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Atlanta

/beige-book-reports/2019/2019-09-at

"September 4, 2019\nSummary of Economic Activity\nSixth District business contacts indicated that economic activity softened slightly during the reporting period. Many firms noted persistent challenges with filling positions. Annual wage increases remained between 3-4 percent, on average, and businesses across the District continued to report increased nonlabor input costs. Tourism activity during the summer season was mixed. Retail sales levels remained steady since the last report, and vehicle sales increased. Residential real estate sales and construction remained below year-ago levels, and home prices appreciated modestly. Commercial real estate contacts reported that leasing and sales activity remained steady throughout the District. Manufacturers noted a decrease in overall business activity since the previous report. Conditions at financial institutions were stable, although consumer loan growth continued to decline.\nEmployment and Wages\nReports of challenges finding, hiring, and retaining workers persisted for various labor market segments. Several business contacts continued to share that their inability to secure labor was holding back growth, encouraging investments in automation, and pushing a few firms to acquire competitors as a means of gaining labor resources. Employers continued to collaborate with workforce development organizations and schools to enhance curricula at vocational centers and to create pipelines of potential employees. A number of contacts expressed that hiring and retention costs, primarily those associated with training programs, were rising. Employers continued to report that while they had increased wages to attract and retain workers, efforts to improve employee benefits offerings, enhance work arrangement flexibility, eliminate some drug testing, and reduce experience requirements remained prominent attraction and retention tools.\nAnnual wage increases, on average, remained between 3-4 percent, though several employers noted that, in some cases, overall compensation was accelerating at a fast clip as healthcare costs were rising. Wage growth was concentrated in technology, healthcare, construction, and lower-skilled hourly positions. Business contacts continued to report that demographic shifts from older experienced workers to younger inexperienced workers were compressing salary budgets.\nPrices\nBusinesses across the District continued to report modest increases in nonlabor input costs. Firms affected by tariffs were typically successful in passing along increases and noted some success in holding on to margins. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in August. Survey respondents indicated they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nWhile retail sales levels remained steady since the last report, District retailers noted heightened uncertainty among consumers due to the geo-political environment; they also expressed concerns about whether this uncertainty will impact consumer confidence and spending behavior during the upcoming holiday season. New vehicles sales levels increased month-over-month in July with light trucks and SUV units driving the increase; sales of used vehicles also rose.\nDistrict tourism activity was mixed, and hospitality contacts reported an uptick in uncertainty since the last report. On balance, the summer season was softer than expected with a year-over-year decline in hotel occupancy and average daily rates in Louisiana and Florida. Contacts in Alabama and Georgia reported strong leisure travel and business conference bookings.\nConstruction and Real Estate\nAlthough a healthy labor market and declining mortgage rates sustained housing demand throughout the District, sales remained below year-ago levels in several markets. Supply constraints, particularly in more affordable price segments, remained a primary impediment to stronger sales. Additionally, new home construction remained down from year-ago levels. Although very few markets experienced a decline in home values, the rate of home price appreciation continued to moderate in most markets as the pace of home sales slowed. Moderate price pressure coupled with declining mortgage rates helped increase housing affordability.\nDistrict commercial real estate contacts reported leasing and sales activity remained stable since the previous report. Overall, rents continued to grow and vacancy trended downward at a modest pace. However, some contacts noted slowing rent growth and greater concessions in the multifamily, retail, and office segments. Despite increasing costs, contacts reported strong construction activity. Robust multifamily construction continued to dominate specific metro submarkets leading to increased concerns of possible oversupply in a few areas. Industry participants noted continuing strength in the industrial sector. Contacts reported that capital for most projects was readily available via banks and non-bank entities.\nManufacturing\nManufacturers reported a decrease in overall business activity since the previous reporting period. A number of firms indicated that new orders and production levels declined, while finished inventory levels continued to rise. Purchasing managers cited that supply delivery times were slightly longer than normal and a few contacts indicated that tariffs were impacting business activity. Expectations for future production levels decreased, with just over one quarter of contacts expecting higher production levels over the next six months.\nTransportation\nDistrict transportation contacts indicated that activity was generally consistent with the previous report. Ports experienced increases in container traffic and bulk and break bulk cargos. Logistics contacts reported continued growth in e-commerce shipments. Trucking contacts, however, reported weaker year-over-year freight volumes, attributed to slowing demand and excess capacity. Railroad contacts noted further declines in intermodal shipments and total rail traffic compared with year earlier levels. Air cargo contacts reported a continued deceleration in international cargo volume caused by slowing global economic conditions and trade policy uncertainty.\nBanking and Finance\nConditions at financial institutions were stable. Total loan growth was steady although consumer loan growth continued to decline. Competition for deposits continued to put pressure on net interest margins along with lower loan yields. Nonperforming assets remained near historic lows.\nEnergy\nInvestment in pipeline infrastructure to transport liquefied natural gas (LNG) and crude oil to Gulf Coast refiners remained elevated, as firms endeavored to alleviate product bottlenecks. Companies continued to pursue development of LNG and crude export facilities along the Atlantic and Gulf Coasts. In anticipation of Hurricane Barry, offshore producers evacuated hundreds of drilling platforms in the Gulf of Mexico, causing oil and gas production to fall temporarily. A number of contacts reaffirmed that while construction on industrial megaprojects, largely chemicals manufacturing and oil and gas refining expansion, slowed in 2019, planned investment along the Gulf Coast picked up during this reporting period. Utilities contacts confirmed the acceleration in industrial activity, observed via natural gas and petrochemical utilities segments. Utilities contacts also shared that activity in renewables increased in recent months, particularly solar energy facility installations across Florida, with many projected to be up and running in the 2020 to 2021 timeframe.\nAgriculture\nAgricultural conditions across the District were mixed. Recent reports indicated much of the District was drought-free although parts of Alabama, Georgia, the Florida panhandle, and Tennessee experienced abnormally dry to moderate drought conditions. Some producers in Louisiana reported crop damage due to Hurricane Barry. Average farm real estate values in the District rose year-over-year with the exception of Georgia, where values declined. On a year-over-year basis, prices paid to farmers in June were up for corn and beef but down for cotton, rice, soybeans, broilers, and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.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/2019/2019-09-sl

"Beige Book Report: St Louis\nSeptember 4, 2019\nSummary of Economic Activity\nEconomic conditions have been mixed but generally unchanged since our previous report. Labor market conditions remained tight as firms continued to note difficulties finding qualified workers. While nonlabor input costs increased moderately, contacts reported only a slight uptick in prices charged to consumers. Construction activity improved slightly; however, some developers reported delaying projects due to economic uncertainty. In transportation, barge activity continued to improve, while airport cargo traffic declined. Farming conditions remained strained. Across all industries, the outlook among contacts turned slightly pessimistic. On net, a slightly greater share of contacts expect conditions during the remainder of 2019 to be worse or somewhat worse than the same period in 2018.\nEmployment and Wages\nEmployment has grown slightly since our previous report. On net, 12 percent of survey respondents reported that employment was higher than a year ago. Labor market tightness has persisted throughout the District, including in transportation, healthcare, and manufacturing. Firms reported increasing benefits, loosening hiring requirements, and more aggressively marketing themselves to attract workers.\nWages have grown moderately since our previous report. On net, 40 percent of contacts reported that wages were higher than a year ago; one contact in Little Rock reported that new graduates applying to jobs at an engineering firm were expecting $10,000 to $15,000 more than their offered starting salary. Numerous firms saw rising wages as a consequence of the tight labor market, with several businesses\u2014due to their size, location, or budget\u2014especially struggling to keep up with wage gains and attract potential employees.\nPrices\nPrices have increased slightly since our previous report. On net, 13 percent of contacts reported that prices charged to consumers increased in the current quarter relative to the same time last year. This is the fourth consecutive quarter in which the share reporting higher selling prices has declined. Despite the reported softness in prices charged to consumers, input costs continue to increase at a moderate rate. On net, 32 percent of contacts reported higher nonlabor costs.\nBusiness contacts continued to note the effects of tariffs and the current trade negotiations with China on price pressures, although the magnitude and direction of these effects vary greatly by product. Agricultural commodity prices generally remained depressed relative to the same time last year and have fallen since our previous report. On the other hand, several contacts noted moderate increases in the prices of steel, construction materials, and automobiles.\nConsumer Spending\nReports from general retailers and auto dealers indicate consumer activity has been mixed since our previous report. July real sales tax collections increased in Missouri, Tennessee, and Kentucky, but decreased in Arkansas relative to a year ago. Most general retailers and auto dealers reported that sales have increased since the same time last year, in line with expectations. However, District auto dealers noted seeing customers purchase more used and low-end vehicles, and their outlook for the rest of 2019 has turned pessimistic. Many cited concerns about higher new vehicle prices, elevated interest rates, and trade uncertainty.\nManufacturing\nManufacturing activity has been mixed since our previous report. A majority of contacts reported declines in production, new orders, and capacity utilization relative to one year ago. Respondents have noted slowdowns in the growth of manufacturing activity over the past few quarterly surveys, but this is the first time that they have reported declines for all three of these measures since 2016. Multiple contacts reported that tariffs and general uncertainty with regard to the ongoing trade negotiations with China contributed to declines in activity. On net, most contacts expect manufacturing conditions to stay at a similar level next quarter. However, several local manufacturing firms across a variety of industries, including automotive and food manufacturing, recently announced plans to expand operations. Likewise, other survey-based indexes indicate that activity in Arkansas and Missouri increased at a modest pace from one month earlier, with new orders and production increasing in both states.\nNonfinancial Services\nActivity in the services sector has been mixed since our previous report. The number of posted vacancies for nonfinancial services occupations increased from June to July in St. Louis but decreased in Louisville and Memphis. Transportation activity was mixed. Cargo traffic at District airports decreased slightly year over year, which some contacts attributed to a general slowdown in global trade. However, passenger traffic remained above year-ago levels. Barge traffic continued to improve from the holdup of business caused by the severe flooding in the spring, and contacts expect a rebound of activity through the rest of the year.\nReal Estate and Construction\nResidential real estate activity has been stable since our previous report. Seasonally adjusted home sales increased modestly across the four largest MSAs in the District. Conversely, a slight majority of contacts reported weaker demand for single-family homes relative to a year ago, and nearly 40 percent noted that third-quarter sales have fallen short of expectations. Contacts continued to report inventory shortages, particularly for lower-end homes.\nResidential construction activity increased slightly. There was a slight increase in June permit activity across the four largest MSAs in the District. On net, 14 percent of respondents reported higher construction activity relative to the same time last year, and 7 percent expect continued growth in the next quarter.\nCommercial real estate activity has improved slightly since our previous report. Survey respondents reported a slight increase in year-over-year demand for office and industrial space and a modest decrease in demand for retail space. Demand for multifamily properties was unchanged.\nCommercial construction activity improved slightly. Survey respondents reported healthy demand for construction of industrial property types and stated that several projects are lined up for the next few months. However, there are some reports of developers deferring future projects due to recent economic uncertainty. Local contacts continued to report labor shortages.\nBanking and Finance\nOverall loan demand in the District has weakened slightly since our previous report. Demand for mortgages slightly increased relative to one year ago, while demand for auto loans and commercial and industrial loans fell modestly. Bankers expect little to no change to overall loan demand in the fourth quarter. Credit standards tightened slightly compared with year-ago levels. Delinquencies fell slightly on a year-over-year basis and are expected to continue declining into the fourth quarter.\nAgriculture and Natural Resources\nDistrict agriculture conditions were down modestly from the previous reporting period. Compared with mid-July, the percentages of cotton and rice rated fair or better declined modestly, while those for corn and soybeans declined slightly. Relative to the previous year, the percentage of all four crops rated fair or better declined moderately. District contacts indicated that farming conditions remained strained due to low commodity prices and lingering effects from the unusually wet weather and flooding in the spring. New government assistance to farmers is expected to provide some short-term alleviation.\nNatural resource extraction conditions rose slightly from June to July, with seasonally adjusted coal production increasing 1.8 percent. Additionally, July production was 0.8 percent above that of a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\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/2019/2019-09-sf

"Beige Book Report: San Francisco\nSeptember 4, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of early July through mid-August. The labor market remained tight, characterized by modest employment growth and moderate wage growth. Price inflation was largely stable. Sales of retail goods increased notably, as did activity in consumer and business services. The manufacturing and agricultural sectors slowed somewhat. Both residential and commercial real estate market activity expanded moderately. Lending grew further.\nEmployment and Wages\nThe labor market remained tight, and employment growth was modest. Across the District, some contacts reported steady growth in employment, especially in urban areas. Others cited little change in employment, mostly due to continued difficulties in finding qualified workers. Information technology and financial sector positions were especially hard to fill. A contact in the payment-processing sector noted that job openings remained unfilled for longer than they did a year ago. Some employers suggested that shortages of qualified workers were a major factor behind a slowdown in their business expansion plans. A large provider of shipping and logistics services mentioned a restructuring-driven hiring freeze for managerial positions, as well as seasonal layoffs. A provider of agricultural transportation services noted that they were only hiring replacements for departed workers.\nWage growth rose further over the reporting period due to brisk competition for qualified workers across sectors. Apart from Alaska, wages for construction workers increased solidly in the District due to a pickup in building activity. Wages in the financial services and hospitality sectors also continued to increase at a solid pace, although one banker in Oregon suggested that wage increases were more subdued. Hourly rates for delivery drivers at a major shipping and logistics business in California rose modestly. Businesses reported continued positive adjustments to starting wages due to new minimum wage laws and tight competition for entry-level workers. Some employers noted their employees' preferences for expanded benefits packages over higher wages including signing bonuses, flexible work arrangements, paid time off, and varied health insurance options.\nPrices\nPrice inflation was largely stable on balance. Many businesses reported that brisk competition limited their ability to raise selling prices. Some input costs increased due to higher tariffs, though an appreciation of the dollar helped offset some of the higher import costs. Across the District, higher import costs have raised concerns over narrower profit margins. In some sectors such as lumber and natural gas, selling prices remained subdued. In other sectors, prices picked up somewhat. Wholesalers in California reported little resistance to price increases, and an online payment processer mentioned higher market prices for finished goods. In Seattle, a restaurateur reported upward price pressures from food and beverage vendors. Prices for agricultural goods remained stable overall, with slightly higher prices reported for hay, milk, and grapes. Market prices for beef, poultry, and pork softened as well as those for utilities.\nRetail Trade and Services\nSales of non-auto retail goods increased notably. Contacts across the District mentioned that retail conditions remained strong, especially in areas where population and income trends are favorable. In the Mountain West, retailers reported a brisk pickup in sales over the summer despite businesses offering lower discounts when compared to the previous year. In Alaska, retail sales were down statewide. E-commerce outlets continued to highlight robust sales growth both domestically and internationally. Demand for vehicles weakened over the reporting period, attributed to general unease in the customer base regarding the economic outlook.\nActivity in the consumer and business services sectors increased notably. Demand for shipping and logistics services rose rapidly, and industry projections remained favorable. A major service provider in the District noted increased investment in information technology for logistics services as well as brisk growth in shipping of health-care products. A transportation service provider noted high demand for train car space. Restaurants in the Pacific Northwest reported strong sales growth, as did hotel operators in the Mountain West. A contact in Hawaii also reported moderate growth in the hospitality sector but mentioned some concerns regarding future tourist inflows.\nManufacturing\nActivity in the manufacturing sector slowed somewhat. A chip manufacturer in the Mountain West reported continued worldwide softening of orders. In the Pacific Northwest, wood product manufacturers noted faltering demand. An energy supplier mentioned lower demand for natural gas from various industrial customers ranging from asphalt and concrete producers to paper makers. Production slowed in a large aerospace business in the Pacific Northwest. On the other hand, contacts in the semiconductors and metals-producing sectors reported strong output and a positive outlook.\nAgriculture and Resource-Related Industries\nActivity slowed somewhat in the agricultural sector. Inclement weather negatively affected both the timing and yield of harvests across different states. Intense storms halved cherry crops and delayed tomato and grain harvests. Unseasonably high temperatures depressed California almond yields, though their impact was somewhat offset by an increase in the number of almond trees in production.\nDemand for agricultural products generally softened, both externally and domestically with notable exceptions in nuts and grapes markets. Trade tensions, a strong dollar, and a less optimistic economic outlook were identified as the main factors behind slower overall demand. Producers of beef, poultry, and pork products sought alternative markets after further escalation of trade tensions with China. Fruit and wheat farmers in the Pacific Northwest noted a decline in their export business. Lumber producers reported weakening demand for their products nationally. A contact in Central California observed stable prices but lower demand for farmland. In the utilities sector, electricity sales and excess capacity remained on par with levels earlier in the year.\nReal Estate and Construction\nDemand for residential real estate grew further. Construction activity and demand for single- and multi-family homes remained elevated throughout the District, aided by low interest rates and strong employment. One notable exception was Alaska where public projects dominated. Supply continued to be somewhat constrained by worker shortages, though one contact in the Mountain West noted increased availability of skilled workers coming from other regions.\nOn net, selling prices accelerated, and permit issuance picked up. Some local governments in California and Hawaii have started considering bans on vacation home ownership as a possible response to increased affordability concerns. In some areas, time-on-the-market increased and prices plateaued.\nActivity in commercial real estate markets expanded moderately. In the Pacific Northwest and the Mountain West, construction activity was strong, vacancy rates were low, and rental rates remained elevated. Commercial permitting in Washington was in line with last year's numbers, and contacts highlighted that there are many projects in the pipeline in Oregon and California.\nFinancial Institutions\nLending activity grew further over the reporting period. Contacts across the District noted healthy demand for loans, supported by low interest rates and robust commercial construction activity. Low mortgage rates spurred refinancing activity, though a few lenders expressed concerns over increasing downward pressures on net interest margins. Loan quality and capital levels remained solid, though a contact in California observed some loosening of lending standards. Competition remained tight but was somewhat less brisk for loans relative to deposits in the current reporting period.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2019/2019-09-ri

"September 4, 2019\nSummary of Economic Activity\nThe Fifth District economy grew at a modest rate since our previous report. Manufacturers experienced a decline in shipments and new orders, and continued to cite trade-related impacts on demand and raw materials costs. Trucking companies also reported a modest decline in shipping volumes. Ports, on the other hand, saw robust activity stemming from strong import volumes. Agriculture contacts gave mixed reports, largely due to differing weather conditions across the region. Meanwhile, demand for nonfinancial services remained moderate. Several firms indicated that they were holding back on new investment due to uncertainties with trade, the federal budget, and the availability of labor. Tourism increased moderately. Auto sales were reportedly up and some hardware stores saw strong growth while other retailers experienced slower sales and less buyer traffic. Residential real estate sales and new home construction increased modestly, on balance. Commercial real estate contacts reported some increased leasing activity, low vacancy rates, and stable to modestly increasing rental rates. Bankers generally indicated modestly increasing deposits and loan demand. Labor markets remained tight and wage increases were modest. Prices continued to rise at a moderate rate.\nEmployment and Wages\nThe demand for labor remained strong in recent weeks. Staffing agents reported a high level of job postings; however, finding qualified applicants continued to be difficult across job categories and experience levels. One staffing agency said that they had turned down some clients because they believed the wages that were offered would not be high enough to attract quality workers. Looking ahead to the fall recruiting season, staffing firms expect demand to increase across the board and expect the usual seasonal uptick for temporary workers. Wage increases remained modest.\nPrices\nPrice growth remained moderate for most finished goods and services since our previous report. Manufacturers generally indicated moderate growth in prices paid, which narrowly outpaced growth in selling prices. Several firms continued to note that tariffs were a driving factor behind some higher raw material prices, but lower prices were reported for lumber, steel, copper, and trucking. In addition, some retaliatory tariffs by China reportedly drove down selling prices for U.S. scrap metal and paper. Service sector firms also reported moderate price growth in both prices paid and prices received.\nManufacturing\nManufacturers in the Fifth District experienced sluggish demand since our last report. Both shipments and new orders declined, and many firms reported weaker local business conditions. Several contacts cited tariff-related effects on their businesses, including lower demand and higher raw materials costs that they could not pass through to customers. A Virginia manufacturer delayed purchasing new equipment because of fear that business conditions would deteriorate in the coming months. However, a South Carolina appliance manufacturer reported strong sales and revenue growth and invested in expansion projects.\nPorts and Transportation\nFifth District ports saw strong growth in recent weeks that met or exceeded expectations. Growth of imports was particularly robust, as import volumes remained above export volumes. One port continued on a strong capital investment plan because of good conditions, but another delayed investments in order to see how business would change in the coming months. A Fifth District airport saw a slowdown in international cargo traffic. Executives also expressed concerns about future trade conditions and impending fuel price increases.\nOn balance, Fifth District trucking companies reported a modest decline in shipping volumes in recent weeks. Several firms attributed the drop in volumes to tariff-related reductions of shipments and they expressed concerns that these reductions would continue in coming months. One contact stated that the softer demand put downward pressure on shipping prices. Another said that they reduced staff and capital expenditures as a result. In contrast, a Virginia firm reported an uptick in volumes across a wide range of products and customers.\nRetail, Travel, and Tourism\nTourism in the Fifth District was moderate in recent weeks. Hotels in Greenville and Charleston, South Carolina, saw strong demand. In addition, an executive at a Virginia resort reported strong demand but nevertheless had to close some pools due to a labor shortage, which was expected to be persistent. Conversely, tourism in Asheville, North Carolina, and in Baltimore was reportedly down, and an amusement park in North Carolina attributed soft business to rainy weather.\nFifth District retailers reported mixed business conditions since our last report. A Virginia auto dealer reported growth in sales of both new and used cars. A high end clothing store, however, reduced inventory after several weak months. Also, a shoe store reported a drop in both sales and customer traffic. Hardware stores around the District gave conflicting reports on demand, with some seeing strong growth and others seeing a drop in business. Several retailers reported increased costs resulting from tariffs, which they were partially able to pass on to consumers.\nReal Estate and Construction\nResidential real estate sales increased modestly, overall. Brokers reported steady levels of buyer traffic in recent weeks. Existing home sales remained below year-ago levels, in part due to low inventory levels. Meanwhile, agents reported steady rental demand for single-family homes. Home prices rose modestly, on balance, while days on the market were generally unchanged at low levels. New home construction and sales increased modestly while speculative construction remained low and was mostly for higher priced homes.\nCommercial real estate brokers reported a moderate rise in industrial leasing across the District. Office leasing was mostly unchanged in recent weeks, with the exceptions of Charlotte, NC, and Washington, D.C., which experienced strong activity. Retail leasing was reported to be flat to down slightly. Vacancy rates remained low in most markets and rental rates were stable to increasing modestly in all sub-markets. On the commercial sales side, brokers reported modest increases in prices and sales. Industrial construction increased modestly across the District, while multifamily construction and leasing remained steady.\nBanking and Finance\nOverall, loan demand rose modestly in recent weeks. Residential mortgage demand was generally described as stable to increasing modestly. Additionally, a few lenders noted an increase in residential refinance loans. On the commercial side, real estate loan demand strengthened modestly. Business loan demand improved slightly and automotive lending was reportedly flat compared to the previous report. Deposits grew modestly and credit quality remained stable at strong levels.\nNonfinancial Services\nSince our previous Beige Book report, demand for nonfinancial services remained moderate, overall. Professional and health services firms generally reported steady to increasing demand. A few contacts, however, reported that turnover and labor shortages were driving up recruiting costs and in some cases constraining growth. Educational institutions also indicated steady demand, and a university president saw significant investment in computer science related programs in Northern Virginia. On balance, services firms indicated modest business investment. A few firms said they were holding back or being cautious due to uncertainties around trade, the federal budget, and the availability of labor.\nAgriculture\nWeather effects varied across the district. For example, a farmer in Maryland saw improvement this year due to more favorable weather conditions and remarked that other farmers in their area, except for dairy, seemed to being doing well. In contrast, a farmer in South Carolina said that the heat and lack of rain were hurting crops. In general, trade issues and low commodity prices were hurting farmers, including by lessening their ability to repay loans and by reducing their desire to purchase new equipment.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2019/2019-09-mi

