanking and Finance\nLending at District financial institutions remained relatively flat amid continued contraction in most consumer loan segments. One notable exception was home equity lines of credit, which have steadily increased in originations and utilization. Commercial real estate loan originations, including multifamily, experienced minor upticks since the previous report. The allowance for loan and lease losses continued its slow but steady increase as economic uncertainty drove banks to adjust reserves. Cash balances at financial institutions also increased slightly, consistent with broader industry trends. Large time deposits experienced continued growth but may be showing early signs of flattening as institutions start to lock-in anticipated interest rate cuts by the Federal Reserve. Borrowings declined over the period as banks paid down this more expensive source of funding.\nEnergy\nMost energy contacts described an uptick in activity since the previous report, when weather-induced outages had reduced oil and gas production, refining, and chemical manufacturing capacity. Since then, oil and gas production climbed, a trend that is expected to continue over the medium term as global demand grows. Additionally, refiners reported very strong demand and utilization rates, while chemical manufacturing contacts noted flat to steady demand. Utilities contacts noted continued investment of billions of dollars over the next several years, largely attributed to power infrastructure for emissions reduction, computing capacity, and data center projects across the southeast.\nAgriculture\nAgricultural conditions showed modest improvement in recent weeks. The cattle market saw continued resilience as limited supply kept prices high. Record inventories of milk depressed prices, but demand for dairy was strong and growing. Some increase in demand for poultry led to more optimism in the market, but many producers struggled as significant export restrictions remained in place. There was a modest increase in demand for lumber, and expectations are for steady sales going forward. Florida growers reported high demand for citrus, but some softness in the row crop market.\nFor more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

/beige-book-reports/2024/2024-04-sl

"Beige Book Report: St Louis\nApril 17, 2024\nSummary of Economic Activity\nEconomic activity across the Eighth District has continued to increase slightly since our previous report. Labor market conditions were generally unchanged. Inflation pressures increased modestly, although firms continue to note higher costs are compressing profit margins as they are unable or unwilling to increase prices to customers. Reports on consumer spending indicate a modest uptick, with some contacts attributing stronger-than-expected activity to an earlier Easter holiday. The outlook among contacts was neutral to slightly optimistic, which is generally unchanged from our previous report, but better than one year ago.\nLabor Markets\nEmployment has remained unchanged since our previous report. The labor market continues to be tight, particularly in rural areas and in the manufacturing and construction sectors. In contrast, banking and professional services contacts have seen upticks in applicants and less turnover from a year ago. Multiple contacts reported adjusting operating hours to reduce their overall wage bill and/or total headcount.\nWages have risen slightly since our previous report, with most contacts reporting a small increase in labor costs. In rural areas of the District, wage disparities between smaller businesses and national firms are an ongoing challenge as smaller firms are struggling to match the higher wages. For example, a food processing firm increased their labor budget by 6 percent to cover merit-based increases to prevent labor turnover. Large District employers continue to reach contract agreements with unions. A large St. Louis distributor reached a contract agreement with its union employees, and St. Louis school district employees were able to secure the largest wage increase in twenty years. However, a pilot union took steps toward a strike.\nPrices\nPrices have increased modestly since our previous report, as contacts are broadly feeling the pressures of increases in both labor and nonlabor costs. Small business contacts reported profit margins compressing on higher costs and an inability to raise final prices for consumers. A restaurant contact reported that even though food and labor costs have risen recently, final prices have not yet been adjusted. A textiles contact echoed this sentiment, but indicated the firm still lacks pricing power over brands and retailers; so, increases in final prices have not kept up with increases in costs. A retail contact reported that her small business insurance costs have doubled. In a similar vein, an insurance agent reported that homeowners are seeing increases in annual insurance premiums of 20 to 25 percent.\nConsumer Spending\nConsumer spending has risen modestly since our previous report. Restaurant and hospitality contacts have generally seen stronger-than-expected business activity, while automotive and retail contacts have generally reported that sales did not meet expectations. A District restaurant contact noted that consumer spending is increasing marginally as delivery services are boosting sales. A fast-food contact noted customers were showing preferences for specialty products, increasing dollar sales per customer. A St. Louis hotel contact reported that, while overall activity is higher relative to last month, activity in the business travel segment has fallen short of expectations. A small clothing retailer reported strong growth in sales, which they attributed to an earlier Easter holiday. A Little Rock boat retailer stated they are cutting profit margins to sell their products due to a lack of demand and plentiful inventory. A Kentucky auto dealer noted that so far this year both new and used car sales have been low. However, they're optimistic activity will increase in the later spring and summer months on expectation of lower auto loan rates.