"September 4, 2019\nSummary of Economic Activity\nNinth District economic activity was stable since the previous report. Employment was flat, while wage pressures were moderate and price pressures remained modest overall. The District economy saw growth in construction, real estate, and manufacturing. Consumer spending was flat while tourism activity was mixed. Energy activity decreased while agricultural conditions remained weak.\nEmployment and Wages\nEmployment was flat since the last report, with some continuing signs of softness. Hiring demand remained healthy, according to recent ad hoc polls of employers in Minnesota and Montana. A Montana insurance contact said that renewals for workers' compensation policies showed that firms widely expected higher employment levels over the coming year. July job postings were 7 and 5 percent higher, respectively, in North and South Dakota compared with a year earlier. Job postings rose slightly in Montana, but fell slightly for Minnesota and Michigan's Upper Peninsula. Labor availability continued to constrain hiring, and turnover remained problematic for many firms. A northern Wisconsin contact said, \"It's hard to find a business that is not looking for more employees,\" and a few employers said they will have to close or move if workers cannot be found. There were some notable signs of softness, however. July employment fell slightly in most District states (and overall) compared with June levels. Initial unemployment insurance claims saw a 10 percent uptick over the most recent six-week period (ending in early August) compared with a year earlier; continuing claims also rose slightly. Staffing contacts reported that recent job orders were mixed, with declines seen in Minnesota and Wisconsin offices. But most staffing contacts predicted strong third-quarter orders in part because businesses would soon be losing many student workers once school began.\nWage pressures varied, but were moderate overall. Two-thirds of large Minnesota employers responding to an ad hoc poll said that wages grew by less than 3 percent over the last 12 months, and wage expectations for the coming 12 months were even more modest. However, in Montana, a slight majority of poll respondents said wages grew by more than 3 percent, including nearly one in five that saw increases of more than 5 percent. But expectations for future wage increases were slightly lower. Staffing contacts cited a wide range of wage increases for available jobs; a Minnesota contact noted that average wages for jobs across more than a dozen offices in the District rose by less than 2 percent over the last 12 months. However, two other staffing contacts reported wage increases of 8 percent or more.\nPrices\nPrice pressures remained modest overall since the previous reporting period. A majority of respondents to a survey of Montana businesses reported having increased prices charged to customers by less than 2 percent over the past year, and a larger proportion expected to increase prices in the same range over the coming year. Input price pressures were slightly greater, according to respondents. Contacts in the construction sector continued to report brisk input price increases. Retail fuel prices in District states as of mid-August were modestly lower relative to the previous reporting period. Prices received by farmers in June increased from a year earlier for corn, hay, cattle, hogs, milk, and turkeys, while prices for wheat, soybeans, eggs, and chickens decreased.\nConsumer Spending\nConsumer spending was flat overall since the last report. Gross sales in South Dakota and Wisconsin in July were flat year-over-year; in Wisconsin, that represented a modest rebound from slower June sales. Sales tax collections in North Dakota in July rose by about 15 percent compared with a year earlier. Vehicle sales in the western part of the District were higher in July, and a dealer contact said he expected August and September sales to be good. But recreational and powersport vehicle sales across the District have been lower, according to industry sources.\nTourism offered a mixed bag. Hotel occupancy in July saw a moderate bump over last year in Minnesota and Montana. A Montana lodging contact said it has been a \"normal\" tourism season overall, but added that \"for the first time in a while, we needed to discount room rates to fill rooms.\" A Minnesota resort contact said bookings were about 2 percent higher this season compared with last year, and guest spending was higher. However, visitation to six of the eight largest national parks in the District was down in July and year-to-date, with several seeing double-digit declines. Attendance at state fairs was higher this year in Montana but lower in North Dakota. Traffic to the annual Sturgis Motorcycle Rally in South Dakota was down modestly compared with last year. Contacts also noted that labor constraints have meant shorter operating hours for some businesses.\nConstruction and Real Estate\nCommercial construction grew strongly since the last report. The value of construction starts across the District saw a healthy rise in July compared with a year earlier, continuing an uptick seen in June. A construction project database indicated that the number of new and active projects in the District through early August was slightly higher than or on par with last year. A contact in northern Wisconsin noted strong activity in the Duluth-Superior region, particularly in healthcare and energy. A Minnesota banker expected \"continued strong demand\" for new hotel and multi-family construction lending. Another contact in the state said, \"All I hear is that (construction companies) are incredibly busy. There's so much work out there.\" Contacts said some of the increase in activity was due to persistent spring rains and flooding, which pushed more work into summer months. Minneapolis-St. Paul saw a healthy increase in single-family permits in July compared with a year earlier, but other large District cities saw mixed permitting activity.\nCommercial real estate grew modestly. In Minneapolis-St. Paul, industrial property continued to see healthy demand, falling vacancy rates, and strong new development. Office vacancy rates rose overall, but asking rents have risen in some submarkets due to strong demand from the tech sector. Retail vacancies were stable overall despite continued pressure on traditional retailers. However, average lease rates and property sales were lower, and new construction hit a multi-year low. In Sioux Falls, S.D., office and retail vacancy rates have risen, while the industrial vacancy rate was stable at very low levels. Residential real estate grew moderately. Closed home sales for July grew in most markets compared with a year earlier, helped by lower mortgage rates. Great Falls, Mont., and Grand Forks, N.D., saw particularly strong July sales, while statewide sales in Minnesota rose 4 percent.\nManufacturing\nDistrict manufacturing activity grew slightly, with some signs of softening. An index of manufacturing conditions indicated increased activity in July compared with a month earlier in Minnesota and the Dakotas. A medical-device producer announced a large expansion at a Minnesota facility. Two pet food manufacturers announced new plants in Minnesota. Several industry contacts reported a tight supply of workers as the main constraint on growth. However, other contacts noted some signs of softening, particularly in international demand. A producer of capital equipment noted slowing in the pace of new orders and a decline in order backlog.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak. Recent estimates lowered the planted acreage and expected production for corn, soybean, and spring wheat in District states compared with last year, due in part to heavy rains and flooding. Respondents to the Minneapolis Fed's second-quarter (July) survey of agricultural credit conditions indicated that farm income and capital spending decreased relative to a year earlier, with further declines expected for the coming three months. However, some contacts expressed optimism about a recent rally in commodity prices. District oil and gas exploration activity as of mid-August was down relative to the previous report. District iron ore mines continued to operate at near-capacity; a Minnesota facility finished a $100 million equipment upgrade that would allow it to produce higher-grade ore.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

/beige-book-reports/2019/2019-09-cl

"September 4, 2019\nSummary of Economic Activity\nEconomic activity in the District was steady on balance. Retailers reported modestly improving sales over the period. Real estate agents also saw increased home sales, including a pickup in the first-time-buyers segment. Bankers reported firm consumer lending as lower interest rates drove mortgage and auto loans, but they reported softening commercial loans. Manufacturers saw weaker demand because uncertainty led their customers to delay capital expenditures. In addition, factory inventories were elevated as sales fell more than anticipated. Freight volumes decreased. Overall District employment remained relatively steady, with little change in most sectors. Wages rose moderately across industry sectors and occupational categories. Prices were little changed in general in the District. However, many contacts expected input costs to rise in the near future, in part because of anticipated new tariffs.\nEmployment and Wages\nTotal employment was steady in the District, although reports on hiring varied by industry. Professional and business services firms continued to hire to keep up with strong demand. A few construction contractors added professional or field staff, but the majority did not. One contractor commented, \"experienced staff can handle the expected volume.\" Most freight haulers did not expand their payrolls although turnover remained high. Retailers generally held headcounts steady outside of typical seasonal variations. Meanwhile, factories tried to align their labor needs with slower sales. Generally, manufacturers did not lay off workers, but several implemented other labor-reducing measures such as fewer shifts, reduced overtime, fewer temporary employees, and shrinkage by attrition.\nOverall wage growth increased slightly to a moderate pace in recent weeks, with modest to moderate growth in most sectors. Retailers, bankers, and staffing agencies reported strong upward pressure on entry-level wages. One staffing executive commented that many clients were raising entry-level wages, and that it is \"very strange to see a client offering the [state] minimum wage.\" Stiff competition for skilled workers led to higher wages in manufacturing, construction, and professional and business services. A manufacturer said that wages were still rising because \"despite demand shortfalls, the employment market remains tight.\" A nonresidential contractor paid midyear bonuses to his workers, a move atypical for the firm. In contrast, freight haulers saw slower wage growth because weaker demand reduced firms' ability to raise wages.\nPrices\nPrices were little changed on net, though there were small changes in a few sectors. Several manufacturers cut their selling prices because of downward pressure from weakening global demand. First, weakening demand contributed to falling commodities prices to which many manufacturers' contracts were indexed. Second, it led to stiff competition for contracts among global manufacturers. Freight haulers indicated that excess shipping capacity eroded their pricing power. Most retailers held prices steady. Professional and business services firms reported no pricing power because of slower demand growth and strong competition in the sector. A few nonresidential contractors were able to raise prices (and margins) because of persistently strong demand, but residential contractors felt buyers' concerns about affordability meant they were unable to raise prices. Contacts across sectors expected input costs to rise in the future, largely because they anticipated more tariffs.\nConsumer Spending\nReports indicated that retail spending increased modestly in recent weeks. Food retailers said that a typical increase in demand for seasonal products and the start of the back-to-school selling season boosted sales. By contrast, apparel retailers indicated activity was relatively flat in recent weeks, although some were optimistic that sales would increase in the near future. Auto dealers reported solid sales in July, with one noting that \"lease returns and incentives have bolstered sales.\"\nManufacturing\nManufacturing activity declined modestly as demand continued to soften across end markets. Several contacts reported that both they and their customers had delayed capital spending as trade tensions and related uncertainty clouded their outlooks. Additionally, respondents noted that weakening demand abroad pushed down prices and intensified competition with foreign manufacturers who were looking for new markets in which to sell their products. Capacity utilization declined, but some manufacturers indicated that this was a return to normal following more than a year of hectic activity. Several contacts reported that inventory levels were elevated because demand fell more sharply than anticipated. Looking forward, reports were mixed: some manufacturers believed that orders would improve in the fourth quarter and beyond, while others expected demand to weaken further.\nReal Estate and Construction\nOverall, construction and real estate activity was steady. On the nonresidential side, builders continued to report stable and strong demand. New projects came from multiple sectors. Backlogs remained strong. One nonresidential contractor described current conditions as \"smooth sailing.\" Nonresidential builders were confident that demand would remain stable and strong through 2019 and into 2020.\nOn the residential side, homebuilders noted slightly weaker demand, but real estate agents reported stronger sales volume. Some homebuilders indicated that the slowdown may have been because of homebuyers' less optimistic views of the broader economy. By contrast, realtors said that sales volume increased because of a typical seasonal pickup and lower mortgage interest rates. They also reported that homeownership rates were rising as low mortgage interest rates, stronger household formation, and rising rents spurred demand among first-time buyers.\nFinancial Services\nBankers reported that loan demand declined slightly. In general, demand from commercial clients softened. Consumer lending held firm, as lower interest rates bolstered demand for mortgages and auto loans. Bankers would like to decrease deposit rates to offset declining lending rates, but many reported that competition for deposits remained too intense to reduce these rates. Overall, core deposits increased on balance.\nProfessional and Business Services\nActivity in professional and business services remained solid, but growth softened since the previous report. Consulting firms reported strong activity and generally indicated that their smaller, local clients had a solid pipeline of projects. By contrast, technology firms suggested that activity was flat or down slightly. One technology contact reported softening demand from clients in Asia, and another noted an overall reduction in the volume of large-scale deals.\nFreight\nFreight volumes softened further since the previous report. One freight executive summarized the sector by saying, \"freight volumes are down in most channels. It is not clear how much of this is related to the surge of last year wearing off and how much is associated with current demand.\" Another contact suggested that heightened trade tensions with China have dampened domestic freight demand. Several freight haulers said that shipments will increase ahead of the upcoming holiday season, although some expected fourth-quarter levels to be lower than in the prior year.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nSeptember 4, 2019\nSummary of Economic Activity\nTenth District economic activity edged up in July and early August, led by increases in consumer spending, wholesale trade and professional and high-tech services. Consumer spending rose modestly, including gains in retail, auto, restaurant and tourism sales. Manufacturing activity fell slightly, and a majority of contacts expected their businesses to be negatively affected by the latest round of U.S. tariffs on China. District real estate activity rose, but the pace of growth in the residential real estate and construction sectors softened. Energy activity held steady, but expectations for future activity eased. District agricultural conditions remained weak, and commodity prices fell with higher-than-anticipated production estimates and ongoing trade disputes. Loan demand increased modestly and loan quality improved, while deposits fell slightly. Employment rose, but contacts in several sectors noted a slowdown in job gains as labor shortages persisted. Wages were mixed across sectors, and a majority of respondents expected the pace of wage growth to remain the same or accelerate in 2020. Input prices rose slightly, while selling prices continued to hold steady.\nEmployment and Wages\nDistrict employment rose, and employee hours held steady since the previous survey period. Compared to a year ago, contacts reported that employment gains were strongest in the real estate, health services and retail trade sectors. However, the pace of job gains had slowed in several sectors including manufacturing, energy, transportation, tourism and auto sales in recent months. Looking ahead, contacts expected employment to increase slightly and employee hours to remain flat in the next few months.\nA majority of contacts continued to report labor shortages across all skill levels. Specifically, contacts noted shortages for hourly retail and food-services positions, truck drivers, auto technicians, physicians, pilots and IT personnel. Wages were mixed across industries as services sector wages increased modestly since the previous survey period, while manufacturing wages held steady. A majority of respondents expected wage gains in 2020 to equal or exceed those in 2019.\nPrices\nInput prices rose slightly in July and early August, while selling prices continued to hold steady. However, both input and selling prices were moderately higher than a year ago, and contacts expected modest gains moving forward. In the retail sector, selling and input prices rose modestly, and moderate increases were anticipated in the months ahead. Respondents in the restaurant sector noted modestly higher input prices and flat selling prices, with both prices strongly above year-ago levels. Manufacturing and transportation contacts reported steady input prices and selling prices since the previous survey period and expected modest growth in the months ahead. Unlike other sectors who all reported higher prices than a year ago, selling prices in the construction supply sector were modestly lower than both the previous survey period and year-ago levels.\nConsumer Spending\nConsumer spending increased modestly compared to the previous survey period and year-ago levels, and contacts expected slight gains in the coming autumn months. Retail sales continued to rise moderately in July and early August, and contacts anticipated sales to increase modestly moving forward. Auto sales improved, rising slightly higher than the previous survey period after declining earlier this summer. Auto contacts also expected moderately stronger sales in the months ahead. Trucks and SUVs sold well, while sedans sold poorly. Restaurant and tourism sales grew modestly compared to the previous survey period and were above year-ago levels. However, both sectors anticipated modest declines in the coming months.\nManufacturing and Other Business Activity\nManufacturing activity declined slightly in July and early August, but activity remained slightly above year-ago levels. Factory production and shipments edged down compared to the previous survey period at both durable and non-durable goods plants, while new orders declined slightly. Manufacturers anticipated modest increases in production, shipments and new orders in the coming months. Capital spending was modestly above year-ago levels, and slight increases were expected in the months ahead. However, a majority of respondents expected the most recent round of U.S. tariffs on Chinese goods to negatively affect their businesses.\nOutside of manufacturing, other business contacts reported mixed sales since the previous survey period. Firms in the transportation sector experienced modestly lower sales, while sales increased strongly in the wholesale trade sector and slightly in the professional and high-tech services sector. In the coming months, contacts in the professional, high-tech and wholesale trade sectors expected sales to expand moderately and transportation sector contacts anticipated modest increases.\nReal Estate and Construction\nDistrict real estate activity continued to expand, but at a slower pace than the last survey period as growth in the residential real estate sector moderated. Residential home sales and inventories rose, but sales were below year-ago levels. Inventories were expected to continue to increase slightly, while sales were expected to decrease in the months ahead. Residential real estate contacts noted that sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Home prices continued to fall modestly since the previous survey period, but remained higher than a year ago. Residential construction activity edged down and was similar to year-ago levels. Commercial real estate activity continued to expand at a modest pace as absorption, completions, construction underway, sales and prices rose, while vacancy rates fell. Respondents in the commercial real estate sector projected similar growth in the months ahead.\nBanking\nBankers reported a modest increase in overall loan demand, with somewhat mixed reports across categories. Respondents indicated a strong increase in the demand for residential real estate loans and a modest increase in demand for consumer installment loans. Demand for commercial real estate loans held steady, while demand for commercial and industrial loans and agricultural loans declined. Bankers indicated a modest improvement in loan quality compared to a year ago and expected a slight improvement in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories, and deposit levels decreased slightly.\nEnergy\nOverall District energy activity held steady compared with the previous survey period, but expectations for future activity continued to ease somewhat. The number of active oil and gas rigs continued to edge down, primarily driven by a drop in Oklahoma rigs, while drilling in Colorado and Wyoming moved higher since the last survey period. District oil production levels continued to expand in recent months and remained above levels from a year ago. Natural gas production also remained at high levels. Oil prices inched down while natural gas prices continued to decline. Regional firms expected less drilling and business activity in the next six months.\nAgriculture\nThe Tenth District farm economy remained weak, and commodity prices declined in response to supply expectations and trade uncertainty. Regional contacts reported weak farm income in the most recent survey period, but expected slower deterioration in the coming months. Less pessimistic expectations in the second quarter were supported by increases in crop prices earlier in the year. However, sharp declines in crop and livestock prices in August weighed on farm revenues. Hog and soybean prices declined moderately alongside ongoing trade disputes, and cattle prices decreased sharply following a substantial disruption at a major beef processing facility located in the District. Corn and wheat prices also declined sharply following higher-than-anticipated production estimates.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"July 17, 2019\nSummary of Economic Activity\nOn balance, reports from Sixth District business contacts indicated that economic activity continued to expand at a modest pace from mid-May through June. Although contacts shared concerns over uncertainty related to tariffs, the overall outlook among businesses remains positive as most expect continued modest growth for the second half of the year. District firms continued to report difficulties filling positions. On balance, wage growth remained steady. Businesses reported increases in non-labor input costs. District merchants noted sales activity increased since the previous reporting period. The tourism sector experienced solid activity throughout most of the District. Real estate contacts noted that home sales, albeit down from a year-ago, increased since the spring season. Overall, the housing market experienced moderate price appreciation. Commercial real estate contacts indicated that activity was steady. Manufacturers reported growth in new orders and increasing production levels. Bankers indicated a slight softening in overall loan activity.\nEmployment and Wages\nContacts continued to report hiring challenges. However, a few transportation contacts observed some easing in the labor market tightness for drivers over the last couple of months. Some employers noted relaxed policies or standards to hire and retain workers. Broadly, firms continued efforts to expand their pools of prospective employees, e.g., pursuing recent veterans, and partnering with other organizations to develop or enhance vocational centers. Firms indicated investing significantly in training programs to attract new workers or upskill existing staff. A number of contacts expressed that hiring and retention costs were rising, primarily associated with training and certification programs.\nAnnual wage increases, on average, remained between 3-4 percent. For lower-skilled hourly workers, several employers reported increasing wages to $15 per hour, depending on competition. While many contacts pointed out that employee bargaining power increased, non-financial benefits focused on work-life balance often dominated demands, rather than higher wages.\nPrices\nContacts continued to report rising input costs with many expecting the pace to continue through 2019. Despite previous efforts to minimize cost and margin pressures, some companies found it necessary to pass through additional costs owing to tariffs. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 2.1 percent in June. Survey respondents indicated they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nContacts reported little change to retail sales levels since the last report. Online sales continued to grow at a faster pace than sales from brick-and-mortar stores. Contacts in the retail and the automobile industry noted concerns with uncertainty in relation to tariffs and the effects changes may have on pricing and demand.\nDistrict tourism and hospitality contacts continued to report healthy activity since the last report. The start of the summer season was robust with the number of visitors to Florida, Georgia, and Louisiana exceeding expectations. Although advanced bookings remained healthy through 2019, contacts expressed concern over the potential impact geo-political uncertainty might have on international travel to the United States.\nConstruction and Real Estate\nA decline in mortgage rates coupled with a relatively healthy economy continued to support improving demand for housing throughout the District. Overall home sales, though still down year-over-year, increased through the spring selling season. Demand was strongest in the more affordable price segments, where inventory remained limited. Still, overall inventories increased modestly over the reporting period, leading to more moderate home price appreciation in most markets. However, affordability remained a concern as higher construction costs continued to make it difficult for homebuilders to deliver reasonably priced products.\nCommercial real estate contacts reported steady leasing and sales activity throughout the District; however, some contacts reported experiencing longer transaction times. Overall, most sectors experienced positive dynamics as rents continued to grow and vacancies trended downward at a modest pace, and contacts reported an uptick in new projects. Industry participants noted continuing strength in the multifamily and industrial sectors, and financing capital was reported to be readily available for projects.\nManufacturing\nManufacturers reported a modest increase in overall business activity. New orders and production levels continued to increase, although the pace decelerated slightly from the previous reporting period. Purchasing managers indicated that finished inventory levels rose modestly and wait times for supply deliveries were slightly longer. Several contacts suggested that tariffs were creating a heightened level of uncertainty. Expectations for future production levels decreased, with just over one third of contacts expecting higher production levels over the next six months.\nTransportation\nDistrict transportation firm reports were mixed during the reporting period. Port contacts noted continued growth in container volumes, though at slightly lower pace. Inland waterway contacts reported modestly higher demand year-over-year. Freight forwarders saw strong growth in volume and revenue driven by e-commerce shipments. However, some ocean carriers noted that demand was down from year-ago levels and lower than 2019 expectations. Air cargo activity reportedly weakened as world trade growth decelerated amid trade tensions, Brexit uncertainty, and slowing economic activity, especially in European and Pacific arenas. Railroads continued to see substantial year-over-year decreases in overall traffic; intermodal volumes also fell.\nBanking and Finance\nThough still healthy, District banking conditions softened slightly. Loan growth at financial institutions continued, albeit at a slower pace, particularly for consumer and commercial real estate lending. Net interest margins declined modestly due to lower loan growth, lower yields on loans, and increased competition for deposits. Nonperforming assets, however, remained steady and near historic lows.\nEnergy\nThe District's petrochemical sector continued to experience strong demand and high levels of output. Contacts cited numerous chemical and petrochemical expansion projects initiated over the reporting period and project starts are expected to accelerate through year-end. However, some contacts expressed that Chinese tariffs on U.S. liquefied natural gas (LNG) exports created uncertainty among global firms pursuing new LNG processing plants or expansions in the U.S. Still, exports of most energy products to global markets continued to grow. Gulf Coast refiners indicated that crude refining capacity continued to grow and investment in pipeline infrastructure to transport oil and gas products to District refiners remained at elevated levels. Utilities contacts reported that while growth will continue to soften because of customers' efficiency gains, the industry has initiated extensive capital investment, including industrial transmission expansions; various renewable energy projects, notably solar plants and wind farms; new power plants; and smart grid investments.\nAgriculture\nAgricultural conditions across the District were mixed. Recent reports indicated much of the District was drought-free although parts of Alabama, southern Georgia, the Florida panhandle, and Tennessee experienced abnormally dry to moderate drought conditions. The District's cotton, soybean, peanut, and rice crops were mostly on par with five-year planting averages. Florida orange forecast was down in June from the prior month's forecast, but was higher than the last two season's production levels. On a year-over-year basis, prices paid to farmers in May were up for cotton but down for corn, rice, soybeans, broilers, and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.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"

New York

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"Beige Book Report: New York\nJuly 17, 2019\nSummary of Economic Activity\nGrowth in the Second District economy slowed to a modest pace in the latest reporting period. The labor market remained very tight, though job growth was tepid, and wage growth largely remained subdued. Input price pressures have moderated slightly, and selling prices have decelerated noticeably. Manufacturing activity declined, while growth in the trade and distribution industries slowed considerably. However, most service sectors saw steady to modestly growing activity. Consumer spending has edged up, mainly due to some firming in auto sales, while tourism has been mostly steady. Housing markets have been mixed but, on balance, a bit firmer\u2014particularly the rental market. Commercial real estate markets have held steady overall, and new office construction has continued to pick up. Finally, banks reported a pullback in loan demand across the board, and the financial sector more generally showed signs of softening.\nEmployment and Wages\nThe labor market has remained very tight throughout the District. Contacts reported persistent difficulties finding workers across the spectrum\u2014in particular, those with IT skills, truck drivers, and construction workers. An employment agency indicated that demand for temporary workers has diminished, as firms are increasingly inclined to hire permanent workers. A payroll service firm noted that job growth slowed in June, but largely because employers have had more trouble filling job openings. A number of contacts noted difficulties in securing and renewing H1B visas for specialized workers, and cited uncertainty about this as a problem.\nBusinesses generally reported slowing in hiring activity. Contacts in the manufacturing, transportation, and information sectors reported that, on balance, headcounts have declined, while professional & business service firms indicate little change. Contacts in other service sectors, as well as construction and real estate, reported continued modest growth in employment. Still, contacts in both manufacturing and in most service sectors plan to increase staffing levels in the months ahead.\nDespite persistently tight labor markets, businesses and employment agencies generally report continued modest wage growth. Exceptions to this include certain high-skill occupations, such as IT workers and engineers, as well workers in the education & health sector more broadly.\nPrices\nBusinesses reported that input prices and especially selling prices have decelerated in recent weeks. Input cost pressures have abated somewhat in the manufacturing, finance, professional & business services, and leisure & hospitality sectors but have remained fairly widespread in other industries. Selling prices are reported to have leveled off for businesses in manufacturing, information, finance, and leisure & hospitality. Prices for Broadway theater admissions were down roughly 10 percent from a year earlier.\nRetailers generally indicated that selling prices have been flat to down slightly. Retail contacts noted that they have been discounting more steeply in recent months, with one major chain noting declines in effective selling prices compared with a year ago.\nConsumer Spending\nOverall, retail sales were essentially flat in the latest reporting period. Somewhat more retail contacts reported that business was declining than increasing. However, an upstate New York mall reported solid shopper traffic and modestly growing sales activity, despite a number of store closures. In addition, a major retail chain noted that sales in the region were roughly on plan and up modestly from a year earlier. Inventories were generally indicated to be at or slightly above desired levels.\nNew vehicle sales grew modestly, while sales of used autos were steady to somewhat weaker, according to dealers in upstate New York. New vehicle inventories remained elevated. Dealers indicated that consumer credit conditions generally have remained in good shape.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) retreated in June, after rising in May, though it remains at a fairly high level, based on the Conference Board's monthly survey.\nManufacturing and Distribution\nThe manufacturing and distribution sectors have weakened since the last report. Manufacturers reported that overall activity and new orders have contracted modestly in recent weeks. Wholesale distributors reported that growth slowed sharply, and transportation firms noted that activity was flat to rising modestly.\nLooking ahead, manufacturing contacts remain fairly positive about the near-term outlook, while wholesale distributors and transportation firms have become somewhat less optimistic. Businesses have continued to express concern about tariffs, trade uncertainty, and the increase in New York State's minimum wage.\nServices\nService-sector businesses reported that activity was mixed but, on balance, little changed in the latest reporting period. Contacts in real estate, information and leisure & hospitality noted increased business, while contacts in finance reported declining activity. Businesses in education & health and professional & business services indicated flat activity.\nBroadway theaters reported that attendance was steady in June and little changed from a year ago. However, revenues have continued to weaken, running roughly 10 percent below comparable 2018 levels.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, slightly firmer since the last report. Home purchase markets in upstate New York have strengthened further, and low inventories of unsold homes have continued to boost prices, with more homes selling for above asking price. In New York City, in contrast, the inventory of unsold homes has climbed to a 7-year high, though not to levels considered problematic. Apartment sales prices have been flat overall. There was a brisk pickup in transactions in the second quarter\u2014largely at the high end of the market\u2014in advance of a \"mansion tax\" effective July 1, but this is expected to sharply curtail activity in the third quarter. Housing markets in the areas surrounding New York City have picked up modestly.\nResidential rents across the District have continued to rise modestly in recent weeks and are up from a year earlier. In New York City, rental vacancy rates remain exceptionally low, and landlord concessions have continued to recede from the high levels of the past two years.\nCommercial real estate markets have been generally stable since the last report. Office availability rates and rents across most of the District have been steady and little changed from a year ago, though some markets across upstate New York have firmed modestly. Industrial markets have been mixed, as rents have continued to rise moderately but availability rates have drifted up somewhat.\nNew multi-family construction starts have been steady, while a sizable volume of residential construction has remained in progress in and around New York City. New office construction has picked up further\u2014largely in New York City\u2014while new industrial construction has tapered off somewhat.\nBanking and Finance\nSmall to medium-sized banks in the Second District reported lower demand across all categories, as well as lower refinancing activity. Bankers indicated that credit standards were unchanged and loan spreads narrowed across all categories. Contacts also reported an increase in the average deposit rate. Finally, banks noted slightly higher delinquency rates on commercial mortgages but little change in delinquencies across other loan categories.\nFor more information about District economic conditions visit: 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"

National Summary

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"Beige Book: National Summary\nJuly 17, 2019\nThis report was prepared at the Federal Reserve Bank of San Francisco based on information collected on or before July 8, 2019. 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\nEconomic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period. In most Districts, sales of retail goods increased slightly overall, although vehicle sales were flat. Activity in the nonfinancial services sector rose further. Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector. Although some Districts continued to report healthy expansion in the transportation sector, others noted that activity declined modestly. On balance, home sales picked up somewhat, but residential construction activity was flat. Nonresidential construction activity increased or remained strong in most reporting Districts, and commercial rents rose. Manufacturing production was generally flat, but a few Districts noted a modest pickup in activity since the last reporting period. Agricultural output declined modestly following unusually heavy rainfall in some areas, and oil and gas production fell somewhat. Increased demand for loans was broad-based, with all but two Districts noting some growth in financing activity. The outlook generally was positive for the coming months, with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty.\nEmployment and Wages\nOn balance, employment grew at a modest pace, slightly slower than the previous reporting period. Labor markets remained tight, with contacts across the country experiencing difficulties filling open positions. The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care. However, some manufacturing and information technology firms in the Northeast reduced their number of workers. A few reports highlighted concerns about securing and renewing work visas, flagging this as a source of uncertainty for continued employment growth. Compensation grew at a modest-to-moderate pace, similar to the last reporting period, although some contacts emphasized significant increases in entry-level wages. Most District reports also noted that employers expanded benefit packages in response to the tight labor market conditions.\nPrices\nThe reports indicated that the rate of price inflation was stable to down slightly from the prior reporting period. Districts generally saw some increases in input costs, stemming from higher tariffs and rising labor costs. However, firms' ability to pass on cost increases to final prices was restrained by brisk competition. Reduced supply boosted prices for some agricultural goods. Reports on transportation costs were mixed, with some Districts noting increased upward pricing pressures, while others highlighted price declines due to reduced demand for shipping services. Prices for professional and business services fell slightly, and steel and lumber prices softened due to lower demand.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest pace at the end of the second quarter of 2019. For manufacturers, tariffs and trade policy uncertainty were major issues. Wage and price pressure remained modest, however. Labor markets continued to be tight.\nNew York\nRegional economic growth slowed to a modest pace. Despite tight labor markets, job creation slowed and wage growth was subdued. Increases in both input prices and selling prices have slowed. Manufacturing activity declined. Banks reported a pullback in loan demand, and the financial sector showed signs of softening.\nPhiladelphia\nOn balance, business activity continued at a modest pace of growth during the current Beige Book period. Trade uncertainty further delayed business investment, and wage increases edged higher as tight labor markets continued to constrain hiring. Still, inflation remained modest, and the firms remained positive about the six-month outlook.\nCleveland\nDistrict economic activity was flat over the period. Demand for financial and nonfinancial services strengthened, but demand for manufacturing and freight softened. Employment increased modestly, mostly in professional and business services. Wages increased modestly, with growth in most sectors. Price inflation decelerated as materials costs, especially for steel, fell.\nRichmond\nThe regional economy grew at a modest rate, overall. Manufacturers reported a slight uptick in shipments and new orders. Port activity remained strong. Trucking volumes fell below seasonal levels. Nonfinancial services and tourism increased in recent weeks. Meanwhile, residential and commercial real estate sales, leasing, and lending picked up modestly, overall. Labor markets remained tight and wages rose moderately.\nAtlanta\nEconomic activity modestly improved. Labor market conditions remained tight. Overall, wage growth was steady. Firms noted rising input costs. Consumer spending was up since the previous report. Housing sales improved from low levels earlier this year. Manufacturing activity grew. Loan activity pulled back slightly.\nChicago\nEconomic activity was little changed. Employment increased modestly; business spending increased slightly; consumer spending and construction and real estate activity were flat; and manufacturing decreased slightly. Wages and prices rose modestly and financial conditions improved modestly. More wet weather put further stress on farmers.\nSt. Louis\nEconomic conditions have improved slightly since our previous report. Barge traffic picked up somewhat after being halted by recent flooding. St. Louis builders expect increased housing permits in the summer as they make up for time lost due to wet spring weather. Loan volumes continued to increase but growth has slowed slightly.\nMinneapolis\nNinth District activity grew at a modest-to-moderate pace. Labor demand was healthy but restrained by lack of labor availability. Consumer spending rose but saw conflicting activity. Commercial and residential construction rebounded after several slower months. Manufacturers described demand as stable overall, with some concerns about a slowdown. Heavy rainfall and flooding delayed crop planting, further hurting farmers.\nKansas City\nDistrict economic activity continued to grow at a slight pace. Retail and restaurant contacts reported moderately higher sales, and residential real estate sales remained robust. Manufacturing, wholesale trade, and professional and high-tech activity held steady, but transportation activity slowed modestly. Energy activity expanded slightly, while the agriculture sector was strained further by delayed planting and harvesting.\nDallas\nEconomic activity expanded moderately. Retail sales and drilling activity dipped, but growth picked up in nonfinancial services and manufacturing in June after softening in May. Input cost pressures increased in manufacturing likely due to tariffs. Hiring continued at a steady pace. Outlooks were mixed, with tariff and trade tensions driving up uncertainty.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight and wage growth was moderate. Price inflation was unchanged on balance. Sales of retail goods increased moderately. Conditions in manufacturing were mixed. Conditions in agriculture deteriorated modestly. Activity in residential real estate markets expanded moderately. Lending activity increased moderately.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"July 17, 2019\nSummary of Economic Activity\nThe Ninth District economy grew at a modest-to-moderate pace since the last report. Employment grew modestly, while wage pressures were moderate and price pressures were modest. The District economy saw growth in consumer spending, services, commercial and residential construction and real estate, and manufacturing. Energy activity fell slightly, and agriculture worsened from an already weak position.\nEmployment and Wages\nEmployment grew modestly since the last report. Recent surveys by the Minneapolis Fed and others suggested that labor demand continued at a healthy pace. A quarter of respondents to the Minneapolis Fed's annual survey of professional services firms planned to increase staffing levels over the coming year, while only 5 percent expected to cut head counts. A poll of greater Minnesota firms showed that 63 percent were hiring, about half of whom were expanding head counts; only 3 percent were cutting employees. A poll of staffing firms, most of them in Minneapolis-St. Paul, found that total job orders and clients have risen modestly over the past two months compared with the same period a year ago; expectations for job orders over the remainder of the summer were slightly higher. Larger employment gains were restrained by low labor supply. Unfilled job orders have risen modestly among staffing firms, and many said labor market tightness was getting worse. \"Toughest market I have ever seen,\" said one. A health care contact in Montana said, \"We flat out cannot find enough workers.\" Four of five respondents to the poll of greater Minnesota firms said that tight labor was negatively affecting business. Some softness was also present in the job market. Initial unemployment claims rose by 3 percent over the most recent six-week period (ending in early June) compared with a year earlier; each District state saw an increase. However, continuing claims trundled lower, falling by almost 8 percent over the same period.\nWage pressures were moderate overall, but varied. Despite strong hiring demand and tight labor, nearly 70 percent of respondents to the ad hoc poll of greater Minnesota businesses said wages rose less than 3 percent over the past 12 months, and a notable share said they rose less than 1 percent. Their wage expectations for the coming 12 months were slightly lower. Among professional services firms, two-thirds reported wage increases of 3 percent or more, but their wage outlook for the year ahead was also lower. Minnesota staffing firms reported stronger wage growth, with almost half reporting 12-month wage growth of 5 percent or more. However, expectations of future wage increases were somewhat lower.\nPrices\nPrice pressures since the previous reporting period were modest. A third of respondents to the annual professional services survey indicated that they increased final prices over the past year, compared with only a quarter who expected to increase prices in the year ahead. A majority of respondents reported increases in input costs, however. A separate Minneapolis Fed business conditions survey indicated that firms increased output prices slightly on average in the second quarter of 2019 relative to the same period a year earlier; a strong majority expected to leave prices unchanged in the third quarter. A larger share of firms reported input price pressures. Contacts reported substantial increases in trucking costs and health insurance premiums. Retail fuel prices in District states as of early July were moderately lower relative to the previous reporting period. Prices received by farmers in May increased from a year earlier for hay, hogs, milk, and turkeys, while prices for corn, wheat, soybeans, eggs, and chickens decreased; prices for cattle were unchanged from a year ago.\nConsumer Spending\nConsumer spending rose slightly overall since the last report, with some mixed activity. Gross sales in Wisconsin were flat in May compared with a year earlier, but rose by 7 percent in South Dakota. New and used vehicle sales were lower in May and moved sideways in June in western areas of the District. Resort operators in northern Minnesota reported strong bookings. However, a Montana contact noted that spending from Canadian tourists was down due to the strong U.S. dollar. Airline passenger traffic was strong in May across many of the District's airports, with some seeing double-digit growth. But hotel occupancy rates in Minnesota were slightly lower in May, and lodging and accommodation taxes in Montana were also lower after seeing robust gains in previous months. Total gaming revenue in South Dakota rose 3 percent in May over a year earlier. However, national park visits Districtwide over the same period were notably slower. Monthly traffic across the Mackinac Bridge in Michigan's Upper Peninsula was flat compared with last year.\nServices\nProfessional services grew moderately. Respondents to the Minneapolis Fed's annual services survey reported growth in sales, productivity, profits, and employment over the past year. Expectations for the coming 12 months were slightly stronger. Contacts in the trucking industry generally reported increased freight volumes, with demand far outstripping the supply of drivers. However, some trucking contacts reported major disruptions due to flooding.\nConstruction and Real Estate\nCommercial construction grew moderately since the last report. The value of construction starts across the District saw a healthy rise in May compared with a year earlier after several months of flat or declining activity. A second database that tracks construction projects found that new and active projects in the District through mid-June were moderately higher than last year. Commercial permitting figures suggested that future activity might remain spotty, with May permitting values lower compared with a year earlier in many of the District's larger markets, including Minneapolis-St. Paul. Residential construction rebounded after several lackluster months, with May housing permits rising across much of the District compared with last year. June permit data were not widely available at deadline, with the exception of Minneapolis-St. Paul, which showed strong single- and multifamily activity in May and June.\nCommercial real estate grew modestly since the last report. Multifamily vacancy rates in Minneapolis-St. Paul continued to be among the lowest in the country, and office and industrial vacancies remained steady. Retail vacancy rates there were expected to rise slightly in the future, but would be helped by a \"thin\" pipeline for new construction, according to an industry source. Residential real estate activity rose moderately in most of the District after several slow months. Closed sales in May rose across Minnesota compared with a year earlier, as well as in western and northern counties of Wisconsin. But closed sales were mixed in North Dakota and Montana markets.\nManufacturing\nDistrict manufacturing activity increased modestly. An index of manufacturing conditions indicated increased activity in June compared with a month earlier in Minnesota and the Dakotas. A steel manufacturer reported solid demand that they were unable to meet due to labor force constraints. Several diversified contract manufacturers described activity as stable, with demand from nondurable goods generally stronger than from consumer products. However, some manufacturing contacts reported concerns about a slowdown in the sector. Producers of agricultural equipment continued to report reduced domestic demand.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions worsened from an already weak position. Heavy rainfall and flooding substantially delayed crop planting in many areas of the District. In some areas farmers switched from corn to soybeans or other crops that could start growing later, while in other areas crops did not get planted at all. Contacts in affected areas expressed concerns that the impacts could be severe. District oil and gas exploration activity as of early July was down slightly relative to the previous report. District iron ore mines continued to operate at near capacity. Contacts in nonferrous mining described activity as stable.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"July 17, 2019\nSummary of Economic Activity\nModerate expansion continued in the Eleventh District economy. Growth in nonfinancial services and manufacturing sectors picked up in June. Retail sales and drilling activity declined. Home sales continued to climb, buoyed by lower mortgage rates. Loan volumes rose at a faster pace, and crop and pasture conditions were mostly favorable. Employment expanded moderately and wage growth remained elevated. Input cost pressures rose in manufacturing, which multiple contacts attributed to the tariffs. Outlooks improved among service sector contacts but worsened among manufacturers and uncertainty increased due to growing concern over tariffs and trade tensions. About 28 percent of respondents to the supplemental questions in the June Texas Business Outlook Surveys indicated being negatively affected by the tariffs while only 5 percent noted a positive impact.\nEmployment and Wages\nEmployment expanded moderately during the reporting period, though there were scattered reports of layoffs. Contacts noted continued difficulty in finding mid-skilled workers. Shortages of truck drivers and food services staff continued. Demand for craft labor remained healthy for midstream chemical manufacturing and port infrastructure-related construction projects. Labor market tightness in the homebuilding industry eased slightly. Energy firms expressed little to no interest in expanding headcounts. Wage pressures generally remained elevated, particularly in energy-intensive areas, and most staffing firms were raising billing rates. There were multiple mentions of rising health care costs.\nPrices\nInput price pressures remained moderate in the service sector but ticked up in manufacturing partly due to tariffs. Airlines reported higher airport rental and landing fees and maintenance costs. Steel prices softened in part due to lack of demand, while reports on changes in other construction materials prices were mixed. Energy contacts said drilling, fracking, and pressure pumping costs were flat to down. Selling price pressures were generally modest.\nAmong the 360 firms responding to supplemental questions on the impact of tariffs on their businesses in the June Texas Business Outlook Surveys, 36 percent noted experiencing higher input costs and 22 percent cited an increase in selling prices.\nManufacturing\nExpansion in the manufacturing sector picked up in June following softening in May. Output growth in durables was sluggish due to softening in primary metals, fabricated metals, and computer products manufacturing. However, expansion in nondurable goods manufacturing strengthened, with food and chemical manufacturing remaining bright spots. Refinery operating rates were healthy in May and June. Higher prices for heavy crudes processed at Gulf Coast refineries have eroded margin expectations.\nOverall outlooks among manufacturers deteriorated, with trade negotiations and tariffs and uncertainty in energy markets weighing on sentiment.\nRetail Sales\nRetail sales declined over the reporting period. Contacts reported steady demand for autos but weakness in some seasonal segments. Outlooks worsened and uncertainty was elevated partly due to ongoing concerns over tariffs and trade tensions.\nNonfinancial Services\nGrowth in nonfinancial services activity was broad based and accelerated in June. A few contacts said that lower interest rates and momentum from prior solid demand were supporting activity. Staffing services companies continued to experience year-over-year demand increases, with strength widespread geographically and across industries. Activity in the transportation and warehousing sector was elevated, with sea cargo and small parcel volumes up notably compared with last year. Rail shipments fell during the reporting period impacted by bad weather, tariffs, and trade issues. Airlines cited healthy passenger demand, particularly for domestic and corporate travel. Revenues expanded in the professional and technical services, information services, and accommodation and food services industries.\nService-sector outlooks were optimistic on net, although uncertainty surrounding trade policy remained a drag on expectations of future activity.\nConstruction and Real Estate\nHomes sales rose during the reporting period, which most contacts attributed to lower mortgage rates. Sales in DFW were exceeding expectations but remained below year-ago levels, while sales in Austin and Houston were above last year's levels. Lot development and single-family construction in many areas has been delayed by spring rains. Builders remained cautious about signing on new lot deals. Outlooks stayed optimistic with builders generally on plan for 2019, though there was widespread concern about margin compression and the impact of tariffs on material costs.\nApartment demand surged in DFW and Houston in the second quarter, helping rent growth gain momentum in DFW; however, rents in Houston remained flat. Apartment leasing was healthy in Austin and San Antonio, firming up occupancy and rents.\nReports on the office market indicated leasing was most active for new class A space. Industrial demand and construction remained strong.\nFinancial Services\nLoan volumes expanded at a faster pace compared with the previous reporting period. Growth was broad based, with particular strength in residential real estate and commercial and industrial lending. Cost of funds continued to increase, and net interest margins fell further. Credit standards tightened modestly. Outlooks remained optimistic, with most contacts expecting continued increases in loan demand.\nEnergy\nDrilling activity in the Eleventh District slipped further as firms continued to rein in spending and orders for new equipment. Oilfield service companies are hungry for work, and fierce competition is keeping downward pressure on industry margins. Outlooks were more pessimistic and uncertainty increased as a result of a weaker oil price outlook and a challenging environment for debt and equity issuance.\nAgriculture\nMoisture levels remained adequate or surplus across most of the district, delaying some plantings but improving crop conditions overall. Pasture and range conditions were quite favorable. Grain prices rose over the reporting period which, coupled with favorable crop conditions, boosted optimism among producers. However, higher grain prices were a negative for livestock producers, driving up feed costs and damping cattle prices. Many agricultural producers were concerned about imposed tariffs and uncertainty surrounding future trade policy. Cotton demand has been adversely impacted by tariffs and slowing global economic growth.\nFor more information about District economic conditions visit: 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"