\nManufacturing\nManufacturing activity has slightly increased since our previous report. Firms in Arkansas and Missouri reported a modest increase in inventories and delivery lead times. Reports of supply chain disruptions increased slightly. One contact noted the Red Sea shipping disruptions have resulted in higher prices, and another firm noted a 2-week delay on a large equipment order due to the bridge collapse in Baltimore. A brewery contact noted that their suppliers have excess capacity and are waiving some fees to attract new business. A food manufacturer reported revenues and volumes were down in the first quarter due to smaller orders from restaurants, but private label grocery store orders remain strong.\nNonfinancial Services\nActivity in the nonfinancial services sector has improved slightly since our previous report. The transportation outlook was largely unchanged. Airports across the District remain optimistic that business and leisure travel will remain strong during the remainder of the year. Smaller trucking firms reported financial challenges stemming from lower prices and volumes, which has made it harder to compete with larger firms. Across the District, healthcare contacts spoke about persistent shortages of medical supplies and drugs. An Arkansas funeral services contact reported fewer traditional funerals and more cremations. They attributed this switch to lower-cost services to a growing number of uninsured or underinsured individuals at time of death.\nReal Estate and Construction\nResidential real estate activity has increased at a moderate pace. Real estate contacts noted signs of an early start to the spring homebuying season. District bankers reported that mortgage loan volumes in February and March were higher than the same period last year. A renovation and remodel contact noted a strong pipeline of projects, although with some shift toward lower-cost improvements.\nCommercial construction activity has been relatively unchanged. An architect in the Little Rock area reported their firm is busier than ever, with projects coming from public funds. In contrast, traditional commercial work has slowed significantly. A construction contact noted demand for transportation, municipal, and lodging projects remains high, while demand for retail and higher education construction projects has slowed. Similarly, an engineering contact noted that so far this year is shaping up to be stronger than expected and the outlook is improving.\nBanking and Finance\nBanking conditions have been generally unchanged since our previous report. Contacts reported little change in deposits, but the market remains competitive. Total loan growth has decreased slightly as banking contacts reported being more selective and focused on maintaining existing relationships. Commercial and industrial loans have decreased. However, the pace of consumer lending growth continues to accelerate. A large retailer noted a considerable uptick in credit card usage, and banking contacts noted customers continue to open new lines of credit. Delinquency rates remain low, but some contacts noted higher delinquencies on auto and small business loans.\nAgriculture and Natural Resources\nDistrict agriculture conditions have remained unchanged since our previous report. Total acres planted as of the end of March are about the same as this time last year. However, contacts in Arkansas said they're closely watching weather over the next few weeks; if conditions remain wet, that will limit future plantings and may force producers to plant later than is ideal. The distribution of crops is expected to shift: The number of acres of corn planted decreased, especially in Arkansas and Mississippi, while plantings of cotton, rice, and soy increased. For corn and cotton, this marks a return to 2022 acreage. Several District contacts reported feeling price pressures due to higher travel costs of bringing in H2A visa labor. Contacts also noted difficulties accessing farming equipment due to high costs and delays, particularly for repairs.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2024/2024-04-bo

"April 17, 2024\nSummary of Economic Activity\nBusiness activity expanded at a modest pace in recent weeks, prices rose slightly, and employment was flat overall. Convention and tourism activity grew at a robust pace, but retail sales increased only modestly. Manufacturers reported slight revenue growth, while software and IT services firms had flat revenues recently despite strong year-over-year growth in sales. Residential home sales increased by moderate margins from a year earlier, the first such increase in over two years. Activity in the commercial real estate sector\u2014including construction\u2014picked up slightly, on balance. The sector's outlook also improved a bit, although the risk of financial distress for large office buildings remained elevated. In other sectors, contacts ranged from cautiously optimistic to bullish concerning the outlook, largely in line with the strength of their own recent results.\nLabor Markets\nEmployment was unchanged overall, but labor market conditions were mixed. One large retailer enacted substantial layoffs in a bid to boost profitability, but no other contacts (in any sector) reported layoffs. Restaurant employment increased modestly on the strength of sustained demand and increased supply. Tourism-related employment in greater Boston was flat as firms struggled to reach desired staffing levels. Employers on Cape Cod also faced challenges filling jobs, as rising housing costs priced more workers out of the Cape. Software and IT employment increased slightly, and manufacturing employment was flat or down slightly where there was attrition. Wages increased at a moderate pace on average. Contacts did not expect major changes in labor market conditions moving forward, although tourism contacts hoped that an upcoming career fair would help attract more workers for the busy summer season.