Kansas City

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"Beige Book Report: Kansas City\nJuly 17, 2019\nSummary of Economic Activity\nEconomic activity in the Tenth District continued to expand slightly in late May and June, and contacts generally expected a faster pace of growth moving forward. Consumer spending continued to rise slightly as higher sales in the retail and restaurant sectors offset weakness in the auto sales and tourism sectors. Contacts in the manufacturing, wholesale trade, and professional and high-tech services sectors noted flat activity, while respondents in the transportation sector reported modestly lower sales. District real estate activity increased modestly as residential real estate sales remained robust and commercial real estate activity rose modestly. Energy activity across the District expanded slightly, but expectations for future activity fell. District agricultural conditions remained weak, and unfavorable weather significantly delayed planting and harvesting. Bankers reported moderate growth in loan demand as well as higher loan quality and deposits. Employment and employee hours held steady across the District, while a majority of respondents noted labor shortages. Wages continued to rise at a modest pace since the previous survey period. Input prices rose modestly, while selling prices held steady.\nEmployment and Wages\nOverall employment and employee hours were fairly steady since the previous survey period, and employment was expected to rise modestly in the months ahead. Contacts in the retail trade, wholesale trade, real estate, professional and high-tech services, tourism, restaurant, and manufacturing sectors noted steady or rising employment, while respondents in auto sales and health services noted a decline. Employee hours were mixed across reporting sectors.\nA majority of contacts continued to report labor shortages for low- and medium-skill workers, including construction workers, truck drivers, hourly restaurant and hospitality positions, and auto technicians. A few respondents also noted shortages in high-skill occupations such as pharmacists, IT personnel, engineers and pilots. Wage growth continued to rise at a modest pace since the previous survey period, and additional gains were expected moving forward.\nPrices\nDistrict input prices continued to rise modestly, while selling prices held steady. Contacts in the retail sector reported moderate growth in input prices and modestly higher selling prices since the previous survey period. Expectations were for strong growth in both selling and input prices in the months ahead. Respondents in the transportation sector reported flat input and selling prices since the previous survey period, but both were moderately above year-ago levels. Input prices in the restaurant sector rose modestly since the previous survey, while selling prices edged down. Contacts in the restaurant sector expected strong growth in input prices and moderate growth in selling prices in the months ahead. Construction supply respondents continued to report modestly lower selling prices but expected strong gains in the months ahead. Manufacturers noted prices edged up for both finished products and raw materials, and expectations were for prices of finished products to hold steady and raw materials prices to rise modestly.\nConsumer Spending\nConsumer spending grew slightly compared to the previous survey period and year-ago levels, and contacts anticipated modest increases in spending in the coming months. Retail contacts reported moderately higher sales compared to the previous survey period and expected strong growth in the next few months. Retail respondents noted that lower-priced items sold well, while higher-priced items sold poorly. Auto sales continued to fall moderately compared to the previous survey period, although respondents anticipated modest sales increases moving forward. Restaurant sales picked up moderately compared to the previous survey period and continued to be strongly above year-ago levels. However, restaurant respondents anticipated a slight decline in sales in the coming months. Tourism sales fell modestly compared to the previous survey period, and sales were similar to year-ago levels.\nManufacturing and Other Business Activity\nManufacturing activity was flat compared to the previous survey period, and business contacts in the wholesale trade, transportation, and professional and high-tech sectors reported flat or falling sales. Factory production fell slightly due to a decline in activity at durable goods plants, notably those producing computers, electronic products and transportation equipment. Shipments and new orders in the manufacturing sector remained mostly flat, but modest increases were expected in the coming months. Capital expenditures were slightly above year-ago levels, and contacts anticipated additional slight increases to capital spending in the months ahead.\nOutside of manufacturing, firms in the transportation sector experienced modestly lower sales compared to the previous survey period and firms in the wholesale trade and professional and high-tech services sectors reported flat sales. Contacts in the professional, high-tech, and transportation sectors expected sales to expand slightly-to-modestly in the months ahead, while wholesale trade sector contacts anticipated strong sales growth moving forward.\nReal Estate and Construction\nDistrict real estate activity expanded at a modest pace in late May and June, and additional growth was expected in the months ahead. Residential home sales and inventories were solidly above previous survey period levels, and similar gains were expected moving forward. Residential real estate contacts noted that sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Home selling prices fell modestly since the previous survey period but were similar to year-ago levels. Residential construction activity was moderately below year ago-levels, but contacts expected positive gains in the coming months. Commercial real estate activity rose modestly as absorption, completions, construction underway, sales, and prices rose, while vacancy rates fell. Respondents in the commercial real estate sector projected a slight deceleration in activity moving forward.\nBanking\nBankers reported a moderate increase in overall loan demand since the previous survey period. Respondents indicated slight-to-modest increases in the demand for commercial real estate, commercial and industrial, and consumer installment loans, and a strong increase in the demand for residential real estate loans. Demand for agricultural loans remained steady. Bankers indicated a modest improvement in loan quality compared to a year ago and expected a slight improvement in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported a slight increase in deposit levels.\nEnergy\nDistrict energy activity expanded slightly compared with the previous survey period, but expectations for future activity declined somewhat. The number of active oil and gas rigs continued to decrease since the last survey period, especially for oil rigs in Colorado, New Mexico, and Oklahoma. Production remained at high levels. Oil prices inched up recently, while natural gas prices continued to decline. Expectations for future oil and gas prices eased lower, and many firms expected less drilling and business activity in the next six months. However, many regional energy firms reported increased expenditures on software, application development, and related personnel over the last two years, and most firms also expected to increase these expenditures over the next two years.\nAgriculture\nThe Tenth District farm economy remained weak, and delayed planting and harvesting could reduce crop production considerably in some states. Weather conditions led to unprecedented delays in corn and soybean planting in some areas of the region. Wheat harvest was also delayed considerably in Oklahoma, Missouri and Kansas. In late June, the percentage of wheat acres harvested in these three states was less than half of the previous year. While expectations of lower U.S. crop production led to sharp increases in prices over the period, uncertainty about the total number of planted crop acres remained. Weather conditions may also reduce the quality of planted crops, which could dampen revenues for some producers.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\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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"July 17, 2019\nSummary of Economic Activity\nOn balance, aggregate Third District business activity continued at a modest pace of growth during the current Beige Book period. Manufacturing slowed to a slight pace of growth, but nonmanufacturing, nonauto retail sales, and tourism continued at a modest pace of growth. Homebuilding held steady, while the ongoing trend of declines in existing home sales appeared to have slowed. Auto sales as well as commercial real estate construction and leasing continued to decline slightly. Contacts continued to note that trade uncertainty was constraining business investment and expressed relief that tariffs had not been imposed on Mexican products. Wage pressures appeared to rise further, as the labor market remained tight. Overall, price pressures eased but remained modest. The firms' outlook for growth over the next six months remained positive but softened, with about two-fifths of all firms anticipating increases in general activity and less than one-fifth expecting decreases.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. More than one-fourth of all firms reported increases in staff. On balance, average work hours declined across firms.\nStaffing firms noted that new client orders kept pace or resumed a pace consistent with moderate labor demand, but a lack of interested, qualified applicants constrained fulfillment to a modest pace. Commercial real estate contractors have stepped up training programs to replace their experienced workers as more baby boomers retire. A shore contact noted that the tight labor market nationwide led to greater demand for H-2B visas\u2014widely used by seasonal vacation spots. Thus, far fewer visas were awarded to local businesses than had been expected. Owners were observed working their own counters.\nWage growth continued at a moderate pace, but more reports of wage and benefit cost increases\u2014ranging above 3.0 percent to as high as 5.0 percent\u2014suggest that pressure is rising. The share of nonmanufacturing contacts who reported increases in wage and benefit costs rose to over 45 percent; only 2 percent reported decreases. Staffing contacts noted that some manufacturers cannot offer a wage sufficient to attract workers for nontraditional shifts (e.g., night shifts and weekends).\nPrices\nThe firms reported that price increases remained modest for prices paid, but prices received grew only slightly. The share of firms reporting increases fell, while the share reporting decreases rose a bit. Well over half of all firms reported no change in prices. Builders expressed few concerns that material price increases were accelerating, and most banking contacts continued to note no signs of inflation.\nLooking ahead six months, the percentage of manufacturing firms that expect to pay higher prices for inputs fell below 40 percent, and the share expecting to receive higher prices for their own goods fell below 30 percent.\nManufacturing\nOn balance, manufacturers reported slight growth in activity\u2014a slower pace than in the prior period. Shipments and unfilled orders remained somewhat above long-term nonrecession averages; however, the new orders index slipped below its average.\nSince the prior period, the makers of paper products, chemicals, fabricated metal products, and industrial machinery have tended to note gains in new orders and shipments, and the primary metal producers and makers of electronic products tended to note decreases. These trends were somewhat weaker this year compared with the same period one year ago for most of the sectors.\nMost firms continued to note some negative effects from tariffs, including higher costs, lower profit margins, greater uncertainty, and lower capital expenditures on new industrial capacity. Food processors noted relief that tariffs were not imposed on imports from Mexico.\nManufacturers' expectations of activity over the next six months changed little and remained subdued. However, expectations of shipments and of new orders shifted higher and are at or above long-term nonrecession averages. Expectations of future employment and planned capital spending also remain above average, with the latter rising higher over the period.\nConsumer Spending\nOn balance, contacts for malls and convenience stores continued to report modest growth of nonauto retail sales. Some mall store operators reported declines in year-over-year sales but steady foot traffic, which may result from online sales that are picked up at mall stores. Contacts at convenience stores noted strong sales for the overall marketplace, especially when the sun shines.\nAuto sales remained near high levels, with continued signs of slight slowing. One contact attributed a greater share of recent sales to fleet purchases rather than consumer purchases. Pennsylvania dealers reported moderate year-over-year growth through May, but the pace appeared to have slowed in June. New Jersey dealers reported a slight decline in year-over-year sales for May and estimated a modest decline for June.\nTourism activity continued to grow at a modest pace as the summer season began. Weekend food and fuel sales have been strong along the shore routes. Delaware shore contacts noted that the season started early in May and remained busy through June. During the July Fourth week, traffic was \"massive,\" and restaurant waits were long even on a Tuesday night.\nNonfinancial Services\nService-sector firms noted some slowing, but overall, they maintained a modest pace of growth. The percentage of firms reporting increases in current revenues fell, although the percentage reporting increases in new orders edged up. The firms commented on rising uncertainties, including tariffs, inadequate labor supply, uncertain federal policy, and signs of an economic slowdown. One large firm noted a slight uptick in delinquent accounts receivables of its consumer base. The share of firms expecting growth over the next six months fell considerably to under one-half from nearly two-thirds.\nFinancial Services\nFinancial firms reported a continuation of moderate growth in overall loan volumes (excluding credit cards) on a year-over-year basis and a resumption of moderate growth in credit card lending.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly in commercial real estate, home mortgages, and auto lending. Loans grew moderately for commercial and industrial lending and home equity lines. Other consumer loans (not elsewhere classified) were up slightly.\nBanking contacts noted increased uncertainty but remained optimistic about the economic expansion. They continued to note overly aggressive loan pricing and some looser standards, but few credit quality problems.\nReal Estate and Construction\nHomebuilders reported little change in contract signings in May and June. One builder noted that sales have been sufficient through the first six months to make its budget for the year but observed that greater opportunities were found building apartments for lease, rather than homes for sale.\nOn balance, existing home sales declined modestly on a year-over-year basis\u2014a lesser decline than in the prior period. Continued declines in the Harrisburg and Greater Philadelphia markets more than offset sales increases in southern New Jersey. Low inventories continued to limit sales in all markets, despite demand.\nOn balance, commercial real estate construction and leasing activity continued a slight retreat from their recent peaks. In the Greater Philadelphia area, contractors described a flat market at a healthy level and optimism for the remainder of the year. Net increases were still evident in a few industrial markets with sufficient labor supply. Office markets were characterized with relatively even net absorption, stable vacancy rates, and incremental rent growth. Contacts were optimistic that current negotiations would recharge the construction pipeline for office and life sciences research facilities.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/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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"July 17, 2019\nSummary of Economic Activity\nEconomic activity expanded at a modest rate in the First District at the end of the second quarter of 2019. Retailers reported lower comparable store sales, which they attributed to temporary factors including unusually strong activity in the same period last year and inclement weather. Restaurants reported higher sales. Manufacturing firms reported slower growth. Contacts attributed slower growth to tariffs, which drove up costs. In addition, trade policy uncertainty reduced capital expenditures. Software and IT services firms reported mixed growth. Commercial and residential real estate markets enjoyed increased prices and flows of transactions in most markets. Employment growth was mixed: some manufacturing firms laid off workers while other contacts reported difficulty finding workers. Tariffs drove price increases at some firms. Wage and pricing pressure was otherwise modest. Outlooks were positive with some downward revision.\nEmployment and Wages\nContacts reported that wage pressure remained modest. Some firms reduced hiring or laid off workers, but those hiring continued to report a very tight labor market. Manufacturing firms directly affected by tariffs were among the firms with reduced demand for labor. Retailers and restaurants reported that finding workers remained a problem but increased numbers of visas should reduce seasonal labor shortages in tourist areas.\nPrices\nFirms facing increased costs due to tariffs said that they had little trouble passing them on. Otherwise contacts did not report any unusual price pressure either on the supply or demand side. Retailers said that intense competition limited price increases. Menu prices were up by about 3 percent at restaurants, relative to a year-earlier, reflecting higher labor and other operating costs.\nRetail and Tourism\nRetail contacts consulted for this round reported that on a year-over-year basis, overall comparable store sales for late May through June were down by 5 to 8 percent. The explanation for these results varied: one firm cited an unfavorable comparison to a record high increase that was set last year, while other sources attributed the lower-than-expected results to an unseasonably cold and rainy spring in the Northeast having an adverse effect on sales and tourist activity. While these lackluster 2019:Q2 results have raised some concerns, the prevailing expectation is that this trend will prove to be temporary. All contacts said filling open positions is hard.\nRestaurants sales in Massachusetts were up six percent.\nTourist activity on Cape Cod was adversely affected by dismal weather, including 20 days of rain in June. More visas for temporary foreign workers this year mean that the Cape Cod labor shortage should be less than in 2018. The travel industry expects that growth in 2019 will be good.\nManufacturing and Related Services\nReports from our contacts continued to be mixed. The big story this cycle is trade policy, which six of seven contacts discussed in detail. Contacts attributed higher costs, reduced demand and higher uncertainty to trade policy. Contacts said it was typically hard or impossible to divert to non-Chinese suppliers. For firms that produce components, the costs of \"qualifying\" new suppliers usually exceed the benefits. Indirect costs of the tariffs were also significant. For example, one contact complained about having to hire consultants to change computer systems to track the cost of tariffs.\nContacts said the US tariffs and foreign retaliation had weakened demand for their products. Firms that supply electronic components to capital goods manufacturers said investment demand had slowed because firms were delaying capital expenditure plans. One contact said the brief threat to impose 5 percent tariffs on Mexican goods significantly increased uncertainty because it meant that even with an agreement in place, new tariffs were still possible. In general, contacts said they were able to pass the tariff costs onto their customers.\nOne contact reported that previous problems finding trucking capacity had ebbed.\nFive of seven contacts reported flat or reduced employment. A frozen fish manufacturer said it was unable to find workers. A manufacturer of electronic components said it had laid people off as a result of the tariffs, with headcount declining by about 10 percent. For example, the firm had moved an assembly line from the U.S. to Germany because most of the components in the product came from China and making the product in Germany allowed them to avoid the tariffs.\nThree of our contacts reported downward revisions in capital expenditure plans. In general, firms did not cancel but delayed plans in order to get more clarity about tariffs. One contact reported increased capital expenditure to duplicate production currently done in China.\nA majority of contacts said they had negatively revised their outlooks. The major reason was trade policy.\nSoftware and Information Technology Services\nSoftware and IT firms reported mixed outcomes from this past quarter. Half our contacts reported demand and revenue growth that exceeded expectations, attributable to improving business efficiency, newer cloud-based or Internet of Things product lines, and introduction of month-to-month subscription pricing options. Other contacts reported either no change in demand from last year, or decreases in demand in the low single digits. Prices showed no change over the last quarter and one contact who had previously mentioned the potential for price increases later in the year no longer mentioned that possibility. Headcount remained stable with no change quarter over quarter or year over year for the majority of firms. Most contacts remain largely optimistic going into the next quarter mixed with slight apprehension looking toward 2020.\nCommercial Real Estate\nCommercial real estate markets in the First District showed somewhat mixed results in recent weeks. The Boston area saw ongoing robust leasing activity in the high technology and life sciences sectors as well as for industrial properties, and rent growth has been very strong in these sectors over the past twelve months. Although several new office buildings broke ground in downtown Boston in recent weeks, the delivery pace of new office space in the metropolitan area slowed on a year-over-year basis, and ongoing construction activity is not expected to boost vacancy rates any time soon. Sales volume slowed modestly in the second quarter in Boston's office and industrial property markets, but this was attributed to lack of inventory. Elsewhere in the First District, office leasing picked up slightly in the Providence area and held steady at a slow pace in Hartford, and in both of those cities, contacts expect activity to experience a seasonal slowdown in the near term. The outlook also appears mixed. A Connecticut contact highlighted weak business sentiment and fiscal strain as ongoing barriers to growth, while Boston contacts seemed bullish for the near-term but saw external risks coming from financial markets and a weaker macroeconomic outlook.\nResidential Real Estate\nResidential real estate markets in the First District continued to show strong momentum in May. Single family homes market saw robust sales activities, with closed sales and pending sales increased in all reporting areas. Inventory decreased moderately in Rhode Island, Boston and Maine, while Massachusetts and New Hampshire experienced a larger drop.\nHouse prices continued to rise in the region. Prices reached milestones in several places. The median sales price of a house surpassed $300,000 in Rhode Island and $400,000 in Massachusetts both for the first time.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"July 17, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District was little changed on balance in late May and June, though contacts expected it to grow at a modest pace over the next 12 months. Employment increased modestly; business spending increased slightly; consumer spending and construction and real estate activity were flat; and manufacturing decreased slightly. Wages and prices rose modestly and financial conditions improved modestly. More wet weather put further stress on farmers.\nEmployment and Wages\nEmployment increased modestly over the reporting period and contacts expected a similar-sized increase over the next 12 months. Hiring continued to be focused on professional and technical, sales, and production workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. A staffing firm reported little change in billable hours. Wage growth remained modest overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. Many firms reported increased benefits costs.\nPrices\nPrices rose slightly in late May and June, though contacts expected prices to rise at a somewhat higher rate over the next 12 months. Retail prices were little changed. Producer prices rose modestly, reflecting in part higher labor, materials, and freight costs. That said, contacts noted that growth in freight prices had slowed in recent months. Contacts in the auto industry reported that automakers and suppliers were not yet passing on much of their higher costs related to tariffs.\nConsumer Spending\nConsumer spending was little changed over the reporting period. Nonauto retail sales were flat, with reports of increased activity in the furniture and appliance sectors and decreases in the apparel and jewelry sectors. Contacts indicated that restaurant sales increased. Total light vehicle sales were flat, with lower new vehicle sales offset by higher volumes in the used vehicle market. Dealers said that reduced incentives from manufacturers had hurt new vehicle sales; they also noted that the strength in used vehicle sales was sufficient to maintain overall profitability.\nBusiness Spending\nBusiness spending increased slightly in late May and June. Retail inventories were generally at comfortable levels. Manufacturing inventories were also generally at comfortable levels, but there was some increase in the number of contacts reporting higher-than-normal inventories due to slower demand. In contrast, one heavy-duty truck dealer noted a shortage of new trucks. Capital spending moved up slightly, though contacts expected a larger pickup over the next 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Contacts from a number of sectors said that elevated uncertainty about the future state of the economy and international trade policy was holding back investment. Demand for transportation services was flat, but remained at a strong level. Commercial and industrial energy demand edged down.\nConstruction and Real Estate\nConstruction and real estate activity was little changed over the reporting period. Contacts reported a downtick in residential construction. Home sales were flat overall, with increased sales of lower-end homes offset by decreased sales of higher-end homes. Home prices and rents rose slightly. Nonresidential construction increased modestly overall. One contact noted that there was a slowdown in industrial building, particularly for the auto industry, but that civil construction was still doing well. Nonresidential construction contacts again reported that high materials and labor costs were holding back growth. Commercial real estate activity was little changed, as were rents, vacancies, and the availability of sublease space.\nManufacturing\nManufacturing production decreased slightly in late May and June; in general, however, contacts remained comfortable with the level of activity. Demand for steel declined; the drop was broad-based with the exception of the energy sector, where demand was flat. Specialty metals manufacturers reported a slight drop in demand, as lower demand from the auto and construction industries outweighed growth in the aerospace and defense sectors. Order books for heavy machinery manufacturers decreased slightly, due to lower demand from agriculture. Demand for heavy trucks and auto production both slowed some, but remained at solid levels.\nBanking and Finance\nFinancial conditions improved modestly overall during the reporting period. Financial market participants reported some improvement in market conditions, though volatility was slightly elevated. Business loan demand rose modestly, led by growth in the construction sector. Loan quality deteriorated slightly. Standards loosened some as lenders reported strong competition for quality clients. Consumer loan demand increased modestly, with contacts noting that lower interest rates were encouraging increased mortgage activity. Consumer loan quality and loan standards were little changed.\nAgriculture\nMore wet weather in late May and June caused further delays in planting and even poorer growing conditions. One contact in Indiana said, \"I have been farming for 48 years now and this is the worst spring/summer planting season we have experienced.\" Because it is now too late to plant corn and soybeans, contacts said that many farmers would be forced to make insurance claims and plant less-profitable cover crops. Corn and soybean prices moved up as expected yields for the fall harvest declined. Egg and dairy prices increased, while hog and cattle prices decreased. Contacts noted that struggling dairy operations were slaughtering more cows, which contributed to the lower cattle prices.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\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\nJuly 17, 2019\nSummary of Economic Activity\nReports from contacts suggest economic conditions have improved slightly since our previous report. Labor market conditions remained tight, with slight growth in employment and a moderate increase in wages. Price pressures strengthened slightly. Multiple contacts cited tariffs as a contributing factor to higher input prices, but responses were mixed as to whether they would pass these costs on to their customers. Manufacturing activity improved moderately. Barge traffic began to pick up after being halted by the severe spring flooding in the region. Outstanding loan volumes continued to increase, but growth slowed slightly compared with three months prior. Crop quality is noticeably below that of a year ago, mainly due to the recent flooding.\nEmployment and Wages\nEmployment has increased slightly since the previous report. Survey-based measures of employment indicated slight-to-modest growth in manufacturing employment in Arkansas and Missouri. Small business employment declined slightly throughout the District. Contacts continued to report labor market tightness for employees across a broad range of skill levels. To attract and retain workers, firms reported offering a wide array of benefits, including extended parental leave, teleworking opportunities, and assistance with student loans. Furthermore, local governments and companies announced several new education and training initiatives as part of long-term efforts to fill skilled trades, transportation, and tech positions.\nWages have grown moderately since the previous report, in part due to upward pressure from the tight labor market. Contacts in healthcare and the public sector in particular reported pay increases resulting from increased competition for workers. However, small business wage growth was more modest.\nPrices\nPrice pressures have increased slightly since the previous report. Grain crop prices have risen sharply due in large part to recent flooding that has limited the quantity and quality of planted crops. Soybeans, sorghum, wheat, and corn prices have increased 10, 4, 17, and 22 percent, respectively, since the previous report. Local contacts noted that increased feed prices will likely translate into higher meat prices in the future. On the other hand, cotton prices showed slight decreases over the same time period and year-over-year losses in excess of 20 percent. The price of coal also fell modestly.\nLocal contacts in retail and manufacturing held that tariffs affecting access to China and the EU continued to place upward pressure on input prices. However, there were significant differences among firms in their ability to pass elevated costs on to consumers, with some noting that online competition was a limiting force.\nConsumer Spending\nReports from general retailers and hoteliers indicate consumer activity has slightly improved since the previous report. May real sales tax collections increased in Arkansas, Kentucky, Missouri, and Tennessee relative to a year ago. Consumers in West Tennessee, on net, expect to spend slightly more than they did last year. However, the consumer outlook in the region has fallen since March. Missouri contacts reported that tourism spending was slightly lower than a year ago.\nManufacturing\nManufacturing activity has increased moderately since our previous report. Overall manufacturing activity in May was stronger than one month earlier in both Arkansas and Missouri, although the pace of growth slowed. Both production and new orders increased in each state. Several companies across a variety of industries announced new capital expenditure and hiring plans throughout the District.\nNonfinancial Services\nActivity in the services sector has improved slightly since the previous report. The number of posted vacancies for nonfinancial services occupations increased from April to May in Louisville, Memphis, and St. Louis. Transportation activity improved modestly. Both freight and passenger traffic at District airports increased year over year. Barge activity began to recover after being halted by severe flooding in the spring, but overall traffic levels remained depressed.\nReal Estate and Construction\nResidential real estate activity has improved slightly since the previous report. Seasonally adjusted home sales increased slightly in May across Louisville, Memphis, and St. Louis but dipped slightly in Little Rock. Inventory levels remained low.\nResidential construction activity was unchanged. May permit activity was mixed across District MSAs relative to the previous month but increased slightly overall. Local contacts continued to report that labor shortages are restricting construction activity. Builders in St. Louis expect increased permit numbers in the summer as they make up for muted activity earlier in the year caused by wet weather.\nBanking and Finance\nBanking conditions in the District have improved modestly since the previous report. According to reports from bankers, outstanding loan volumes grew by 4 percent relative to year-ago levels in the second quarter, which was a slight decrease from the first quarter of 2019. District growth remained below the national rate for the third consecutive quarter. Commercial and industrial lending continued to expand, but growth slowed significantly to 5 percent year-over-year from 9 percent in the previous quarter. Commercial and residential real estate lending maintained positive, and slightly lower, growth rates compared with the previous quarter.\nAgriculture and Natural Resources\nDistrict agriculture conditions have declined modestly since the previous reporting period and have deteriorated moderately relative to a year ago. Compared with one month prior, the percentage of corn and cotton rated fair or better at the end of June declined modestly, the percentage of soybeans rated fair or better declined slightly, and the percentage of rice rated fair or better increased slightly. The percentages of all four crops rated fair or better were moderately below those from the same time last year. Contacts have frequently attributed the decline in crop quality to the historic flooding along the Mississippi River this spring.\nNatural resource extraction conditions declined slightly from the previous reporting period, with seasonally adjusted coal production falling by less than one percent. Similarly, year-to-date coal production was relatively unchanged compared with this time in 2018.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"July 17, 2019\nSummary of Economic Activity\nSince our previous Beige Book report, the Fifth District economy grew at a modest rate. Manufacturers saw a slight increase in shipments and new orders, but continued to face challenges from the current trade environment. Import volumes remained strong and, at one port, the composition of imports is shifting from China to other Asian countries. Trucking firms, on the other hand, had freight volumes fall below seasonal levels. Nonfinancial services firms reported moderate growth, particularly for construction-related and health care services. Tourism contacts indicated that both business and leisure travel increased in recent weeks, which helped boost restaurant and touring business in some areas. Meanwhile, reports from retailers were mixed. Residential real estate sales picked up modestly, overall, but were constrained by low inventory levels. Commercial leasing and sales also increased modestly in recent weeks, vacancy rates remained low, and rental rates were generally reported as stable to increasing modestly. Fifth District bankers reported deposit growth and a modest increase in loan volumes. Labor markets strengthened, overall, but employers continued to face challenges finding workers and were increasing wages at a moderate rate. Price growth remained moderate, overall.\nEmployment and Wages\nLabor demand strengthened moderately in recent weeks. Employment agencies reported growth in new job openings across all the industry segments they service. Meanwhile, employers across sectors continued to report tight labor markets and difficulty filling positions, particularly for skilled tradespeople, engineers, experienced bankers, IT professionals, and hospitality workers. Wages reportedly grew at a moderate rate, overall, and several firms are increasingly using non-wage benefits, such as flexible work arrangements and additional paid time off, to attract and retain workers.\nPrices\nSince our previous Beige Book, manufacturing firms generally indicated slower, but still moderate, growth for prices paid and a slight acceleration of growth for prices received. Several contacts noted that some raw material prices eased in recent months, including a notable decline in steel prices. Meanwhile, services firms reported a slight increase in both prices paid and prices received, with both growing at a moderate pace. Businesses in both sectors attributed some of the overall increase in prices paid to tariffed imports and paying higher wages to attract and retain workers.\nManufacturing\nOn balance, manufacturers in the Fifth District reported mild growth in recent weeks, with shipments and new orders increasing slightly. A cabinet manufacturer reported solid growth in business, and a food manufacturer planned to increase capital expenditures because of strong demand. On the other hand, several contacts continued to report challenges with tariffs and the trade environment. For example, a North Carolina furniture manufacturer was unable to pass tariff-related cost increases on to customers, and a West Virginia rubber manufacturer attributed a drop in business from Chinese customers to the trade wars.\nPorts and Transportation\nFifth District ports saw robust activity in recent weeks. Import volumes rose and remained above export volumes. One port saw record-breaking imports, with particularly strong furniture imports. A separate port contact noted that furniture imports had shifted away from China, to other South-Asian countries. One port executive noted that exports recently picked up; however, lumber exports to China declined according to multiple Fifth District ports. Meanwhile, an airport reported strong growth in cargo shipments, although growth slowed slightly in recent weeks.\nTrucking companies reported slowing business since our last report, with freight volumes below normal seasonal levels. One executive attributed slowing business to retailers who placed orders to get ahead of the tariffs and still have excess inventory as a result. Companies generally reported that the softer demand led to lower shipping rates, and one company had to eliminate several positions because there was not enough work. On the other hand, another firm continued to look for drivers but said that they no longer needed to raise starting wages.\nRetail, Travel, and Tourism\nThe Fifth District tourism sector continued to grow in recent weeks, with many contacts reporting a strong start to the summer tourism season. Travel for both business and leisure increased, although some hotels struggled with occupancy and rates because of an increasing supply of hotels in their markets. Restaurants and touring companies did robust business as travel was high. Firms expect tourism and travel to remain strong throughout the summer.\nComments from Fifth District retailers varied considerably. A Virginia hardware store had an uptick in business as weather improved. A North Carolina auto dealer saw strong buyer traffic and sales, but expressed concerns about how unrest in the Middle East might affect business in the coming months. Meanwhile, a Virginia high-end clothing retailer reported that business continued to weaken after several soft months, but hoped that July sales events would improve revenues. A North Carolina retailer reported rising prices from suppliers, which was attributed to tariffs.\nReal Estate and Construction\nResidential real estate firms indicated modest growth, overall. Home sales were reportedly stable to increasing modestly in recent weeks. Brokers continued to report that low levels of inventory were constraining sales, and agents said that new listings continued to sell quickly. Meanwhile, residential construction activity remained flat in most areas; however, a broker in Columbia, South Carolina, reported an increase in recent weeks.\nCommercial real estate leasing and sales rose modestly, since our previous Beige Book. Fifth District brokers reported increased demand for industrial space and higher fast casual restaurant leasing. Meanwhile, retail activity varied as small retail sites were generally leasing well but larger anchor tenant leasing had slowed. Commercial office leasing was steady to increasing slightly in most markets. A Charlotte, North Carolina, broker reported conversions of older warehouse space to office space, and also noted high-rise towers with rents starting to push over $40 per square foot. Multifamily leasing and construction remained healthy, overall. Vacancy rates remained low across sub-markets. Lastly, reports indicated that commercial rental rates were stable to increasing modestly.\nBanking and Finance\nOn the whole, loan volumes increased modestly since our previous report. Residential mortgage demand was flat to slightly up in recent weeks, but down slightly compared to last year. Bankers commented that the lack of housing inventory continued to affect the volume of mortgage loans underwritten so far this year. Commercial lending activity rose modestly in recent weeks. Bankers noted increased demand for business investment and commercial real estate development loans. Deposits rose moderately. Bankers said that competition for deposits remained strong, and accordingly interest rates moved higher. Credit quality remained strong while credit standards were generally unchanged.\nNonfinancial Services\nOn balance, demand for nonfinancial services strengthened moderately in recent weeks. Engineering and architecture consulting firms saw strong growth. Overall, health care providers reported growth in services and reimbursements; however, revenues declined in rural hospitals in one area in Virginia. Some firms were concerned that growth could slow in the near future, but they had not altered capital expenditure plans. In fact, one contact reported increased spending on software upgrades and PC replacements.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"July 17, 2019\nSummary of Economic Activity\nEconomic activity remained stable and solid since the prior reporting period. Professional and business services firms continued to report strong growth. Loan demand increased, driven by improved confidence and lower mortgage rates. Lower mortgage rates also motivated increased demand for residential real estate. However, growth in the aforementioned sectors was offset by declines in others. Manufacturing continued to weaken because of trade wars, high customer inventories, and slowing global growth. Freight haulers saw a modest decline in demand, despite summer's typically being the strong season, and they are concerned about the future. Construction demand was flat overall. Consumer spending was flat as well. Employment increased modestly over the period, almost entirely because of hiring in professional and business services. Wages grew modestly overall, with gains reported in most sectors. Overall, prices increased at a slower pace than earlier, primarily because of lower materials costs, especially for steel. Retail was the only sector with appreciable acceleration of price inflation over the period.\nEmployment and Wages\nEmployment in the District increased modestly over the period. Professional and business services firms drove the bulk of hiring. Staffing firms placed more permanent employees than in the prior period. A banker reported increased hiring to keep up with stronger demand for mortgages. Retailers kept nonseasonal employment levels stable and remarked that turnover was at average levels but hiring remained challenging. Manufacturers reported generally stable employment as well. With the exception of seasonal hiring, construction employment was unchanged. Trucking companies did not increase total driver levels, but persistent driver churn motivated continued hiring. Railroad firms downsized employment.\nWages rose modestly overall, with wage growth in most sectors. Retailers reported raising entry-level wages because of persistent labor market tightness. A banker also reported raising entry-level wages incrementally by bringing in each new cohort at a slightly higher level up to a target of $15 per hour at the end of the year. About half of construction and real estate firms reported raising wages recently for the purpose of employee retention. Fewer professional and business services firms raised wages in this period than had in the prior two periods, but some cited poaching of employees as motivating continued wage increases. Several manufacturers implemented cost-of-living increases, and a few also raised wages for retention. After a couple years of strong wage growth for truckers, no trucking contacts raised wages since the last report.\nPrices\nPrice inflation continued to decelerate, with aggregate selling prices rising only slightly over the period. Falling steel prices exerted deflationary pressure on regional manufacturers. Slowing demand for trucking led to declines in spot rates, especially for long-haul. Trucking contract rates also saw slight deflationary pressure; one company commented that it lost a route to undercutting even when holding its own prices constant. The majority of the aggregate price inflation came from retailers, who explained that they were passing along rising wage, tariff, and shipping costs. An auto dealer remarked that invoice prices for new cars have risen. Nonresidential builders did not report any recent materials cost increases, but they padded margins somewhat because of consistently strong demand. Residential subcontractors increased their rates, and some homebuilders raised prices in turn. Professional and business services firms said that increased competition forced them to hold pricing steady.\nConsumer Spending\nRetail activity was relatively flat, as contacts reported mixed demand for seasonal products. Food retailers indicated that demand for seasonal goods increased over the period. However, apparel and sportswear retailers reported that cool and wet weather dampened demand for seasonal products, resulting in softer than expected sales. Auto retailers continued to see a shift from new car sales and leases to used car sales. Certified preowned vehicles were in particularly high demand, as higher interest rates and price increases on new vehicles have taken many customers out of the new vehicle market.\nManufacturing\nConditions in the manufacturing sector weakened further. While contacts continued to cite trade-related factors as causes for the slowdown, many reported that broader economic forces were also at work. A large ramp up in activity in 2017 and 2018 led many customers to overbuild inventories, leading to slower current demand. Meanwhile, slowing global growth, adverse weather\u2014which has impacted construction activity\u2014and other factors have also contributed to the weakening. Materials costs continued to fall, particularly for steel. There were fewer reports than in the prior period that falling prices have bolstered demand.\nReal Estate and Construction\nNonresidential construction and real estate contacts reported strong and stable demand, and they expected this trend to continue in the near future. Backlogs remained solid, and a wide variety of new projects were coming online. Nonresidential builders have revised upward their expectations for demand in the second half of 2019. One builder stated that he has kept expecting that this strong, consistent demand will cause the market to become saturated but that saturation has not happened so far.\nHomebuilders saw mixed conditions; some spoke of slowing momentum, while others said that lower interest rates spurred demand growth. One homebuilder was concerned that slower foot traffic in the current period could signal slower demand in the future. Homebuilders cited the possibility of increased interest rates as the most important risk to their outlook. Residential real estate agents noted improved demand in the summer selling season for both seasonal and nonseasonal reasons. Lower mortgage rates and buyer confidence motivated more first-time homebuyers to enter the market, while older customers downsized their homes. Real estate agents were optimistic about demand through the remainder of 2019.\nFinancial Services\nLoan demand increased modestly since the last report. Home loan and refinancing activity increased as mortgage rates dropped. Most community banks reported loan growth driven by strong economic conditions and business and consumer confidence. Demand for commercial credit remained stable and strong. Core deposits grew modestly. Delinquency rates continued to be low. Bankers believed conditions will slightly improve through the quarter, but they were less optimistic about revenue growth in 2019 than they had been at the beginning of the year. Bankers cited the yield curve, the potential for lower interest rates, and international relations as the primary risks to the outlook.\nProfessional and Business Services\nProfessional and business services firms saw robust growth, as almost 70 percent of firms reported improving business conditions over the period. Improved interest in offerings, new partnerships, and larger pools of funding were cited as some of the primary drivers of growth in the sector, and firms expected these positive conditions to continue. However, political uncertainty, trade policy, and uncertainty regarding the risk of a downturn were cited by some contacts as notable risks to the sector.\nFreight\nActivity in the freight sector softened modestly over the period. Even a modest decline is noteworthy because freight shipments typically pick up substantially in the summer. While some firms reported increases in activity because of their reputation and their ability to attract new customers, the majority of firms reported softening demand, particularly for long-distance shipping. Flooding in the Midwest, low demand for fertilizer, and generally slower economic growth were among the causes of the softer demand contacts described. One contact reported that weaker year-over-year growth rates were causing concern among fleets. Freight firms generally expected demand to remain softer, or even decline further, in the coming months.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\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\nJuly 17, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-May through June. Conditions in the labor market remained tight, employment growth was modest, and wage growth was moderate. Price inflation remained unchanged on balance. Sales of retail goods increased moderately, while activity in consumer and business services increased somewhat. Conditions in the manufacturing sector were mixed. Conditions in agriculture deteriorated modestly. Contacts reported that residential real estate market activity expanded moderately, and commercial activity grew modestly. Lending activity picked up moderately.\nEmployment and Wages\nThe labor market remained tight and employment growth was modest. Some contacts reported that employment growth would have been higher if not for persistent shortages of qualified labor. In Eastern Washington, a large employer in the utility sector shifted some of its existing workforce into information technology-related functions, given the difficulty of hiring for those roles. To fill vacancies in construction positions, some employers in Idaho discussed whether to relax certain hiring standards related to drug testing. In Southern California, some employers increased investments in workforce development programs to hire and train workers from labor pools that may have been overlooked in the past.\nWages continued to rise moderately over the reporting period due to brisk competition for qualified workers across sectors. Wages for construction jobs rose solidly in parts of the District where building activity picked up. Hourly rates for delivery drivers at a major shipping and logistics business in California rose moderately. A few businesses continued to adjust to increased minimum wages in their states, which have put upward pressures on starting pay. Some businesses relied increasingly on signing bonuses and expanded benefits packages to fill vacancies.\nPrices\nPrice inflation remained unchanged on balance. For many businesses, brisk competition in final goods markets limited the ability to raise selling prices to offset higher costs, which rose because of compensation pressures and higher input costs. A few businesses that import heavily from China reported higher input costs due to tariffs. Lumber prices remained substantially lower than they were last year. Prices for most other building materials increased somewhat over the reporting period. In Seattle, a restaurant industry contact reported weak upward price pressures for food and beverages, while a payments services provider noted that higher hardware costs were being passed on to clients. Inflation in the agriculture sector overall remained modest, but market prices for beef and pork rose noticeably due to decreases in global supply.\nRetail Trade and Services\nSales of retail goods increased moderately. In the Pacific Northwest and the Mountain West, tight labor markets with solidly rising wages supported brisk consumer spending. In Oregon, sales at home improvement stores rose moderately on a year-over-year basis, and a major apparel company based there reported that demand was healthy and should remain so, thanks to elevated consumer confidence. Spending at e-commerce outlets continued to displace some foot traffic at brick-and-mortar retailers, but the impact has been uneven across the District.\nActivity in the consumer and business services sectors increased somewhat. Demand for shipping and logistics services remained solid. A major service provider in the District noted that they expect continued brisk shipping activity thanks to strong consumer spending and innovations in their service offerings, such as expanded mobile checkout options. Restaurants in the Pacific Northwest reported moderate sales growth because of the healthy regional economy. Growth in airline passenger volumes in the Los Angeles area slowed slightly, though retail revenue growth at airports picked up as per-passenger spending increased. In the wider Southern California region, contacts reported weakening conditions in the hospitality industry, visible in fewer bookings for both leisure and business guests and a shift in preferences to more affordable rooms.\nManufacturing\nActivity in the manufacturing sector was mixed. Production of heavy building machinery and construction materials like asphalt declined somewhat due to lower domestic demand. Some of the weaker demand was attributed to poor weather in regions outside of the District, which delayed building projects there. A business that supplies natural gas and electricity to various manufacturers noted that demand from their aerospace and metals-producing customers was especially solid, likely reflecting the impact of recent protective tariffs in the case of the metals producers. In Northern California, activity in the semiconductor sector recovered from a dip in recent months, with healthier sales and inventory levels.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated modestly. Poor growing conditions for wheat and corn resulted in yields weaker than normal in the Mountain West, though some contacts said this boosted profitability slightly on net as selling prices ticked up. Demand for lumber from major trading partners like China continued to run soft due to trade tensions, and domestic demand was also weak due to slower national building activity in recent months. A lumber producer in Oregon observed that some landowners initiated plans to reduce log supply in response to continued weak demand. Fruit growers in the Pacific Northwest also noted subdued demand from foreign trading partners owing to trade developments. A contact in Central California observed stable domestic demand for a variety of crops, though uncertainty surrounding global demand ticked up. Domestic producers of beef, pork, and poultry continued to benefit from the impacts of a swine fever outbreak in China, which limited Chinese meat imports. In the utilities sector of Southern California, electricity sales growth was flat and generation capacity remained well above demand.\nReal Estate and Construction\nResidential real estate markets expanded moderately. In most areas, demand remained elevated while supply continued to be somewhat constrained by worker and materials shortages, putting further upward pressures on selling prices. In the Mountain West, construction activity did not keep pace with growing demand for both single-family and multifamily housing in urban areas, raising affordability concerns further. In Oregon, the completion of several apartment complexes and single-family developments resulted in brisk selling activity, especially for more affordable units. A couple of contacts reported a tick down in housing demand in Washington and Central California, as evidenced by growing time-on-the-market, but still expected generally stable market activity over the rest of the year.\nIn the commercial real estate market, contacts reported modest expansion. In Washington, construction activity was strong, and builders had long lists of planned projects, especially in urban areas. Demand for office space in Seattle was high, and the vacancy rate was nearly the lowest in the country. A contact in Central Oregon reported that demand for retail space picked up noticeably, but remained at a slightly lower level relative to previous economic expansions. Commercial permitting for Idaho and Oregon as a whole was down modestly.\nFinancial Institutions\nLending activity picked up moderately over the reporting period. Contacts across the District noted healthy demand for loans, supported by historically low interest rates, and observed that credit availability was steady. In the mortgage market, refinancing activity increased modestly as mortgage rates declined. Loan quality remained solid, though a contact in Oregon reported that loan quality in their region's agriculture industry deteriorated slightly due to declines in profitability in the sector.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJune 5, 2019\nThis report was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before May 24, 2019. 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\nEconomic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period. Almost all Districts reported some growth, and a few saw moderate gains in activity. Manufacturing reports were generally positive, but some Districts noted signs of slowing activity and a more uncertain outlook among contacts. Residential construction and real estate both showed overall growth, but both sectors saw wide variation in sentiment across Districts. Reports on consumer spending were generally positive but tempered. Tourism activity was stronger, especially in the Southeast, but vehicle sales were lower, according to reporting Districts. Loan demand was mixed but indicated growth. Agricultural conditions remained weak overall, but a few Districts reported some improvements. The outlook for the coming months was solidly positive but modest, with little variation among reporting Districts.\nEmployment and Wages\nEmployment continued to increase nationwide, with most Districts reporting modest or moderate job growth and others reporting slight growth, an assessment similar to the previous reporting period. Solid hiring demand was noted for retail, business services, technical, manufacturing, and construction jobs and by staffing agencies in general. However, stronger employment growth continued to be constrained by tight labor markets, with Districts citing shortages of both high- and low-skill workers. Competition for workers reportedly applied some wage pressures across a wide range of occupations and induced improvements in benefits to attract more workers and to improve retention of existing employees, according to several Districts. However, overall wage pressures remained relatively subdued given low unemployment rates; a majority of Districts reported modest or moderate wage growth.\nPrices\nOverall prices continued to increase at a modest pace in most Districts since the previous report. While several Districts noted faster growth in input prices than in final selling prices, firms generally reported input cost increases in the modest-to-moderate range. Contacts in several Districts reported higher freight prices. Reports from manufacturers on input prices were mixed, with some Districts citing an easing in steel and other metals prices, while contacts in others noted that raw materials prices remained elevated. Construction materials prices, including those for lumber, also eased in several Districts. Retailers generally reported flat to slightly increased selling prices. Despite increases for certain agricultural commodities, prices remained low relative to historical levels.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest-to-moderate pace in most sectors, although a majority of manufacturers saw declines. Several staffing firms suggested that a shift in the balance of requests from direct hires toward longer contracts for temps indicated an increase in uncertainty among their clients. Most business contacts remained at least guardedly optimistic about the outlook.\nNew York\nRegional economic activity expanded at a moderate pace in the latest reporting period. Despite persistently tight labor markets, wage growth was subdued, as was inflation generally. Consumer spending and tourism grew modestly. There was a notable expansion in new commercial construction and a modest firming in the office market. Housing markets also firmed somewhat. Banks reported a fairly broad-based pickup in loan demand.\nPhiladelphia\nOn balance, business activity accelerated further to a modest pace of growth during the current Beige Book period following slight growth in the prior period. Trade uncertainty has delayed business investment, and tight labor markets have constrained expansion and spurred wage hikes. Still, inflation remained modest, and the firms remained positive about the six-month outlook.\nCleveland\nEconomic activity grew modestly overall. Service-focused industries grew the fastest, both in terms of demand and in terms of employment. Nonauto consumer spending increased. Manufacturing declined slightly. Employment rose modestly. Wages increased moderately overall and grew faster in white-collar than blue-collar industries. Price inflation decelerated.\nRichmond\nOn balance, the regional economy grew modestly in recent weeks. Manufacturers saw a decline in shipments and new orders, while trucking firms said that business was below normal. Meanwhile, ports saw strong import volumes, tourism remained high, and real estate sales and leasing picked up modestly. Labor markets tightened, and difficulty finding workers constrained growth for some retail and nonfinancial services firms.\nAtlanta\nEconomic activity grew at a modest pace. The labor market continued to be described as tight. On balance, wages held steady but rose for select positions. Retail sales were largely unchanged since the previous report. The pace of home sales picked up. Manufacturers noted increases in new orders and production. Bankers noted stable activity.\nChicago\nEconomic activity increased slightly on balance. Employment increased modestly; consumer spending, business spending, and construction and real estate increased slightly; and manufacturing was little changed. Wages and prices rose modestly, and lending picked up slightly. Farmers continued to be challenged by poor weather and low crop prices.\nSt. Louis\nEconomic conditions were generally unchanged from the previous report. Contacts in most sectors reported slightly positive to no growth. However, contacts in banking, real estate, and agriculture noted slight to moderate declines. Overall, contacts' economic outlook for the reminder of the year remains slightly optimistic.\nMinneapolis\nNinth District economic activity grew slightly, with several sectors seeing mixed or flat growth, including commercial construction and real estate. Labor demand remained healthy, but signs of softness were apparent. Residential construction and real estate remained soft, but manufacturers were upbeat about near-term expectations. A wet spring has threatened the planting season for already-struggling agricultural producers.\nKansas City\nEconomic activity continued to expand at a slight pace in April and early May. Home sales increased strongly, and consumer spending rose slightly, driven by moderate gains in the retail sector. In addition, manufacturing, wholesale trade, transportation, and professional and high-tech activity rose modestly. However, energy activity fell slightly, and agricultural credit conditions and farm income weakened.\nDallas\nEconomic activity expanded moderately, although there were scattered signs of a deceleration in growth in early May. Home sales rose, and loan volumes continued to increase. Hiring continued at a moderate pace, and wage pressures remained elevated. Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was unchanged on balance. Sales of retail goods increased modestly, and activity in the consumer and business services sectors increased moderately. Conditions in the agriculture and manufacturing sectors improved modestly. Activity in residential real estate markets expanded moderately, and commercial activity was steady. Lending activity increased slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"June 5, 2019\nSummary of Economic Activity\nOverall, the Fifth District economy grew at a modest pace since our previous Beige Book report. Manufacturers reported a slight decline in shipments and new orders. Trucking firms also reported a slowdown in recent weeks with volumes falling below normal levels and below expectations. Meanwhile, port activity remained strong, particularly for imports from Europe and Southeast Asia; however, port contacts expressed concerns about potential impacts from the latest round of tariff increases. Tourism remained strong across the Fifth District; however, in some cases, labor shortages led to cutbacks. Retailers gave mixed accounts with some mention of excess inventory and paying higher prices for tariffed products. Reports from nonfinancial services firms were also mixed. Health care and construction-related firms saw healthy growth, but some professional and legal services saw slower growth due to more cautious business spending and labor constraints. Home sales and mortgage lending grew modestly, overall, as did commercial real estate leasing. Bankers generally indicated modest loan demand, moderate deposit growth, and strong credit quality. Labor markets remained tight and wages rose modestly, overall. Prices continued to grow at a moderate rate.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks, while supply remained tight across industry sectors. Employment agencies noted a slight increase in job openings while staffing firms reported increased demand for entry-level positions and a pickup in permanent and executive search services. Businesses reported difficulty filling positions for accounting and finance professionals, administrative staff, IT professionals, engineers, health care professionals, electricians, and construction workers. Wage increases remained modest across sectors, but staffing firms reported increased wage pressures.\nPrices\nFifth District manufacturing and services firms generally indicated that input price growth continued to outpace growth in prices received, but both remained moderate, overall. Several firms attributed recent input cost increases to labor and raw materials as freight and energy prices were flat to slightly lower. Some manufacturers noted that prices leveled off but remained high for steel, aluminum, and resin. Meanwhile, a food manufacturer noted an uptick in prices for commodities, such as sugar, poultry, and pork.\nManufacturing\nFifth District manufacturers reported slightly slowing growth since our last report, as shipments and orders fell. A Maryland manufacturer reported cutting staff because of slowing business and high expenses. Manufacturing contacts continued to express concerns about the effects of trade policy. Meanwhile, some contacts attributed the fall in new orders to retailers wanting to reduce inventories. However, an elevator manufacturer reported strong business, with a backlog extending into 2020, and was able to charge higher prices.\nPorts and Transportation\nPorts in the Fifth District saw strong activity since our last report. Growth of imports continued to outpace that of exports, but exports remained solid. One port noted particularly strong growth in imports from Europe and Southeast Asia. Consumer goods, especially automobiles, remained strong on both the import and export sides. A port executive attributed an increase in both imports and exports of machinery, construction, and farm equipment to positive economic sentiment. However, some port contacts expressed concern about uncertainty surrounding the potential effects of the latest round of tariff increases.\nFifth District trucking softened slightly in recent weeks, with business below normal seasonally and also below expectations. Firms reported fairly steady rates but the drop in volumes shipped led to lower revenue. Several companies also saw demand and prices fall in the spot market. Several trucking firms reported reducing the amount they had planned to spend on equipment because of uncertainty and slower business.\nRetail, Travel, and Tourism\nFifth District tourism remained strong since our last report. Hotels generally reported growth in occupancy, room rates, and advance bookings for both business and leisure travel. The District of Columbia saw an increase in both visitation and visitor spending in recent weeks. Meanwhile, in Charleston, South Carolina, demand for hotel rooms increased, but rates remained low, as many of the bookings came from corporate accounts with predetermined rates. A few hospitality contacts said that labor shortages led to cutting back on services. Additionally, several restaurants in Charleston, SC, closed because they couldn't find enough staff. Moreover, one restaurant moved to counter service and disposable utensils in order to remain open with a smaller staff.\nRetailers reported mixed conditions in recent weeks. Clothing retailers reported that a build-up of inventory from trying to get ahead of tariffs was preventing them from placing new, seasonally appropriate orders. Other retailers continued to struggle with high prices of products resulting from tariffs. However, a Virginia auto dealer saw higher sales and increased profit margins as manufacturers strengthened sales incentives. A kitchen supply retailer reported high inventories but strong sales, and a hardware store attributed strong sales to good weather.\nReal Estate and Construction\nHome sales increased modestly in recent weeks and were reportedly higher than last year. District Realtors reported that single-family inventories remained low, new listings continued to sell quickly, and buyer traffic was steady. Home prices rose modestly, while days on the market were generally unchanged at low levels. Meanwhile, new residential construction and sales continued at a modest pace while speculative construction was limited.\nCommercial real estate leasing rose modestly, overall. District brokers continued to report strong industrial leasing activity; however, reports on office and retail leasing were mixed. Vacancy rates remained low across most markets. Rental rates were stable for retail and office space, while rates increased modestly for industrial space. Commercial sales rose slightly, while commercial construction increased modestly in most regions, with healthcare, warehouses, and data centers representing the majority of new projects. Multi-family leasing and construction remained healthy in most markets.\nBanking and Finance\nSince our previous Beige Book, loan demand grew modestly. Business loan demand increased slightly while automotive lending was reportedly flat. Meanwhile, bankers said that consumer demand was stable. In the District on the whole, residential mortgage demand grew at a modest pace. Deposits rose moderately, on balance, in recent weeks. Credit quality remained strong while credit standards were generally unchanged.\nNonfinancial Services\nSince our previous Beige Book, reports from nonfinancial services firms were mixed. Services related to construction, such as engineering and architecture, saw increased demand and a growing backlog of work. Also, health care providers reported higher volumes and increased access due to employment growth. However, some professional and legal services firms reported a slowdown in activity, due to more cautious business spending and difficulties finding workers. Meanwhile, corporate giving to nonprofits fell.\nFor more information about District economic conditions visit: www.richmondfed.org/research/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\nJune 5, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of April through mid-May. Conditions in the labor market remained tight, hiring activity remained generally stable, and wage growth was moderate. Price inflation remained unchanged on balance. Sales of retail goods increased modestly, while activity in consumer and business services increased moderately. Conditions in the manufacturing sector improved modestly. Conditions in agriculture also improved modestly. Contacts reported that residential real estate market activity expanded moderately, and commercial activity was steady. Lending activity increased slightly.\nEmployment and Wages\nConditions in the labor market remained tight, with persistent worker shortages reported across various skill levels and industries. Hiring activity remained generally stable over the reporting period. Contacts continued to report elevated competition for workers, difficulty in filling vacancies including entry-level positions, and a shrinking pool of qualified applicants. Many contacts across the District noted that hiring and retaining information technology professionals has been particularly challenging. Contacts in the food services and banking sectors reported an increase in hiring connected to the opening of new locations. Contacts in other sectors, including electronics, manufacturing, utilities, public agencies, and nonprofit organizations, noted that hiring remained generally flat. A quick service restaurant chain in the Pacific Northwest noted that employment levels remained unchanged. A contact in Hawaii reported that following recent increased numbers of lawyers and technological alternatives, hiring in the legal practices sector has softened.\nWage growth continued to rise moderately over the reporting period. Across the District, upward compensation pressures persisted due to brisk competition for workers and higher minimum wages in California and soon in Oregon. Contacts particularly noted increasing entry-level wages for both low- and high-skilled workers. A few contacts also reported offering more comprehensive benefit packages in order to attract and retain workers.\nPrices\nPrice inflation remained unchanged on balance. Most contacts across the District, particularly in the finance and technology sectors, reported steady price increases. Some contacts in the transportation and food services sectors reported price increases beyond those implemented earlier in the year. The ability to pass increased labor costs and tariffs to final consumers varied across different sectors, and in some instances even within the same sector. A contact in the California utility sector observed that some price inflation resulted from wildfire-related costs. Contacts in the agriculture sector noted that export prices continued to be subdued. A few contacts in the construction sector mentioned that prices for lumber and other wood products were considerably lower relative to the previous year.\nRetail Trade and Services\nSales of retail goods increased modestly. Contacts across the District reported higher retail sales over the reporting period relative to earlier in the year. Contacts reported that most growth has taken place within the online retail market, leading some larger retailers to close certain brick-and-mortar locations across the District. Contacts in the electronics and automotive sectors described sales growth as steady. A large animal product retailer in Arizona mentioned that consumer spending is becoming more polarized, with items at the high and low ends of the price spectrum seeing the largest sales growth.\nActivity in the consumer and business services sectors increased moderately. Demand for shipping and logistics services saw strong growth across several product lines, including warehousing services. Food service providers in the Northwest reported strong demand because of the strong regional economy. Contacts in Hawaii noted that the tourism sector remains robust. Contacts in the health care and insurance sectors reported steady demand, while a contact in the passenger air transportation sector noted that demand softened somewhat.\nManufacturing\nConditions in the manufacturing sector improved modestly. Contacts in the metal manufacturing sector reported that raw materials were readily available and that capacity utilization remains elevated relative to historical averages. One steelmaker in the Pacific Northwest reported strong domestic demand backed by order backlogs and reduced competition from abroad, though another noted a tick down in all new orders. On the export side, demand for finished metals was somewhat softer. A contact in Northern California reported that demand for semiconductors and smart phones fell modestly due to increased competition from abroad, which in turn led to excess inventory accumulation.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector improved modestly. Many contacts reported stable demand and adequate supply throughout the District, with inventories and planted acreage remaining at healthy levels. Domestic demand for agricultural products remained steady, although a contact in the peach and apricot markets reported increased competition from producers in states outside the District. Concerning export demand, contacts noted that continued trade policy tensions affected some products more intensely than others. Contacts in California and the Mountain West mentioned that demand from abroad has declined for grain, potatoes, walnuts, and cattle markets. Contacts in the swine market reported that the outbreak of a particular strand of swine fever in foreign markets has constrained global supply and increased demand for domestically produced pork products, putting upward pressure on prices. One contact in Central California continued to express concern over higher-than-expected rainfall and its potential effects on the output of crops that are nearing harvest season, such as cherries. In the utilities sector, activity remained mostly unchanged, with one contact in Southern California reporting flat sales growth.