\nPrices\nPrices increased only slightly overall. Retailers reported modest input price increases, and one remarked that recent shipping disruptions overseas had not yet affected its suppliers. Hotel room rates in greater Boston were stable recently, net of seasonal factors, and were up moderately from a year earlier, marking a notably slower pace of growth compared with 2023. Nightly room rates on Cape Cod were flat compared with last year. Software and IT services prices were stable. Manufacturers mostly held prices steady, but some reduced their output prices (either slightly or moderately) in response to declining input prices; those experiencing cost increases, by contrast, reported that they had raised prices moderately. For the most part, the outlook called for slow further price growth moving forward. However, one manufacturing contact, having held prices steady over an extended period, was considering a significant price increase to compensate for accumulated cost pressures.\nRetail and Tourism\nFirst District retail and tourism contacts reported a moderate upswing in sales in the first quarter of 2024 from late 2023, net of seasonal factors. An online retailer boosted its market share and experienced modest revenue growth despite sluggish industrywide performance. Airline passenger traffic through Boston increased at an above-average pace in recent months, with total passengers now exceeding pre-pandemic levels. Domestic travel remained below pre-pandemic levels because of the incomplete recovery of business travel, but growth in international travel more than compensated. Hotel occupancy in greater Boston increased at a strong pace, exceeding seasonal norms, fueled in part by robust convention activity and sporting events. On Cape Cod, retailers and hoteliers said revenues were on par with one year earlier, a modest improvement from the previous report. The outlook for tourism and convention activity in 2024 remained very bullish, and Cape Cod hotel bookings for the remainder of the year looked on track to match those from 2023. In contrast, retailers were only cautiously optimistic.\nManufacturing and Related Services\nManufacturing revenues were about flat on balance, with half of contacts reporting moderate gains in sales over the cycle and the other half experiencing moderate losses. Capital expenditures were mostly unchanged but on balance exceeded typical levels, as two firms were in the process of expanding or upgrading their plants. Contacts were uniformly optimistic for the remainder of 2024, projecting steady to moderately higher sales moving forward; in one case, however, that still meant that total sales in 2024 would fall short of their 2023 levels. The positive forecasts were based largely on firms' own recent demand trends, although one contact cited the prospects of productivity gains from AI and expected cuts in the federal funds rate as additional sources of optimism.\nIT and Software Services\nContacts in IT and software services said that demand and revenues were mostly stable in recent months. On a year-over-year basis, revenues increased by moderate to large margins for all firms. Those latter growth rates were about on par with those of the previous quarter and exceeded expectations in one case. Furthermore, the growth was attributed to factors that had boosted real demand, such as the transition to subscription-based business models. Capital and technology spending was unchanged, and no future changes were anticipated. Contacts expected demand to hold fairly steady at strong levels in the next quarter. One contact noted that the time required to close deals had increased of late, although the implications for their revenues were not yet clear.\nCommercial Real Estate\nCommercial real estate activity in the First District increased slightly on balance since February. Industrial leasing activity slowed a bit due to a lack of inventory, and industrial rents faced slight upward pressure. In the office market, leasing activity held mostly steady at a slow pace, but one Boston contact detected a modest increase in tenant demand; office rents were mostly stable but fell slightly for lower-quality spaces. Leasing activity strengthened modestly for retail properties, with deals concentrated in restaurant- and grocery-anchored centers. Construction activity picked up a bit, primarily in the industrial market but also for retail and hospitality projects. Contacts noted an uptick in refinancing activity for office properties with maturing loans, although borrowers often had to add equity. The investment sales market was nonetheless still \"frozen,\" as investors waited for interest rates to come down, and large banks remained on the side lines. The outlook improved modestly, as contacts expected leasing activity to either hold steady or increase by late 2024, including for small-to-medium sized office buildings. Contacts remained concerned that certain office properties faced elevated foreclosure risks.\nResidential Real Estate\nFor the first time in over two years, residential home sales increased on a year-over-year basis in all First District states that were contacted (Connecticut furnished no data). Closed single-family sales increased at a moderate pace on average (from February 2023 through February 2024), led by robust gains in Vermont, Maine, and Rhode Island. Condominium sales fared even better than single-family sales over the same period, with strong overall growth and very large increases in those same three states. Massachusetts posted only modest increases in home sales, although greater Boston had above-average results within the state. Contacts attributed the stronger sales to a combination of recent declines in mortgage rates and increases in property listings but emphasized that inventories remain well below desired levels. Home prices increased at a strong pace from one year earlier, similar to what was reported last time. Contacts were optimistic for a strong spring buying season, provided the tight inventory situation showed further improvement.\nFor more information about District economic conditions visit: https://www.bostonfed.org/in-the-region.aspx .\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"