\nReal Estate and Construction\nResidential real estate markets expanded moderately. Contacts noted that declines in mortgage rates spurred demand for both single-family and multifamily housing. Contacts in Idaho and California noted that demand for entry-level homes rose briskly, inventories remained low, and prices appreciated notably. Most contacts reported robust construction activity over the reporting period. A few contacts in Southern California mentioned that homebuilding activity in the area was steady at a low rate, with builders initiating projects only after completed sales.\nIn the commercial real estate market, contacts reported steady activity. Across the District, contacts generally noted that demand for commercial space remained at healthy levels but softened somewhat relative to earlier in the year. Contacts noted that nonresidential construction activity was buoyed by the industrial real estate sector; demand for physical retail and office space has cooled.\nFinancial Institutions\nLending activity picked up slightly over the reporting period. Contacts in Central California, the Pacific Northwest, and Idaho continued to report strong loan demand and credit availability. Elsewhere in the District, contacts reported a slowdown in lending activity. Contacts at community banks highlighted that competition between lenders remained elevated. Most contacts reported that loan quality remained generally high, though a contact in Southern California and another in Oregon observed a modest deterioration in underwriting standards.\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\nJune 5, 2019\nSummary of Economic Activity\nEconomic growth in the Second District picked up to a moderate pace in the latest reporting period. The labor market has remained very tight, while wage growth has been largely subdued. Both input prices and selling prices have continued to increase at a modest pace. Manufacturing activity grew at an increasingly brisk pace, as did activity in some service sectors; however, growth in the distribution industries slowed somewhat. Consumer spending and tourism expanded modestly. Housing markets firmed somewhat, as the rental market continued to improve and the sales market picked up modestly. Commercial real estate markets have also firmed slightly, on balance, and new office construction has expanded noticeably. Finally, banks reported a broad-based increase in loan demand.\nEmployment and Wages\nThe labor market has remained very tight across the District, as employment agencies report persistent difficulties finding workers\u2014particularly those with IT skills. Businesses continued to characterize employment as flat to up slightly. Firms in wholesale trade, transportation, real estate & construction, and leisure & hospitality reported increased staffing levels. In contrast, businesses contacts in the retail trade, professional & business services, information, and leisure & hospitality sectors noted little change in employment. A New York City employment agency reported particularly brisk demand for human resource workers.\nDespite persistently tight labor markets, wage growth has been fairly subdued, though highly skilled workers have seen larger hikes. Large IT firms have reportedly been luring top employees from smaller tech firms by offering generous benefits and salary hikes. A number of businesses in New York State have noted ongoing challenges from the recent minimum wage increase; some reported that they are investing more in automation.\nPrices\nBusinesses reported that both input prices and selling prices rose at about the same modest pace as in the last report. Input cost pressures tended to be most widespread in the wholesale & retail trade, transportation, and education & health sectors. The most widespread rises in selling prices were reported from the leisure & hospitality, wholesale & retail trade, and real estate & construction sectors.\nRetailers generally indicated that selling prices have been flat. One major chain reports that it has raised prices on some merchandise (such as furniture and leather goods) in order to pass along cost increases due to tariffs. Prices for Broadway theatre admissions edged up in April but declined in May, running 8-9 percent lower than a year earlier.\nConsumer Spending\nRetail sales have remained essentially flat in the latest reporting period. A major retail chain noted that sales in the region were slightly below plan and little changed from a year earlier, with a decline in store sales offset by growth in digital sales. Retailers in upstate New York indicated modest growth in retail sales, with shopper traffic buoyed by unseasonably cold and wet weather. Inventories were generally said to be at or around desired levels, though some overhang was reported for warm-weather merchandise.\nNew vehicle sales rebounded modestly from sluggish levels and were roughly on par with comparable 2018 levels, according to dealers in upstate New York. New vehicle inventories remained elevated. Sales of used vehicles were reported to be steady to somewhat stronger in recent weeks. Dealers indicated that consumer credit has remained widely available, though the cost of holding inventory has increased as floor plan rates have moved up.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) fell in both March and April, reaching its lowest level in more than a year, based on the Conference Board's monthly survey.\nManufacturing and Distribution\nThe manufacturing and distribution sectors have been mixed. Manufacturers reported a significant pickup in activity in recent weeks, while transportation firms noted a pause in activity. Wholesale distributors reported steady, moderate growth.\nLooking ahead, wholesale distributors have remained fairly optimistic, and contacts in the manufacturing and transportation industries expressed renewed optimism about the near-term outlook. Some businesses expressed ongoing concern about trade uncertainty, tariffs, and the increase in New York State's minimum wage.\nServices\nService-sector businesses overall reported some improvement in the latest reporting period. Contacts in the information and finance sectors noted a pickup in activity, while those in business & professional services reported steady, moderate growth. However, contacts in the education & health service sector indicated that activity was flat.\nLeisure & hospitality firms reported a pickup in business in April and early May. Broadway theaters reported that attendance has been steady to somewhat higher in recent weeks, running modestly above a year earlier. However, revenues weakened in the first half of May, running more than 5 percent below comparable 2018 levels.\nReal Estate and Construction\nHousing markets across the District have picked up somewhat since the last report. Homes sales in upstate New York have picked up further, and low inventories of unsold homes have continued to boost prices. In New York City, the inventory of unsold homes has continued to climb, though prices appear to have stabilized. The volume of transactions remains subdued and down noticeably from a year earlier. There continues to be concern about the federal tax changes, which diminish the tax-deductibility of homeowner expenses, and thus some of the tax advantage of owning versus renting.\nResidential rents across the District have continued to rise since the last report and are up from a year earlier. In New York City, rents have continued to rise at a modest pace, as rental vacancy rates remain exceptionally low. Landlord concessions, though still somewhat prevalent, have receded further.\nCommercial real estate markets have firmed slightly since the last report. Office availability rates have edged up in New York City and Long Island but have fallen noticeably across the rest of the District. Asking rents have been steady across downstate New York but have risen modestly in upstate New York and northern New Jersey. The market for retail space has remained soft, particularly in and around New York City. Industrial markets, in contrast, have remained fairly robust across most of the District.\nNew multi-family construction starts have been subdued, though a sizable volume of residential construction has remained in progress in and around New York City. However, there has been a significant pickup in new office construction in New York City, as well as its northern suburbs, and there has continued to be a good deal of office construction in progress throughout the metro area, including northern New Jersey.\nBanking and Finance\nSmall to medium sized banks across the District reported widespread increases in loan demand across all categories. Bankers reported no change in refinancing activity. Credit standards were reported to be lower for consumer loans but unchanged for all other categories. Banks reported unchanged loan spreads across all categories and widespread increases in the average deposit rate. Finally, reports on delinquency rates were mixed, declining for consumer loans but rising on commercial mortgages.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\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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"June 5, 2019\nSummary of Economic Activity\nOn balance, aggregate Third District business activity strengthened further to a modest pace of growth during the current Beige Book period. Growth was characterized as slight in the prior period. Growth of manufacturing, nonauto retail sales, and tourism picked up to a modest pace, while homebuilding held steady and auto sales appeared to have fallen slightly. Contacts noted that tariffs continued to prompt concerns, induce uncertainty, and delay business investment. The labor market tightened further and continued to constrain employment growth and spur moderate wage increases. Overall, price pressures remained modest. The firms' outlook for growth over the next six months remained positive and edged higher overall, with more than half of all firms anticipating increases in general activity and less than a third expecting no change.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. About one-fourth of all firms reported an increase in staff. This was a bit higher than last period for manufacturers, but lower than the previous period for nonmanufacturing firms. On balance, average work hours appeared to be flat to down across firms.\nMost staffing firms noted that orders were flat to down through the first quarter and into the second. Some firms were beginning to see a pickup as the second quarter progressed. One firm suggested that uncertainty had prompted firms to delay hiring. Several firms, however, noted that finding workers remains difficult as the labor market continues to tighten and that this has continued to constrain their ability to expand.\nWage growth continued at a moderate pace, with reports of wage and benefit cost increases clustered around 3 percent. However, some firms noted that wage pressures had eased recently and that turnover rates had improved. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged back down to near 40 percent.\nPrices\nPrice increases remained modest for most firms. The share of firms reporting increases ranged from one-fifth to one-third, while well over half of all firms reported no change in prices. The share of manufacturing firms reporting increases in prices paid rose but edged lower for prices received; these trends were reversed among nonmanufacturers. Most banking contacts continued to note few signs of inflation.\nLooking ahead six months, the percentage of manufacturing firms that expect to pay higher prices for inputs edged down below 50 percent, while the share of firms expecting to receive higher prices for their own goods rose above 40 percent.\nManufacturing\nOn balance, manufacturers resumed modest growth in activity after noting a slight increase in the prior period. Shipments and unfilled orders are running a bit above long-term nonrecession averages; however, new orders are at typical levels.\nThe makers of lumber products, chemicals, fabricated metal products, and industrial machinery tended to note gains in new orders and shipments, while primary metal producers reported little change.\nTariffs remained a key concern for many manufacturers. Contacts noted that much of the impact from the initial 10 percent tariffs was absorbed along the supply chain before reaching the consumer. However, they expect much more of the impact from the 25 percent tariffs to be passed through to the consumer.\nManufacturers' expectations of activity and of new orders over the next six months have changed little since last period and have generally remained below long-term nonrecession averages. Expectations for future shipments did rise somewhat, as did expectations of future employment and planned capital spending. The latter two indicators were above their historical nonrecession averages.\nConsumer Spending\nContacts for malls and convenience stores reported modest growth of nonauto retail sales \u2013 a faster pace than the prior period. After some store brands closed in the first quarter, the surviving mall stores may have garnered higher sales. Convenience stores noted no signs of slowing and cited ongoing activity from early morning construction workers.\nAuto sales remained at high levels, with signs of slight slowing. In Pennsylvania, dealers continued to report strong year-over-year growth through April, beating expectations and national trends, although April sales may have fallen off the pace set in the first quarter. Looking back to 2018, sales had been strong in the first quarter and then fell in April, so current comparisons are tougher than first quarter comparisons. In New Jersey, early estimates by dealers indicated a modest decline in year-over-year sales for April and May.\nTourism activity picked up to a modest pace of growth in the early spring with \"blockbuster\" growth noted in the Greater Philadelphia market. Bookings for the summer were described positively (ahead of the Memorial Day weekend), and more Canadians are showing up at the Jersey Shore. Concerns were expressed that consumers were digging deeper into their discretionary income to fund their travel and that uncertainty may be dampening business travel.\nNonfinancial Services\nOn balance, activity at service-sector firms continued at a modest pace of growth, although the percentage of firms reporting increases in current revenues and in new orders slipped somewhat. Numerous firms commented on the uncertainty of business conditions stemming primarily from tariffs and other political issues. Yet, one large firm noted no substantive signs of a downturn, and the percentage of firms expecting growth over the next six months rose to nearly two-thirds.\nFinancial Services\nFinancial firms reported a continuation of moderate growth in overall loan volumes (excluding credit cards) on a year-over-year basis and a continuation of modest growth in credit card lending.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly in home mortgages and auto lending. Loans grew slightly for commercial and industrial lending. Commercial real estate loans, home equity lines, and other consumer loans (not elsewhere classified) were flat to down slightly.\nBanking contacts continued to note looser lending standards and aggressive pricing but few problems with credit quality. Contacts in and out of the banking sector have noted that firms are now taking longer to pay (but without becoming delinquent); some suggest this may represent the relative value of money now that deposit interest rates are higher. Bankers and their customers continued to be bullish for the remainder of 2019.\nReal Estate and Construction\nHomebuilders noted no change in contract signings for early spring on a year-over-year basis after growing slightly last period. However, better weather this spring has been good for construction activity, and one builder noted that spec houses had sold well.\nExisting home sales continued to decline moderately across most local markets. The spring sales season brought no relief to the falling inventory of new listings.\nOn balance, commercial real estate construction and leasing activity continued to edge back from relatively high levels, but contacts describe markets as healthy with room to grow for the remainder of 2019. Office and industrial markets were characterized with positive net absorption, stable vacancy rates, rent growth, and incremental new construction.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\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\nJune 5, 2019\nSummary of Economic Activity\nEconomic conditions have been unchanged since our previous report. Firms continue to report that difficulties finding employees is the main constraint on growth. Wages continue to increase moderately, with relatively stronger growth for low-wage and entry-level positions. Overall inflation pressures continue to weaken, consistent with firms' prior expectations. Most firms see some ability to raise prices over the next few months. Overall, the outlook among contacts remained slightly optimistic, but notably weaker than the same time last year. On net, a slightly greater share of contacts expect conditions during the remainder of 2019 to be better or somewhat better than the same period in 2018.\nEmployment and Wages\nEmployment has grown slightly since our previous reporting period. On net, 10 percent of contacts reported that employment was higher or slightly higher than a year ago. Reports of labor market tightness persisted across several industries, including, but not limited to, transportation, construction, and healthcare. Furthermore, multiple manufacturing contacts reported that the shortage of qualified workers has worsened, and a contact in St. Louis reported that many employees left the firm before completing their first week in their new job. However, several contacts in Louisville reported employment gains in skilled trades, in part due to successes in recruiting recent high-school graduates.\nWages have increased moderately since our previous report. On net, 36 percent of contacts reported that wages were higher or slightly higher than a year ago. Firms reported that increased competition for workers continued to put upward pressure on wages. In St. Louis, contacts reported that larger firms were offering higher pay to attract workers, particularly for entry-level positions, but that small businesses were struggling to raise wages at the same rate.\nPrices\nPrices have increased slightly since our previous report, although overall inflation pressures have continued to soften. On net, 34 percent of contacts reported higher input prices, and 16 percent reported higher prices charged to consumers. However, the share of contacts reporting higher labor and non-labor costs declined for the second consecutive quarter. Similarly, the share reporting higher prices charged to consumers declined for the third consecutive quarter.\nThe softening inflation pressures seemed to be expected: Among those respondents responsible for setting prices, most noted that their price changes over the past three to six months met expectations. On net, the ability of business contacts to increase consumer prices was unchanged over the past three to six months: 57 percent felt that they would have some ability to increase prices over the next three months.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate consumer activity has slightly increased since our previous report. April real sales tax collections increased in Kentucky and Missouri but decreased in Arkansas relative to a year ago. March real sales tax collections slightly increased in Tennessee relative to a year ago. Auto dealer contacts generally reported flat sales; however, multiple dealers have seen new vehicle sales decline, citing higher lending rates. March Arkansas tourism sales tax revenue was flat year over year.\nManufacturing\nManufacturing activity has been mixed since our previous report. Several firms across a variety of industries reported new capital expenditure and facility expansion plans, while several manufacturers announced plans to close. Contacts in the corrugated packaging industry reported slow growth attributed to the current trade dispute with China. In a recent survey, contacts reported weakening manufacturing conditions: On net, a slight majority of contacts reported that production and capacity utilization were lower in the second quarter relative to one year ago, while new orders remained at the same level. This follows a trend from our previous reports of weaker activity but is the first reported decline. However, contacts are slightly optimistic about the next quarter, with net majorities expecting growth increases in production, orders, and capacity utilization. Other survey-based manufacturing indexes indicate that activity in Arkansas and Missouri continued to expand from March to April. New orders and production also increased in both states.\nNonfinancial Services\nActivity in the nonfinancial services sector has improved slightly since our previous report. On net, 19 percent of survey respondents reported higher sales since the same time last year, and 28 percent expect this growth to continue into the third quarter. However, over half of contacts noted that sales midway through the second quarter have fallen short of expectations. Transportation contacts generally reported a pessimistic outlook, noting the adverse effects that weather has had on business. Traffic volume across major waterways, highways, and airports has been generally unchanged since our previous report. However, flooding of the Mississippi River has negatively affected barge traffic. Airport passenger volumes were higher in both St. Louis and northwest Arkansas relative to a year ago.\nReal Estate and Construction\nResidential real estate sales have declined modestly since our previous report. Seasonally adjusted home sales decreased modestly across the four largest MSAs in the District. On net, around 7 percent of survey respondents reported a decrease in demand for single-family homes relative to a year ago, and most noted that second-quarter sales have fallen short of expectations. Contacts continued to report inventory shortages, although inventories have increased slightly.\nResidential construction activity declined slightly. There was a slight decline in April permit activity across most of the District's MSAs. On net, respondents reported no change in activity relative to the same time last year but expect a slight increase in the next quarter.\nCommercial real estate activity was mixed. Survey respondents reported a slight decrease in year-over-year demand for retail property space and a slight increase in demand for industrial and distribution property space. They expect these trends to continue into the next quarter. Contacts in Little Rock noted that demand for multifamily properties remains strong.\nCommercial construction activity improved slightly. Contacts reported a healthy level of construction activity, propped up by a few large projects. However, their outlook has weakened somewhat, as they expect the average size of new projects to decline over the next twelve months. Local contacts continued to report labor shortages.\nBanking and Finance\nBanking conditions in the District have weakened slightly since our previous report. Demand for mortgages slightly increased relative to one year ago, while commercial and industrial loans remained constant, and demand for auto loans slightly decreased. Bankers expect a slight increase in overall loan demand in the third quarter. Credit standards were generally unchanged compared with year-ago levels but continued to tighten for commercial and industrial loans. Overall delinquencies rose on a year-over-year basis but are expected to remain unchanged in the third quarter.\nAgriculture and Natural Resources\nAgriculture conditions declined moderately from our previous report and have significantly worsened relative to the same time last year. The number of acres planted experienced significant declines compared with previous years, which contacts have attributed to significant flooding along the Mississippi River. As of mid-May, the percentages of planned acreage planted for corn and soybeans were around 50 percent lower than this time last year and about 30 percent lower for rice and cotton. Contacts have continued to report concerns over depressed crop prices and the effects of renewed trade tensions with China.\nNatural resource extraction conditions have improved modestly since our previous report. Seasonally adjusted coal production increased 15 percent from March to April. However, April production was down 18 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"June 5, 2019\nSummary of Economic Activity\nThe Fourth District's economy grew modestly with some improvement to business demand. Professional and business services was the fastest-growing sector during the period as increased confidence motivated clients to spend on new projects. Financial services reported growth, especially for construction and real estate lending. Nonauto consumer spending accelerated, but auto purchases declined modestly. Homebuilders and real estate agents saw slightly increased housing demand, partially because of the spring selling season. Manufacturing activity in the District declined slightly because of slowing global demand. Employment grew modestly, driven by the service sector. Wages rose moderately overall, but they rose faster for white-collar industries than blue-collar industries. Prices decelerated to a modest pace. Manufacturers cited an easing of materials costs pressures, retailers absorbed cost increases, and competition held down professional and business services prices.\nEmployment and Wages\nDistrict employment increased modestly, with much of the gains concentrated in services. Professional and business services and banks added workers at a healthy clip thanks to growing demand. A couple of contacts in these sectors noted that automation had reduced the need for workers in some functions but that they had increased hiring for more analytical roles. A few retailers added workers to keep up with increased demand. Nonresidential builders increased staffing levels because of good weather and strong demand, while homebuilders reduced staffing levels slightly. Changes to manufactures' staffing levels were mixed. One industrial equipment manufacturer remarked that the firm was more cautious in hiring in order to prepare for future business conditions. Transportation employment declined slightly as companies looked to reduce costs. Several contacts in various industries reported that their growth was hamstrung by lack of workers. One steel producer noted that staff levels fell because they could not find replacements.\nWages rose moderately as employers encountered tight job markets. Although wages rose in all industries, they rose faster in white-collar industries than in blue-collar industries. Professional and business services firms reported difficulty finding qualified workers and found that competitors were luring away workers by offering higher salaries. One technology contact reported that he had given raises to employees who had been with the firm less than a year in an effort to retain them. Bankers reported wage increases across job levels, but especially for tellers, in order to compete with recent wage increases from retailers. General merchandise, food and hospitality, and auto retailers all reported raising wages because of competition for workers. Wages in the freight sector rose modestly\u2014one freight contact characterized it as an \"upward drift.\" Construction firms held wages steady, for the most part. A few manufacturers raised wages for retention, citing tight labor markets, but fewer raised wages than had in the prior two periods.\nPrices\nSelling prices rose modestly overall, a deceleration of prices relative to growth rates during the last several periods. Manufacturers reported final selling prices were mostly unchanged because materials costs, especially for steel and other metals, fell during the period. This is a notable change from circumstances during the last several periods when manufacturers consistently raised prices to cover materials cost increases. Retailers reported strong input cost pressures stemming from higher freight costs, marketing costs, tariffs, and, for auto retailers, new-vehicle costs. A few retailers raised prices to cover these cost increases, but many elected instead to absorb the cost increases. A few nonresidential builders reported that strong backlogs enabled them to increase their margins. Home price increases were inconsistent across the District; contacts in markets that were experiencing stronger population growth reported stronger price appreciation. Trucking contacts reported somewhat smaller price increases relative to those in previous periods, with the decrease in pricing power concentrated in the long-haul segment. Strong competitive pressures kept prices for professional and business services flat.\nConsumer Spending\nOverall, activity in the retail sector accelerated through the period. Nonauto retailers cited seasonality, promotions, and the continuation of trends in growth as the primary drivers of the modest growth in the period. The majority of nonauto retail contacts believe these trends will continue into the next quarter. By contrast, auto retailers saw a modest decline in activity. One auto retailer reported that sales were down in the last two months because the payments on new cars have been increasing as a result of higher interest rates. Auto contacts reported that they expect new-vehicle sales to be flat or even to decline in the near future.\nManufacturing\nManufacturing activity declined slightly. Contacts attributed slowing demand to weakness in global markets, especially in demand for light vehicles and related parts. Many contacts are concerned that the increased tariffs on goods traded with China will further exacerbate softening manufacturing activity in China, leading to less demand for American products from Chinese manufacturers. Others noted that weakness has also emerged in some European markets. Some contacts reported that they are holding off on capital expenditures in the short term. Despite uncertainty about trade negotiations and slowing global growth, backlogs remain stable, and manufacturers were relatively upbeat. Many noted that there is usually an uptick in activity during the summer months.\nReal Estate and Construction\nDemand for nonresidential real estate and construction was steady during the period, while residential demand increased slightly. Nonresidential builders are busy, with strong and increasing backlogs. One builder mentioned that extensions and expansions of existing contracts are contributing to rising backlogs. Nonresidential builders acquired new projects at a pace in line with that of the prior period, and they commented that demand in this period was strongest from industrial and healthcare customers. Homebuilders noted improved demand because of the spring selling season and because of urgency spurred by the possibility of higher interest rates in the future. Homebuilders started more homes in this period than in last period. Real estate agents reported slightly improved sales and unchanged housing inventory.\nFinancial Services\nBanking conditions improved modestly. Many contacts reported an increase in commercial construction and real estate lending. Residential mortgage demand picked up seasonally, though several contacts noted that growth in mortgage demand is constrained by lack of housing inventory. Competition for core deposits remained stiff, particularly for lower-rate deposits. Bankers dismissed potential concerns about a slight rise in delinquency rates, noting that these remain low by historical standards and that consumer and commercial financial positions remain strong.\nProfessional and Business Services\nProfessional and business services firms reported strong growth in the period. Expanding markets, new products, consumer confidence, and a favorable competitive landscape were among the variety of factors reported as contributing to this growth. However, one legal firm reported that tariffs had resulted in decreased deal flow. Overall, expected conditions are favorable in the sector because increased budgets from clients and consumers and strong project pipelines will continue to drive growth.\nFreight\nReports from the freight sector were mixed. Some contacts reported that demand was strong in the beginning of the period, citing seasonal improvements, while others reported demand had decreased over the same timeframe. Firms that reported a decrease in activity indicated various reasons, such as that meat loads had been soft because of Lent, light-vehicle shipping had weakened, and coal shipments were down. One contact who saw a decline in demand, especially for long-distance trucking, said he was unsure whether this is a real decline in demand or just a temporary deceleration because of pull-ahead effects of tariffs in prior periods. Freight contacts expect demand to remain relatively flat for the remainder of the current quarter.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"June 5, 2019\nSummary of Economic Activity\nModerate expansion continued in the Eleventh District economy, although there were scattered signs of deceleration later in the reporting period. Growth in the manufacturing, nonfinancial services, and retail sectors was solid in April but softened in early May. Home sales rose and loan volumes continued to increase, led by growth in residential real estate lending. Ample soil moisture boosted prospects in the agricultural sector, though prices for several commodity declined. Drilling activity weakened. Employment rose moderately, despite being constrained by a tight labor market. Wage growth remained elevated, while price growth was mixed. Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty.\nEmployment and Wages\nEmployment expanded moderately during the reporting period. However, energy contacts voiced little interest in growing headcounts this year. Contacts continued to report difficulty finding workers, particularly for mid-skill positions. The shortage of truck drivers continued, and the construction labor market remained tight. Wage pressures generally remained elevated.\nPrices\nInput price pressures remained moderate in the service sector but continued to ease in manufacturing after peaking last year in the wake of tariff announcements. An auto dealer said higher interest rates versus last year have dramatically increased the cost of carrying inventory, and transportation services firms noted rising fuel costs. Multiple contacts mentioned the long delays at the Mexico border were adding to transportation costs. Homebuilders said material costs were mostly stable, and energy contacts said drilling and fracking costs declined slightly. A couple of contacts\u2014in manufacturing and the service sector\u2014noted that the latest tariffs on Chinese imports will raise their costs more. Selling price growth was moderate, and reports were mixed regarding firms' ability to raise prices in step with cost increases.\nManufacturing\nExpansion in the manufacturing sector continued at a moderate pace in April, with growth led by durable goods. Machinery manufacturing in particular posted notable strength after some weakness earlier this year. While output growth in nondurables eased slightly, chemical manufacturing remained a bright spot with accelerating production. Gulf Coast refinery operating rates remained healthy in April as gasoline margins improved and the summer outlook firmed.\nReports of early May activity showed a downshift in growth to a more modest pace. Outlooks worsened slightly and uncertainty increased, with trade negotiations and tariffs, the political climate, and labor constraints weighing on business sentiment.\nRetail Sales\nRetail sales picked up notably in April but declined in early May. Contacts reported strength in construction-related segments but weakness in autos and along the Mexico border. Outlooks worsened and uncertainty increased. Retailers cite tariffs and the resulting impact on pricing as a key concern going forward.\nNonfinancial Services\nGrowth in nonfinancial services activity continued at a moderate pace in April but slowed somewhat in May. Several contacts said the recent weakness was due to tariffs, and a few mentioned sluggish activity in the oil and gas sector dampening their business. In transportation services, the Texas ports posted gains in cargo traffic over the reporting period, and small parcel as well as air cargo volumes increased. One contact mentioned the negative impact that ride sharing was having on car rental companies and mass transit activity. Staffing services companies continued to report year-over-year demand increases, with strength broad based across geographies and industries.\nService-sector outlooks were less optimistic, with numerous mentions of uncertainty surrounding trade policy. Specifically, several contacts indicated a downshift in demand growth if there is a not a resolution to the trade dispute with China, although a few were optimistic that an agreement would be reached and benefit the U.S. long term.\nConstruction and Real Estate\nSales of new and existing homes rose during the reporting period. Contacts noted higher foot traffic in April, and a few added that new-home contract cancellations were down relative to yearend 2018. Spring rains delayed lot development and single-family construction in some areas. Finished vacant home inventories edged up. Outlooks were optimistic with builders generally on plan for 2019, although some contacts expressed concern about margin compression and trade policy uncertainty.\nApartment market conditions were mostly positive. Rent growth remained robust in Austin and modest in Dallas. Rents were flat in Houston, but contacts expect growth to firm up in the near term. Industrial demand and construction remained vibrant, and investor interest in commercial real estate continued to be solid.\nFinancial Services\nLoan volumes increased over the past six weeks, at a pace similar to what was seen in the previous reporting period. Growth was led by residential real estate lending, with a third of banking contacts noting an increase in volumes. Growth was also seen in commercial real estate lending, while volumes of consumer and commercial and industrial loans were relatively flat over the reporting period. Loan pricing continued to increase, while net interest margins continued to decline. Credit standards and terms were unchanged from six weeks ago. Banking contacts remained optimistic, expecting future loan demand to continue to increase.\nEnergy\nDrilling activity in the Eleventh District continued to erode as firms reined in spending and orders for new equipment. However, contacts continued to note that activity will increase once new pipeline construction is completed. As a result of declines in exploration and capital expenditures in the energy sector, oilfield services firms and capital goods suppliers have experienced a slowdown and were not planning expansion until demand increases.\nAgriculture\nWet weather over the reporting period allowed moisture conditions to remain adequate or even in surplus across most of the district. While causing late plantings in some areas, overall, the rain impact was positive as it boosted growing conditions. The wheat crop was in great shape, though prices remained weak. Pasture conditions remained favorable for livestock grazing. Contacts expect a big cotton crop this year, but prices have moved lower than the cost of production for many producers. Trade discussions have put a strain on agricultural markets in general, and raised concern from agricultural industry leaders.\nSeveral agricultural producers in southern New Mexico expressed concern over the lack of labor force growth and the strain that immigration restrictions have imposed on their current workforce. They also mentioned that the recent authorization of hemp production provides an opportunity as an alternative to pecan production, as the pecan industry has been negatively impacted by tariffs.\nFor more information about District economic conditions visit: 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"

Chicago

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"June 5, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly on balance in April and early May, though contacts expected growth to pick up to a modest pace over the next 12 months. Employment increased modestly; consumer spending, business spending, and construction and real estate increased slightly; and manufacturing was little changed. Wages and prices rose modestly, and lending picked up slightly. Farmers continued to be challenged by poor weather and low crop prices.\nEmployment and Wages\nEmployment increased modestly over the reporting period and contacts expected a similar-sized increase over the next 12 months. Hiring continued to be focused on professional and technical, sales, and production workers, though there was a noticeable decline in the number of contacts hiring professional and technical workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. Some contacts in the construction industry indicated they are increasingly hesitant to provide quotes for projects because of difficulty in finding workers. A staffing firm reported little change in billable hours, though there was a decline in demand from the auto industry. Wage growth remained modest overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. There was a noticeable decline in the number of firms reporting wage increases for management occupations. Many firms reported increased benefits costs.\nPrices\nPrices rose modestly in April and early May, though contacts expected prices to rise at a moderate rate over the next 12 months. Retail prices increased slightly. Producer prices rose modestly, reflecting in part the pass-through of higher labor, materials, and freight costs. Numerous contacts expressed concerns about the impact on input costs of higher tariffs on Chinese imports.\nConsumer Spending\nConsumer spending increased slightly over the reporting period. Nonauto retail sales increased modestly, with strength in the lawn and garden and restaurant segments offset by weakness in the furniture segment. One contact noted that spending growth continues to be strongest for discount retail, recreational, and entertainment establishments. Travel and tourism contacts in the Detroit area reported a slight increase in activity. Overall, light vehicle sales were flat, with lower new vehicle sales offset by higher volumes in the used vehicle market. Contacts reported that some automakers had reduced incentives for new vehicles, particularly for leasing. Many dealers said that 2019 year-to-date sales of new vehicles were lower than expected.\nBusiness Spending\nBusiness spending increased slightly in April and early May. Retail inventories were generally at comfortable levels, though some contacts reported elevated inventories due to lower-than-expected seasonal sales. There also were some reports of inventory building in anticipation of increased tariffs on Chinese imports. Manufacturing inventories were at comfortable levels overall, though one auto industry supplier indicated that stocks were elevated because some customers had delayed taking delivery of their orders. Capital spending moved up only a little, though contacts expected a larger pickup in spending over the next 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Demand for transportation services was flat, but remained at a strong level.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly over the reporting period, and contacts characterized the market with terms such as \"plowing ahead\" or \"solid.\" Residential construction contacts reported a moderate increase in building, led by entry-level homes and mixed-use developments. Home sales edged up, as increased activity in the low- and moderately-priced segments outweighed decreased sales of high-priced homes. Prices and rents increased slightly. Nonresidential construction edged higher, with growth in the office sector offset by declines in the industrial sector. Contacts reported that high labor and materials costs were holding back growth. Commercial real estate activity also edged up. One contact in Chicago noted increased demand for large industrial buildings. Rents, vacancies, and the availability of sublease space were little changed.\nManufacturing\nManufacturing production was little changed in April and early May. Demand for steel was flat, with little change across major sectors. Demand for heavy trucks was flat, though activity continued at a strong level. Auto production was unchanged as well, but also remained at a solid level. Specialty metals manufacturers reported little change in demand, as a pickup in demand from the aerospace and defense sectors was offset by less demand from the auto industry. Order books for heavy machinery manufacturers decreased slightly, with reports of lower demand from the agriculture sector. Manufacturers of building materials reported little change in demand overall, though a contact in Iowa reported a decline due to weather-related delays in construction projects.\nBanking and Finance\nLending picked up slightly over the reporting period, while there was little change in credit quality. Business loan demand rose slightly, with growth reported in the medical, professional services, and real estate sectors. Loan quality and standards were little changed. Consumer loan demand increased slightly, primarily because of increased mortgage refinance volumes, which contacts attributed to lower interest rates. Consumer loan quality and standard were little changed. Financial market participants noted increased volatility and generally attributed it to investor concerns about the outcome of international trade negotiations.\nAgriculture\nWet weather and low prices continued to be challenges for farmers in April and early May. There were reports of planting delays throughout the District because fields were too wet. Contacts indicated that it would soon be too late to plant corn in some areas and that switching to soybeans, while possible, would be costly due to wasted fertilizer and the low price of soybeans. Contacts also noted that the poor field conditions were adding to some farmers' financial distress. In other market segments, hog and dairy prices were up, while cattle prices were down. Hay prices moved higher as the slow development of pastures this spring meant livestock required supplemental feeding. Contacts believed that the removal of Mexican and Canadian tariffs on US livestock would boost exports.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"June 5, 2019\nSummary of Economic Activity\nSixth District business contacts reported that economic activity continued at a modest pace from April through mid-May. The outlook among contacts remains optimistic as most firms expect modest growth to continue over the next three to six months. District firms continued to report labor market tightness. Although overall wage growth remained moderate, pressure was noted among low-skill, trucking, construction, technology, and medical positions. Most nonlabor input cost pressures remained subdued. On balance, District merchants reported steady sales levels since the previous report. The tourism sector continued to experience solid activity. According to residential real estate contacts, home sales were up and prices were flat compared with a year ago. Commercial real estate contacts indicated leasing and sales activity continued to advance across most parts of the District. Manufacturing purchasing managers cited increases in new orders and production. Banking conditions remained steady.\nEmployment and Wages\nSimilar to the previous report, many District firms added to headcounts; however, a number of business contacts expressed that labor market tightness was slowing the pace of hiring and constraining growth. Employers continued to invest in training programs to upskill new and existing employees. Some contacts added that funding for training and skills development was impacting starting salary budgets. Firms also continued to push for productivity and efficiency enhancements, typically through automation and technology investment, in an effort to reduce the need to add workers or augment the lack of available talent. Further, some business contacts reported adjusting employment standards, e.g., implementing remedial training and relaxing attendance policies, in order to attract and retain workers.\nAnnual wage increases, on average, remained between 3-4 percent, though many contacts expressed that labor costs were accelerating when full compensation costs, including healthcare, bonuses, and other incentives, were factored in. Wage pressures remained most acute among low-skill, trucking, construction, technology, and medical positions. As a way to avoid the higher cost of hiring new talent, some firms noted directing more wage dollars towards retention efforts.\nPrices\nOverall, reports from District firms remained consistent with the previous report, with some contacts indicating costs were increasing. While some businesses noted pricing power, there were some accounts of firms considering alternative approaches to maintain margins and offset increases. The Atlanta Fed's Business Inflation Expectations survey showed that year-over-year unit costs were up 1.8 percent in May. Survey respondents indicated that they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nRetail sales levels were unchanged from the previous report; however, online sales continued to grow at a faster pace than brick-and-mortar sales. The sentiment among District retailers and automotive dealers was mixed with those affected by tariffs expressing concern over trade policy uncertainty.\nSentiment among travel and hospitality contacts was unchanged from the previous reporting period. Contacts in Georgia, Florida, and Louisiana noted that demand for hotel rooms, flights, and attractions was on par with expectations for the second quarter. The outlook remains positive for the summer season.\nConstruction and Real Estate\nHealthy economic fundamentals and declining mortgage interest rates continued to fuel optimism among District housing contacts. Although still below 2018 levels, firms indicated that the pace of home sales accelerated during the 2019 spring selling season. Meanwhile, the level of existing home inventory contracted and home price appreciation remained flat. Moving forward, as inventory levels continue to decline and construction costs for new homes edge higher, contacts indicated that home prices may experience increased upward pressure, making housing affordability a concern for many markets.\nCommercial real estate (CRE) leasing and sales activity remained generally steady across most District markets and property sectors during the reporting period. Overall, most sectors experienced positive dynamics as rents continued to grow and vacancies trended downward at a modest pace. Business contacts reported strength in the multifamily, industrial, and office sectors. Outside of retail, the rate of new CRE construction remained at or above the long-term average.\nManufacturing\nDistrict manufacturing contacts reported a moderate rise in overall business activity since the last reporting period. Most firms indicated that new orders and production levels increased, while also reporting a modest decline in finished inventory levels. Contacts suggested that supply delivery times were essentially unchanged since the previous report. Expectations for future production levels fell slightly from the previous report, with just under half of contacts expecting higher production levels over the next six months.\nTransportation\nReports from District transportation contacts were little changed since the previous report. Ports noted further strength in shipments of containers, and some reported continued investments in capacity expansion and channel deepening projects in anticipation of future growth. Railroads saw significant declines in overall traffic from year-earlier levels; year-to-date volumes were also down. Trucking companies indicated that freight activity improved from a soft first quarter, but was still down from a year ago. Regarding trade policy uncertainty, some transportation contacts developed contingency plans to reduce capital expenditures and headcount to offset tariff-related revenue shortfalls. Expectations at District ports are for the pulling forward of freight ahead of the tariffs followed by a drop off in activity in the second half of the year.\nBanking and Finance\nImproved earnings and solid loan performance kept conditions at financial institutions steady since the previous report. Contacts reported increased competition for deposits continued to put pressure on net interest margins. Still, earnings improved slightly due to tighter expense control and lower provisions for loan losses. In total, loan growth at financial institutions increased marginally although consumer loan growth continued to decline. Asset quality metrics remained healthy with nonperforming assets near historic lows.\nEnergy\nCrude oil production and investment maintained an upward trend, though lack of adequate infrastructure to transport product to Gulf Coast refineries remained a challenge. Contacts reported significant investment in pipeline infrastructure projects. Firms also continued to sanction crude oil storage expansion projects. Investment in liquefied natural gas (LNG) units continued to pick up. Chemical manufacturing contacts shared that production volumes picked up after a slow start to the year. Renewable energy contacts indicated that construction of solar farms in Georgia were near completion and power wind farms in Florida were recently announced. Utilities contacts reported that while residential and commercial activity declined slightly over the reporting period, industrial activity was up among new and existing customers. District energy contacts remain optimistic about near-term activity.\nAgriculture\nAgricultural conditions across the District were mixed. Recent reports indicated much of the District was drought-free although parts of Alabama, Georgia, and the Florida panhandle experienced abnormally dry to moderate drought conditions. Conversely, recent heavy rains interfered with fieldwork in Louisiana and Mississippi where both soybean and rice planting were behind the five-year averages. Alabama, Georgia, and Tennessee were ahead of the five-year average in cotton planting, while Alabama, Florida, and Georgia were ahead of their five-year planting averages in peanuts. Several contacts reported that the combination of low commodity prices and some rising input costs were resulting in compressed margins. The May Florida orange forecast was down from the prior month's forecast, but continued to be higher than last season's production. On a year-over-year basis, prices paid to farmers in March were up for corn, cotton, and beef but down for rice, soybeans, broilers, and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.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"

Minneapolis

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"June 5, 2019\nSummary of Economic Activity\nThe Ninth District economy grew slightly overall since the last report. Employment grew modestly, while wage pressures rose moderately and price pressures were modest. The District economy saw growth in consumer spending and manufacturing. Commercial construction and real estate were mixed, while energy and mining were flat. Residential construction and real estate both fell, and agriculture remained weak.\nEmployment and Wages\nEmployment grew modestly since the last report, hampered by tight labor, with some modest signs of softness. In general, hiring demand remained healthy. Most staffing firms across the District reported somewhat higher job orders in April and early May compared with last year. An ad hoc survey of large Minnesota employers found that half were hiring to increase total employee head count. A similar survey of human resources professionals in Montana found that three in four firms were hiring, though a larger share was doing so to replace turnover rather than add personnel. April job openings in North Dakota and Minnesota were 6 percent higher and 3 percent higher, respectively, compared with a year ago. Minnesota also recently reported a record number of job vacancies. But tight labor was widely blamed for subduing stronger employment gains. A Minnesota staffing contact said, \"We keep stirring the [labor pool] pot, and there's nothing left in it that wants to work.\" Every District state saw initial unemployment claims fall over the most recent six-week period (ending in early May) compared with the same period a year ago. Some softness was evident. April job openings in Montana, South Dakota, and Michigan's Upper Peninsula were all down 7 percent or more compared with a year earlier. Minnesota has added only 700 net jobs over the first four months of the year, and its unemployment rate has risen by one-tenth of a percentage point for four consecutive months.\nWage pressures rose moderately. A sizable majority of Minnesota and Montana firms responding to the aforementioned ad hoc polls said wages rose less than 3 percent over the past year, and wage expectations for the coming 12 months were slightly lower. However, a number of contacts noted significantly faster wage growth. North Dakota and Minnesota staffing firms said wages were up more than 7 percent over a year ago, though a western Wisconsin staffing contact said wage increases had \"been a little cold recently.\" A Minnesota manufacturer increased hourly wages for welders from $18 to $22 to better compete for labor. A Minnesota health care firm saw 6 percent wage growth, with support staff receiving larger increases for retention.\nPrices\nPrice pressures remained modest overall since the last report. Retailers responding to a survey reported that increases in final prices remained subdued overall; however, wholesale prices saw modestly higher rates of increase. The majority of respondents to a separate survey of large firms reported increases in nonlabor input costs of 3 percent or less over the past year. Contacts in manufacturing continued to note substantial increases in metals prices. Retail fuel prices in District states in late May were generally flat relative to the previous reporting period. Prices received by farmers in March increased from a year earlier for corn, wheat, hay, milk, cattle, and turkeys; prices for soybeans, eggs, chickens, and hogs decreased.\nConsumer Spending\nConsumer spending rose moderately since the last report. Gross sales in Wisconsin increased by almost 6 percent in April compared with a year earlier and by 5 percent in South Dakota. Sales of new vehicles in the western portion of the District were down slightly in April, but sales of used vehicles were notably higher. Industry data showed that first-quarter sales of camping, travel, and other recreational vehicles were down across the District compared with the previous year, as were sales of all-terrain and other powersport vehicles. However, a Montana banker noted that retailers of boats and other recreation-type vehicles were increasing their inventories, \"anticipating strong spring and summer sales.\"\nTourism was reportedly slowed by a cool spring. However, a survey of Minnesota tourism businesses, released in mid-May, found that 36 percent of respondents expected their summer occupancy to rise compared with last year\u2014twice the rate of those who expected declines. Hotel occupancy rates and revenue per average room in Minnesota were both higher in April compared with a year earlier. Lodging and accommodation tax collections in Montana were also higher over the same period.\nConstruction and Real Estate\nCommercial construction was mixed since the last report. Contractors across the District generally reported strong project backlogs heading into summer. Construction also began on the $2 billion Southwest light rail line in Minneapolis-St. Paul. However, industry data showed that the value of total construction starts in April was down across the District compared with a year earlier. Commercial permitting in April was also lower in most of the District's larger markets, with the exception of Minneapolis-St. Paul. Tight labor may be playing a role in overall activity, as numerous construction contacts said they had turned down work due to the inability of finding necessary workers. Residential construction fell. Compared with a year earlier, April single-family permits were higher in Billings, Mont., and Rochester, Minn., but flat or lower in a majority of District locations.\nCommercial real estate was mixed since the last report, as vacancy rates were rising slightly, due in some cases to new capacity coming online. In Minneapolis-St. Paul, a significant amount of new industrial space has seen strong leasing but also increased vacancy rates. Office space in the region has seen a similar increase in vacancies, and rental rates have declined slightly, according to sources. Retail vacancy rates also have ticked higher from the closure of numerous big-box and junior-box stores in Minneapolis-St. Paul. Residential real estate was lower. While a few regional markets saw higher April home sales compared with a year earlier, sales fell in most locations\u2014including by 15 percent or more in Fargo, N.D., Sioux Falls, S.D., and Bozeman, Mont. Low inventories of homes for sale were a major reason for slower sales, according to sources. A Montana contact said, \"The truth is we have lots of buyers with nothing to sell them.\"\nManufacturing\nDistrict manufacturing activity increased moderately. A survey of Minnesota manufacturers released in May indicated strong expectations for 2019, with a solid majority expecting increased revenue and one-third planning to increase capital expenditures. An index of manufacturing conditions indicated increased activity in April compared with a month earlier in Minnesota and South Dakota, while activity in North Dakota was nearly flat. In contrast, several producers of capital equipment reported a decrease in orders recently. Contacts who produce inputs for residential construction also noted reduced demand.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions weakened heading into the growing season. Heavy spring rains significantly delayed crop planting across the District, with contacts expressing concerns that some farmers might not be able to get a crop in the ground at all this year. Respondents to the Minneapolis Fed's first-quarter (April) survey of agricultural credit conditions indicated that farm income and capital spending decreased relative to a year earlier, with further declines expected for the coming three months. Activity in the energy and mining sectors was flat overall. Oil and gas drilling as of mid-May was down slightly since the last report. A gold mine in Montana announced it will shut down. District iron ore mines were operating at near capacity, though production for the year was down slightly due to harsh winter weather.\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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"June 5, 2019\nSummary of Economic Activity\nMost First District business contacts said that activity continued to expand at a modest to moderate pace in recent weeks; by contrast, more than half of responding manufacturers cited sales declines from a year earlier. Commercial real estate markets were mostly steady in the region, with the Boston and Portland areas generally stronger than Providence and Hartford. Most residential real estate markets in the region experienced increases in sales and prices of both single-family homes and condominiums. Labor markets remained tight, but hiring difficulties were not said to be constraining operations (except for staffing firms). Prices were reportedly mostly steady. Consumer-facing sectors contacts cited a positive outlook and staffing firms were \"guardedly optimistic,\" while most manufacturers downgraded their outlooks.\nEmployment and Wages\nContacted First District firms cited little hiring and continued upward pressure on wages. Retailers reported that while the labor market remained tight, especially for technical jobs, they were able to fill open positions. Most manufacturing contacts reported small changes in hiring. Respondents in the staffing industry mentioned low unemployment rates, local labor force demography, and limited applicant supply as \"challenging\" factors; within the limited applicant pool, they noted many underqualified applicants. Regarding wages, staffing contacts said that clients accepted higher bill rates to see qualified candidates who demanded higher pay rates.\nPrices\nRespondents reported minimal price pressure. Retailers indicated prices were generally steady, notwithstanding price declines for dairy products and eggs and price increases for pork and some consumer product categories. Branded pharmaceutical prices reportedly continued to rise, but at a more modest pace than the double-digit increases noted in previous years; this moderation was attributed to political attention being paid to drug prices. Manufacturing contacts cited tariffs as their main pricing issue, indicating that they were generally able to push price increases to customers. One reported that they added a surcharge to cover the tariff on goods from China, which customers accepted; once they found an alternative supplier, they removed the surcharge.\nRetail and Tourism\nMost First District retail contacts reported year-over-year comparable-store sales increases ranging from low- to mid-single-digit percentages; one retailer recorded a double-digit sales increase. Customer traffic was up, whether gauged by in-store traffic or online sales, and consumer sentiment remained strong. Two retailers noted that the delayed onset of warmer weather through much of April and May depressed sales of summer items like clothing and outdoor furnishings. Despite expressing some concern about higher tariffs, responding retailers did not expect much impact on their businesses. The outlook for the rest of 2019 is positive, though one contact noted that retailers have been forced to cut delivery fees and be very attentive to customer service to grow sales in a very competitive retail landscape.\nA travel industry contact reported that domestic flights to Boston through March were up 1 percent from a year earlier, while international traffic was up 6.2 percent. Boston is expected to set a new record for the number of cruise-ship passengers in 2019. New hotel rooms continued to be added in the city. This respondent said the outlook for Boston tourism is very strong for the peak summer and fall travel seasons.\nManufacturing and Related Services\nReports from manufacturing contacts continued to be mixed. Of the nine contacted firms, five reported lower sales, one reported no change and only three reported higher sales versus the same period a year ago. Three negatives mentioned most often were China, tariffs, and the semiconductor cycle; the three are related but distinct issues according to contacts. For example, Chinese cellphone manufacturers are big consumers of semiconductors so trade actions against them (as with Huawei, for example) are a big negative for semiconductor-related firms. At the same time, semiconductor firms cited a flat period in the industry's business cycle. Another area of weakness is autos; a firm supplying capital equipment to the auto industry said investment was depressed because uncertainty about trade policy has delayed new model launches. Two contacts supplying Boeing said that the problems with the 737 MAX did not have a material effect on their business.\nResponding manufacturers reported no revisions to capital expenditure plans. Among other things, contacts said they still needed to invest in automation. Although most contacts were still positive about the near term, many had negatively revised their outlooks.\nStaffing Services\nTwo of five responding First District staffing firms struggled to find year-over-year revenue growth in the first quarter, with others reporting performance similar to 2018's first quarter; all reported revenues higher than in the fourth quarter. Demand from clients remained steady across industries, but the tight labor market constrained placements. Many firms cited transparency and educating clients about labor force composition as business strategies to avoid pushback and maintain profits.\nSeveral respondents reported an increase in the length of temporary contracts and less demand for direct hires; they conjecture these changes reflect their clients' uncertain expectations stemming from the threat of a trade war with China. Most contacts noted that their outlook on the economy was guardedly optimistic.\nCommercial Real Estate\nContacts reported only slight changes in commercial real estate market conditions in recent weeks. Leasing demand for industrial space remained very strong throughout much of the First District, except that Connecticut continued to see weaker demand for large-scale industrial and warehouse space compared with 6 to 12 months ago. Office leasing demand showed continued strength in the Boston and Portland areas but remained a bit soft in the Providence area and quite slow in greater Hartford. Accordingly, office rents faced further upward pressure in Boston and Portland and were flat elsewhere. A Portland contact noted that average rents for both office and industrial space increased roughly 10 percent from one year ago.\nConstruction activity held steady throughout the District\u2014again with more robust activity in Portland and Boston than elsewhere. Contacts across the District noted that construction was restrained by high and rising costs, which were attributed to tariffs on steel and other materials and high labor costs due to the tight labor market. Investment sales demand was reportedly stable and the lending environment for commercial real estate remained favorable to borrowers.\nThe outlook was mixed across locations, in line with the strength of current conditions. Contacts across the District felt that rising construction costs presented a significant risk to activity moving forward, as did ongoing disputes over tariffs.\nResidential Real Estate\nResidential real estate markets in the First District displayed robust activity in recent weeks. For single family homes, sales increased over the year in Massachusetts, Boston, Maine, and Rhode Island, but decreased in New Hampshire. (Most areas reported year-over-year changes from April 2018 to April 2019, while Greater Boston reported statistics through March; no data were available for Vermont and Connecticut.) Single-family inventories decreased in all areas but Rhode Island. For condominiums, sales rose in all reporting areas except Rhode Island. Condo inventories decreased in Boston and New Hampshire, and increased moderately in Rhode Island, Maine, and Massachusetts. Of particular note, the number of condos for sale in Massachusetts increased for the fourth straight month, which was only the fourth time in the last three years.\nMedian sales prices increased or held flat in all reporting areas for both condos and single family homes, indicating that the seller's market environment persisted. According to the Rhode Island representative, \"Homes are going under contract at a hectic pace and prices, though slowing a bit, are still on the rise.\" In general, residential contacts had a positive outlook, citing high demand and a favorable interest rate environment as reasons.\nFor more information about District economic conditions visit: www.bostonfed.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

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"Beige Book Report: Kansas City\nJune 5, 2019\nSummary of Economic Activity\nTenth District economic activity continued to expand slightly in April and early May, and contacts generally expected the pace of growth to accelerate moving forward. Consumer spending rose slightly as sales increased in the restaurant, retail, and tourism sectors. Manufacturing, wholesale trade, transportation, and professional and high-tech activity expanded modestly, and capital spending was projected to rise further in the months ahead. Residential real estate sales expanded at a strong pace since the previous survey period, and commercial real estate activity increased slightly. Energy activity across the District fell slightly, but expectations for future activity remained positive. District agricultural credit conditions and farm income weakened further, but farmland values remained relatively stable. Bankers reported a slight increase in loan demand and a modest improvement in loan quality. Employment and employee hours rose slightly across most sectors, and additional gains were expected in the months ahead. Wages continued to rise at a modest pace since the previous survey period. Input and selling prices continued to rise, with retail contacts reporting the largest gains.\nEmployment and Wages\nOverall District employment and employee hours rose slightly since the previous survey period, and gains were broad-based across sectors. Contacts in the retail trade, wholesale trade, transportation, professional and high-tech services, real estate, tourism and hotels, and restaurant sectors reported steady-to-increasing levels of employment, while respondents in the auto sales and health services sectors noted a decline. All reporting sectors noted steady-to-rising employee hours, with the exception of health services. Additional gains were expected in both employment and employee hours moving into the summer months.\nA majority of contacts continued to report labor shortages for low- and medium-skill workers, including sales representatives, truck drivers, construction workers, and hourly retail and restaurant positions. A few respondents also noted shortages in high-skill occupations such as physicians, pilots, accountants, and IT professionals. Wage growth continued to rise modestly since the previous survey period, and wages were expected to increase at a faster pace moving forward.\nPrices\nDistrict contacts noted modestly higher input prices and slightly higher selling prices. Retail sector contacts continued to note strong growth in input prices and moderately higher selling prices since both the previous survey period and one year ago. Input and selling prices in the retail sector were projected to continue to rise at their current rate of growth. Respondents in the transportation sector reported moderately higher input prices, while selling prices rose modestly. Input and selling prices in the restaurant sector rose slightly but were strongly above year-ago levels. Construction supply contacts reported modestly lower prices but expected prices to increase in the months ahead. Manufacturers noted slightly higher prices for finished products and raw materials, but expected stronger gains moving forward.\nConsumer Spending\nConsumer spending rose slightly compared to the previous survey period, and contacts expected the pace of sales growth to increase this summer. Despite nearly half of retail contacts noting negative impacts from recent severe weather conditions, growth in retail sales picked up compared to the previous survey and was at a moderate pace. Auto contacts reported a moderate drop in sales, although expectations remained positive. Auto contacts noted SUVs and trucks sold well, while sedans sold poorly. Restaurant sales rose slightly compared to the previous survey period and were strongly above year-ago levels. Tourism and hotel sales grew slightly compared to the previous survey period, but sales were slightly below year-ago levels. Respondents in the restaurant, tourism and hotel sectors projected slight growth in the coming months.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand modestly, and business contacts in the wholesale trade, transportation, and professional and high-tech sectors reported modestly higher sales. Factory production rose at both durable and nondurable goods plants, with stronger growth in food, plastics, and metal manufacturing. Production, shipments, and new orders in the manufacturing sector were mostly flat, but increases were expected in the coming months. In addition, manufacturing contacts anticipated modest increases in capital spending in the next few months.\nOutside of manufacturing, firms in the transportation, wholesale trade, and professional and high-tech services sectors experienced modestly higher sales compared to the previous survey and year-ago levels. Contacts in the professional, high-tech and transportation sectors expected sales to continue to expand modestly, while wholesale trade sector contacts anticipated strong sales growth in the months ahead.\nReal Estate and Construction\nDistrict real estate activity grew at a modest pace in April and early May, and additional gains were expected in the months ahead. Residential home sales experienced solid gains compared to the previous survey period driven by positive seasonal factors, but sales were strongly below year-ago levels. Residential real estate contacts noted that sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential selling prices and inventories rose moderately, and respondents projected steady prices and moderately higher inventories in the months ahead. Residential construction activity continued to rise at a modest pace since the previous survey period as traffic of potential buyers, housing starts, and construction supply sales rose. Contacts expected additional gains in residential construction activity in the coming months. Commercial real estate activity increased slightly as absorption, completions, construction underway, sales, and prices rose. Respondents in the commercial real estate sector projected a slight acceleration in activity moving forward.\nBanking\nBankers reported a slight increase in overall loan demand since the previous survey period. Respondents indicated increases in the demand for commercial real estate, residential real estate, commercial and industrial, and consumer installment loans, while demand for agricultural loans fell. Bankers indicated a modest improvement in loan quality compared to a year ago and expected a slight improvement over the next six months. Credit standards remained largely unchanged in all major loan categories, and bankers reported steady deposit levels.\nEnergy\nEnergy activity in the District edged slightly lower compared with the previous survey period, but expectations for future activity remained solid. While oil prices inched down recently, they remained higher than the average price needed to be profitable for most District firms. The number of active oil and gas rigs continued to decrease, including a drop in active oil rigs in New Mexico, Oklahoma, and Wyoming since the last survey period. Production of oil and gas remained at high levels across the District, and the level of natural gas stocks rose. District firms expected oil and gas production to expand further in 2019.\nAgriculture\nFarm income and agricultural credit conditions weakened slightly in the Tenth District. Specifically, regional contacts indicated that farm income decreased modestly and farm loan repayment rates slowed slightly since the last survey period. Conditions deteriorated more in Missouri and Nebraska, where contacts reported a moderately faster decline in income and slower rate of loan repayment. District contacts also commented that low commodity prices continued to strain working capital, and recent severe flooding and blizzards may have significantly impacted some borrowers. Cattle, soybean and wheat prices decreased slightly over the period, while corn prices increased moderately and hog prices increased significantly, which could improve revenues for some producers moving forward. Alongside weaknesses in farm finances, interest rates on farm loans increased modestly throughout the District, but farmland values in the region remained relatively stable.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\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/2019/2019-04-sl

"Beige Book Report: St Louis\nApril 17, 2019\nSummary of Economic Activity\nReports from contacts suggest economic conditions have improved slightly since our previous report. Labor market conditions remained tight: Employment grew slightly while wages continued to increase at a moderate rate. Price pressures strengthened modestly, with many contacts citing tariffs as a contributing factor to higher input prices. Most retailers expect to pass along increased costs to their customers. Reports on consumer spending activity remained mixed. Manufacturing activity continued to improve at a moderate pace. Residential real estate activity increased modestly while residential construction activity was unchanged. District bankers reported a moderate increase in loan demand. Agriculture conditions declined modestly, as some farmers expressed concerns over recent flooding.\nEmployment and Wages\nEmployment has increased slightly since the previous report. Contacts throughout the District continued to note a tight labor market in a variety of industries, including construction, health care, manufacturing, and information technology. Companies have used a myriad of strategies to attract and retain workers, such as signing bonuses and paid time off. A contact in the trucking industry reported that insurance policies have prevented firms from hiring less-experienced drivers. Contacts in the agriculture industry near Memphis reported filling vacancies with temporary workers through the H-2A visa program.\nWages increased moderately, as the tight labor market has led to higher wages in several sectors. Contacts reported that raises for entry-level workers resulted in pay increases for experienced workers as well. Upward wage pressures for technical workers were especially strong. Small business wages increased modestly, with several contacts reporting that they could not afford to raise wages as much as larger firms could.\nPrices\nPrices have increased modestly since the previous report. Retailers cited Chinese tariffs as a major factor driving up input prices, along with rising wages and freight costs. Most expect to pass along these costs to their customers, with the exception of a regional grocer who noted that competition limits their ability to raise prices. Construction contacts similarly lamented increased costs from tariffs, wage pressures, and rising material prices. Metal prices have increased modestly since the previous report.\nHealthcare contacts reported that there has been continuing robust growth in drug prices in the range of 8 to 15 percent annually, straining hospitals. However, consumers have been largely sheltered from these changes by insurance companies, experiencing only slight increases in deductibles and out-of-pocket maximums and actual decreases in premiums.\nAgricultural commodity price changes have been mixed, although prices remain historically low. Cotton prices have experienced moderate growth since the previous report, while corn and soybean prices both declined.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicated mixed consumer spending activity. Retailers in Missouri reported that bad winter weather negatively affected sales. Furthermore they expect weaker growth in 2019 compared with last year. Reports indicate that retail sales were mixed in northwest Mississippi. Consumers in West Tennessee expect to spend slightly more this year than they did last year and have an improved outlook relative to three months ago. A grocer reported a shift in consumer demand away from products in the middle of the price spectrum toward both high- and low-end products. Multiple hospitality contacts reported flat tourism growth in Missouri from the same time last year.\nAuto dealers reported mixed sales activity across the District. Some contacts conjectured that delayed or lower tax refunds reduced sales earlier in the year. Multiple dealers reported a decline in the credit ratings of buyers and increased demand for used vehicles. One dealer suggested that the latter trend may be due to higher financing costs for new vehicles rather than changing consumer preferences. Demand for electric vehicles has softened due to lower gas prices.\nManufacturing\nManufacturing activity has increased moderately since our previous report. Overall manufacturing activity was stronger than one month earlier in both Arkansas and Missouri, and the pace of growth increased. New orders and production also increased in both states, each at a similar rate as in the prior month. Several companies across a variety of industries announced new capital expenditure and hiring plans, including firms that manufacture auto parts, primary metals, chemical products, and furniture.\nNonfinancial Services\nActivity in the services sector has slightly improved since the previous report. Contacts reported increased demand for barge, rail, and especially trucking transportation. However, growth in rail transportation has been muted due to flooding and lower exports of grain to China. In general, contacts indicated that a lack of recruits and high employee turnover have negatively affected their businesses.\nReal Estate and Construction\nResidential real estate activity has improved modestly since the previous report. Seasonally adjusted home sales increased slightly in February across the District\u2019s largest MSAs. Contacts reported a dichotomy in the market: There is strong demand for lower-priced houses, while housing inventory comprises mostly higher-priced homes.\nResidential construction activity remained unchanged. February permit activity was mixed. Contacts continued to report that labor shortages and high input costs have limited new construction.\nCommercial real estate activity was mixed. Contacts reported a healthy market for office space in Memphis. Contacts in Memphis and Little Rock reported robust demand for multifamily units. Demand for retail space decreased modestly across the District.\nCommercial construction activity declined slightly. Contacts in Memphis and Little Rock noted healthy levels of activity, but mostly in the form of renovations rather than new projects. Contacts reported that shortages of labor, combined with inclement weather, have limited new construction.\nBanking and Finance\nBanking conditions in the District have improved moderately since the previous report. Outstanding loan volumes grew by 5 percent relative to year-ago levels in the first quarter, which was a slight increase from the fourth quarter of 2018. The rate of loan growth increased for the first time since the end of 2016. Commercial and industrial lending continued to be robust, growing by 9 percent year over year. Growth in residential real estate lending ticked up from the previous quarter and is now in line with the national rate. Bankers reported a sharp increase in deposits growth.\nAgriculture and Natural Resources\nDistrict agriculture conditions have declined modestly since the previous reporting period and the same time last year. District cotton and corn acreages are expected to increase from last year by 12 percent and 4 percent, respectively, while rice and soybean acreages are expected to decrease by 1 percent and 6 percent, respectively. This reflects reports by contacts that continued trade conflict with China has caused growers to shift production from soybeans to other crops. Overall, acreage for the four main crops is expected to decline by 1 percent from last year. Contacts have reported that the flooding of the Mississippi Valley is a major concern for growers and is expected to negatively impact timing and yields of crops this year.\nNatural resource extraction conditions declined modestly from the previous reporting period, with seasonally adjusted coal production declining 3 percent from February to March. Additionally, District coal production declined nearly 8 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2019/2019-04-ch

"April 17, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly on balance in late February and March, though contact expected growth to pick up to a modest pace over the next 6 to 12 months. Employment increased modestly; business spending and construction and real estate increased slightly; and consumer spending and manufacturing were little changed on balance. Wages and prices rose modestly, and financial conditions improved slightly. Farmers continued to be challenged by low crop prices.\nEmployment and Wages\nEmployment increased modestly over the reporting period and contacts expected a similar-sized increase over the next 6 to 12 months. Hiring was focused on professional and technical, sales, and production workers, though there was a noticeable decline in the number of contacts hiring production workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. Contacts reported higher job turnover, particularly for lower-skilled workers, and an increased willingness to hire and keep workers who had failed drug tests. Many manufacturing contacts said that difficulty in finding labor was the primary factor preventing them from increasing output. Wage growth remained modest overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. Many firms reported growing benefits costs.\nPrices\nPrices rose modestly in late February and March, and contacts expected prices to continue to rise at that rate over the next 6 to 12 months. Retail prices increased modestly. Producer prices also rose modestly, reflecting in part the pass-through of higher labor, materials, and freight costs.\nConsumer Spending\nConsumer spending was little changed over the reporting period. Nonauto retail sales were flat on balance, with strength in the hardware, general merchandise, and personal services segments offset by weakness in the jewelry, lawn and garden, building materials, furniture, and apparel sectors. Contacts noted that e-commerce continued to grow at the expense of brick and mortar stores. Light vehicle sales were little changed overall, with contacts indicating that higher used car sales balanced out lower new car sales. Many noted that new car incentives were less generous than during the previous reporting period.\nBusiness Spending\nBusiness spending increased slightly in late February and March. Retail contacts said that inventories were generally at comfortable levels, though one auto dealer reported elevated new vehicle inventories. Most manufacturers indicated that stocks were at comfortable levels. A heavy machinery dealer said that long lead times over the last couple of years had led them to build inventories more than usual in anticipation of the spring buying season. Capital spending moved up only a little, though contacts expected somewhat faster growth over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Energy demand from commercial and industrial users was little changed. Demand for transportation services was flat, but remained at a strong level.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly on balance over the reporting period. Residential construction increased slightly, with contacts indicating that labor and material cost pressures continued to hold back growth. Residential real estate activity increased modestly, as increased sales of homes under $300,000 offset declines in sales of homes over $1 million. Contacts indicated that lower mortgage rates and an increase in inventories had spurred sales, though inventories remained below historical norms. Nonresidential construction increased slightly on top of a strong level, and contacts in some parts of the District reported rising backlogs. Commercial real estate activity was little changed. Rents and the availability of sublease space were flat, though vacancies edged up.\nManufacturing\nManufacturing production was little changed overall in late February and March, though contacts were generally pleased with the level of activity. Demand for steel was flat, with growth in the energy and heavy machinery sectors offset by declines elsewhere. Auto production was unchanged as well, but remained at a solid level. Specialty metals manufacturers reported little change in order books overall, as increased demand from the energy and defense sectors was balanced by decreased demand from the auto industry. Heavy machinery demand increased moderately, led by increased sales to the commercial construction sector; growth in commercial construction also led to a small increase in shipments by manufacturers of construction materials.\nBanking and Finance\nFinancial conditions improved slightly over the reporting period. Market participants noted steady growth in equities prices and relatively low volatility, but expressed concerns about the slope of the yield curve. Business loan demand increased slightly, led by stronger demand from logistics companies. Loan quality was little changed, though one contact noted deteriorating quality among agricultural loans. Consumer loan demand was flat on balance, with reports of increased mortgage activity but decreases in auto and home equity lending. Loan standards and quality were little changed.\nAgriculture\nFarmers continued to be challenged by low corn and soybean prices. Flooding--primarily in the far western parts of the District--destroyed some farmers\u2019 stored crops and was likely to delay fieldwork. Contacts said they were hopeful for a resolution to trade disputes with China and a subsequent pickup in exports. Expectations of a future price rally led many farmers to continue to hold on to crops from last year\u2019s harvest and to delay entering into contracts for this year\u2019s harvest. Contacts expected particularly low soybean prices to push the corn-soybean mix closer to its typical 50-50 split following an increase in soybean acres last year. Livestock prices, especially for hogs, moved up in response to China\u2019s decision to include livestock purchases in the trade negotiations and because of a considerable decline in China\u2019s hog herd due to disease.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2019/2019-04-bo

"April 17, 2019\nSummary of Economic Activity\nSimilar to the last report, most First District business contacts cited modest to moderate growth, with some slowing in manufacturing. Non-auto retailers reported moderate growth in sales; an automotive respondent said dealerships saw activity decline. Manufacturers again reported that revenues had either increased or stayed the same; most mentioned slowdowns in activity. Software and information technology services firms reported slow to moderate growth. Commercial real estate markets were mixed, with metro Boston remaining strong. Residential real estate markets saw home price increases and robust demand; several contacts said inventories were improving. Some manufacturers downgraded their outlooks, while retailers and software and IT services firms retained positive outlooks.\nEmployment and Wages\nHiring by manufacturers and retailers remained muted, while software and IT services firms expanded employment steadily. Wage increases were moderate. One retailer reported that merit pay increases for 2019 would average 3 percent. Other retail firms enhanced benefit policies to reward productivity gains and to retain current workers. Aside from offsetting attrition (notably of store associates and warehouse workers lured away by other employers), hiring plans were flat for most retail firms. An automotive contact cited a labor shortage of certified mechanics, which with computer technology are now highly skilled and well-paying jobs requiring technical expertise, but not a four-year college degree. No manufacturing contacts reported significant increases or reductions in staffing. A manufacturer of electrical components said that the tight labor market had led them to invest heavily in automation. No manufacturing contacts complained of wage pressures. Software and IT services contacts indicated that headcounts were growing steadily at a slow-to-moderate pace with no changes in the turnover rate. These contacts reported raising wages approximately 3 percent to 5 percent over last year.\nPrices\nPrices were generally stable or rose modestly. One retailer said that its spring selling prices were up by 1 percent to 2 percent from a year earlier. Manufacturing contacts said inflationary pressures were generally muted but some said that tariffs continued to drive up prices. Most respondents directly affected by tariffs said they were able to pass the costs on to buyers and, in some cases, they expected to retain the higher prices even if the tariffs were removed. One exception--a producer of frozen fish who has the fish processed in China--was unable to pass higher costs on to consumers.\nRetail and Tourism\nAll retail contacts for this round, covering late February through early April, reported that same-store sales grew by low- to mid-single digits on a year-over-year basis, indicating that \"consumers were in a buying mood.\" Capital spending plans were moderate, though one firm noted that it was deferring some discretionary maintenance because construction costs were up 20 percent. Although one respondent continues to be uncertain, the 2019 retail outlook was for generally positive growth.\nAn automotive industry contact reported that sales in 2019:Q1 were lower than 2018:Q4; the year-over-year comparison was also negative, as sales during the Presidents\u2019 Day weekend were down compared to last year\u2019s Presidents\u2019 weekend. Dealers were reportedly a bit nervous about the outlook, citing recent threats to raise tariffs on automobiles.\nAs of the end of February, domestic air travel to Boston was up 3.6 percent year-over-year, while international traffic was up 10.1 percent year-over-year.\nManufacturing and Related Services\nThe news from manufacturing contacts was again mixed. None of the nine respondents reported falling sales but many reported no growth or substantial slowdowns. A manufacturer of filtration materials said that actual 2018 sales growth was 6.5 percent and they expected 3 percent to 5 percent for 2019, both figures down markedly from their expectations last August. A maker of mechanical components for machinery saw 3.5 percent growth in 2018 but expects 1.5 growth for 2019. A manufacturer of furniture said demand had risen, but only after he cut prices. A manufacturer of cardboard boxes said that growth was flat after many quarters of very strong growth. A toy maker said the failure of a major toy retailer in 2018 continued to have dramatic negative effects this year. Only one contact reported significant revisions to capital expenditure plans, saying they were cutting them by 15 percent to conserve cash.\nThe outlook was unchanged or down; several contacts downgraded their growth expectations substantially. Only one, however, noted the possibility of a recession.\nSoftware and Information Technology Services\nSoftware and IT firms reported slow-to-moderate growth in the first quarter. The majority of contacts noted positive revenue increases in the low- to mid-single digits, with demand especially strong for newer, more innovative product lines. Two contacts mentioned that their first-quarter growth exceeded expectations, which they attributed to a favorable demand environment as well as to recent restructuring efforts aimed at improving efficiency. Two technology contacts mentioned seeing evidence of unexpectedly high demand for office space in metro Boston, including one who received an unsolicited offer of twice the original purchase price for a building in a major tech corridor. Overall, contacts were largely more optimistic than last quarter and anticipated positive growth throughout 2019.\nCommercial Real Estate\nCommercial real estate contacts in the First District offered mixed reports. In Hartford the office leasing market was described as sluggish, with activity limited to short-term renewals. Providence has seen rising vacancies in the class A office market recently, which is expected to blunt or halt the growth of office rents there. The Boston office market was characterized as historically strong, with robust leasing activity dominated by the life sciences and high-tech sectors. Very low vacancy rates in Boston have boosted speculative office construction in recent months, but significant amounts of new space will not come on line for several years. Construction activity in Connecticut was still largely limited to the multifamily housing market. Demand for industrial property, for lease and for purchase, remained very strong in greater Boston and continued to moderate in Connecticut. In Rhode Island, industrial property values and rents increased noticeably in the past year amid strong demand and tight supply, although the volume of sales transactions was restricted by low inventories. Investment sales markets were described as stable around the region, and demand for commercial real estate mortgages remained high in greater Boston and southern New Hampshire.\nThe outlook remained pessimistic for Connecticut, where a contact expected conditions to remain flat or slow further in 2019. The outlook for Providence was for stable, modest activity in the near-term and a possible slowdown in 2020. Boston contacts were cautiously optimistic that the good times would continue, although one expressed increasing nervousness about the potential vulnerability of the commercial real estate market to a bust in the high-tech sector.\nResidential Real Estate\nResidential real estate markets in the First District displayed signs of improvement and robust demand in February. (Most areas reported year-over-year changes from February 2018 to February 2019, Vermont reported through January 2019, and Connecticut data continued to be unavailable.) For single family homes, closed sales increased substantially over the year in Massachusetts, Boston, and New Hampshire, while decreasing a small amount in Maine and moderately in Rhode Island. Single-family median sales prices were up in all reporting areas. For condos, sales rose in Rhode Island, Massachusetts, and Boston but declined in New Hampshire. Median condo sales prices decreased in Rhode Island, Massachusetts, and Boston while increasing in New Hampshire. Vermont, reporting on single family homes and condos combined, cited a drop in sales and an increase in the median sales price.\nMost First District respondents said the recent improvement in market conditions included pick-ups in pending sales and/or inventories. Contacts expressed generally positive outlooks tempered with caution.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2019/2019-04-ri

"April 17, 2019\nSummary of Economic Activity\nSince our previous Beige Book report, the Fifth District economy grew moderately. Manufacturing activity picked up modestly as firms experienced steady growth in shipments and new orders. Ports continued to report robust business, with import volumes exceeding exports. Meanwhile, trucking companies saw demand pick back up to a strong level after a slow start to the year. Travel and tourism strengthened across most of the Fifth District. Most of the contacted retailors reported sluggish conditions with softness noted in apparel and auto sales. Reports from nonfinancial services firms were mostly positive with increased demand for staffing and recruiting, administrative services, engineering, legal services, and health care. Residential home sales increased modestly in recent weeks while inventories remained low. Commercial real estate leasing and sales rose modestly, overall, with notable strength in industrial markets. Banks generally reported stable to modest growth in real estate lending, strong and increasing deposits, and solid business lending. On the whole, the demand for workers increased, labor markets remained tight, and wages rose modestly. Prices continued to grow at a moderate rate, overall.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks, while labor markets remained tight across industry sectors. Employment agencies noted a slight increase in the level of new job openings. Employers reported difficulty filling positions for accounting and finance professionals, IT professionals, engineers, health care providers, and construction workers. Firms continued to report increased use of retention tools and high levels of employee turnover, particularly for truck drivers, production workers, mechanics, salespeople, and temporary workers. Wage increases remained modest across sectors, though firms reported that wage growth was picking up.\nPrices\nOn balance, price growth remained moderate since our previous Beige Book report. Manufacturers indicated that prices received grew at a moderate rate but continued to lag input price growth. Some raw materials price increases were reported for specialized chemicals and metals, while some easing of prices was cited for freight, lumbar, resin, and natural gas. Overall, services firms saw prices paid increase at a faster rate than selling prices, with both remaining within a moderate range.\nManufacturing\nOverall, manufacturing activity picked up modestly since our last report. Contacts reported steady growth in shipments and new orders, overall. However, several manufacturers continued to face higher costs of raw materials due at least in part to tariffs. A North Carolina furniture manufacturer said that price increases were difficult to pass through to customers, but a Maryland company was able to pass them through. A few contacts, such as a Virginia window manufacturer, reported that recent bad weather led to weak business.\nPorts and Transportation\nFifth District ports saw robust growth in recent weeks. Imports remained strong and continued to outpace exports. Contacts reported a slight decrease in exports, particularly for agricultural goods to China. An airport planned to add new international flights as both cargo and passenger business grew. Contacts also reported being able to process imports and ship them domestically more efficiently. However, port executives remained cautious about investment decisions because of lingering uncertainty over tariffs.\nFifth District trucking companies saw strong growth in recent weeks. Contacts reported an increase in business after a slow start to the year with growth in shipments of most goods. One firm noted a strong increase in food shipments but a softening of government business. A North Carolina company was overbooked heading into the busy spring season. Similarly, a Virginia firm reported capacity constraints, with more freight than trucks, although all the firm\u2019s trucks had enough drivers. However, one contact reported a drop in volumes but still maintained good profit margins and revenue growth.\nRetail, Travel, and Tourism\nFifth District travel and tourism were strong in recent weeks. The Asheville, North Carolina area saw tourism revenue grow, particularly for short-term rentals. A new hotel in Charleston, South Carolina was unable to open many rooms because of an inability to find staff. However, a Greenville, South Carolina hotel credited low revenues to an increase in supply in the area, as well as softening demand. A zoo reported raising prices amid confidence that business would remain strong.\nOn the whole, retailers experienced sluggish conditions since our last report. Several contacts attributed poor sales to bad weather. A Virginia high-end clothing store reported that sales have been persistently bad since November. A contact at a Virginia furniture store attributed business swings to unstable consumer confidence. Meanwhile, a North Carolina auto dealer reported low sales, resulting in a build-up of inventory. On a positive note, a regional hardware store had strong sales in March and most retailers remained optimistic about 2019.\nReal Estate and Construction\nHome sales increased modestly in recent weeks. District Realtors reported that single family inventories remained low, new listings continued to sell quickly, and buyer traffic was steady at open houses and showings. Brokers also reported that home prices rose modestly. Agents reported that new home sales and construction were steady, although construction of lower priced homes remained limited. Meanwhile, some District homebuilders reduced their planned production numbers for the rest of 2019.\nCommercial real estate leasing rose modestly in recent weeks. Brokers reported strong demand for industrial space and office leasing was reportedly flat to increasing modestly in some markets; however, retail leasing slowed across markets. Vacancy rates increased slightly for some office and retail markets. Meanwhile, rental rates were reportedly stable to increasing modestly. Commercial sales rose modestly, according to a few brokers, with warehouse and industrial building sites representing the majority of transactions. Commercial construction increased modestly in some regions. Multifamily leasing remained healthy in most markets, while multifamily construction remained steady.\nBanking and Finance\nOn the whole, loan demand increased modestly since our previous report. Residential mortgage demand varied by location but was generally described as stable to increasing modestly. The demand for commercial real estate loans remained modest. Corporate lending was reportedly strong and small business lending was solid. Overall, deposits were increasing. Credit quality remained high while credit standards were generally unchanged. Bankers continued to report strong competition among banks, credit unions, and financial technology firms.\nNonfinancial Services\nOn balance, nonfinancial services firms reported modest growth in recent weeks. Increased demand was reported by businesses engaged in staffing and recruiting, engineering, administrative support, law, and health care. However, several firms reported profit margin compression with limited ability to pass along rising input costs to customers. A few federal government contractors said that business was starting to return to normal after sustaining negative impacts from the shutdown, although one contractor noted a slowdown in spending by some federal agencies.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"April 17, 2019\nSummary of Economic Activity\nEconomic activity in the Fourth District has risen modestly since our prior report. Residential and nonresidential construction and professional and business services drove the majority of growth over the period. Growth in non-auto retail and in banking was restrained by seasonal factors, but contacts in these sectors were optimistic that underlying demand remained resilient. Manufacturers\u2019 reports were mixed. Freight haulers reported flat demand. District firms across most industries increased staffing levels moderately. Wages strengthened moderately for a wide range of industries and education levels. Companies expressed concern about employee retention in the face of increased competition for labor. Selling prices increased moderately overall across the District. Some goods producers reported some relief from materials cost increases, but they continued raising selling prices to cover prior increases in their input costs. Retailers reported improved pricing power. Professional and business services firms reported limited pricing power despite demand growth.\nEmployment and Wages\nHiring in the Fourth District strengthened back to a moderate overall pace after a brief softening in the prior period. Most industry sectors reported job growth but also difficulty finding new, qualified workers. Staffing agencies noted that more companies were struggling to hire on their own and that clients were increasingly contracting staffing firms to assist with permanent placements. Bankers reported adding staff to run new programs and to develop a talent pipeline in anticipation of near-term retirements. Nonresidential builders rehired staff that had been laid off for seasonal reasons during the winter months, and they further increased payrolls when possible. In contrast, residential builders held staff levels steady, citing uncertainty about overall demand through 2019. Trucking companies added drivers in preparation for their busy season, but they expressed difficulty finding qualified drivers. Manufacturing jobs increased overall, as the manufacturers who saw improved demand over the period added staff while those who saw slowed demand held staff numbers steady. Professional and business services firms continued to grow. Retail staffing levels were stable.\nWages increased moderately across industry sectors and education levels. Retailers increased wages for both store and warehouse employees, citing increased competition for both. Manufacturers and freight haulers increased wages for their hourly staff to aid retention efforts, pointing to wage increases by competitors. A contact in robotics development noted that he had lost out on several candidates for new hires because competitors offered higher salaries, so he has increased his offer in turn. Construction companies preemptively offered bonuses and raises to certain office staff members, such as key engineers, for the purpose of retention. Staffing agencies noted their clients were offering higher pay for temporary and permanent hires.\nPrices\nSelling prices rose moderately in the District at a pace similar to that of the prior period. Manufacturers and some nonresidential builders reported a deceleration of materials cost inflation. Some manufacturers even reported materials cost declines, especially for steel, after a run-up last summer. However, these firms still reported raising selling prices in this period for the purpose of covering the materials cost increases that they had seen throughout 2018. Prices of new homes have risen to cover recent input cost increases, especially from increased subcontractor rates and higher costs for manufactured products such as cabinets. Freight haulers continued to raise prices, and, in turn, retailers reported freight prices as a cost driver. Retailers reported improved ability to raise prices. Auto retailers reported transaction price increases for new vehicles, and a department store reported offering fewer discounts on items. Most professional and business services firms reported limited pricing power because of strong competition, but some specialized firms were able to raise selling prices.\nConsumer Spending\nActivity in the retail sector was slightly up during the reporting period. Several retailers noted that the strengthening of the economy late last year had continued into 2019, but other firms reported that colder weather toward the end of the quarter curbed foot traffic to their stores. Auto retailers reported stable demand and increased inventories for new cars. Auto retailers also reported higher prices as interest rates rose. Several retailers noted signs of increasing consumer demand and confidence, and they expect conditions to improve going into the second quarter because of warmer weather, plant sales, and several holidays.\nManufacturing\nReports from the manufacturing sector remained mixed, with little indication that conditions have changed from those of the prior period. Some contacts reported that demand for their products improved as a result of strong economic conditions and organic growth. Others attributed an increase in activity to more transient factors: falling retail prices (driven by falling input costs) and a seasonal upswing coming off the slow winter months. However, some reports suggested that demand has slowed, possibly because of trade tensions and the slowing of industrial activity in China. Some contacts reported that their finished goods inventories have increased because of capacity constraints and longer lead times. Despite some reports of slower growth in demand compared with that of recent months, many manufacturers continue to report strong backlogs and normal levels of capacity utilization.\nReal Estate and Construction\nConstruction activity in the District increased moderately over the period, while real estate activity remained stable. In the current period, growth in nonresidential construction has rebounded to the moderate pace seen before the typical winter slowdown in the prior survey period. Education, warehousing, and industrial projects especially picked up over the period. Nonresidential backlogs increased. Homebuilders pointed to lower mortgage rates, urgency caused by increasing home prices, and the spring selling season as spurring improved demand. Contacts reported that lower-priced homes outsold more expensive homes. Real estate agents reported stable sales. Nonresidential builders expect demand to remain strong, but homebuilders are more uncertain about 2019 overall and are therefore holding off on hiring and capital expenditures.\nFinancial Services\nConsumer lending declined slightly, as it typically does during this time of the year. Consumers paid off credit card balances during the first quarter, and mortgage lending was soft because of the winter weather. Bankers reported that they expect the second quarter to be stronger than the first. Core deposits increased somewhat as consumers received refunds from income taxes, but competition for deposits continues. Commercial lending firmed some, and bankers were optimistic about continued growth in inquiries from business clients. One contact cited an uptick in credit requests for debt restructuring, capital expenditures, and acquisition financing.\nNonfinancial Services\nProfessional and business services firms reported a solid first quarter, citing increased demand for specialized services because of clients\u2019 budget increases. One risk consulting firm stated that global security concerns were driving increasing demand for particular services. In contrast, freight contacts had a softer first quarter, reporting that demand was mostly flat. One freight contact indicated that while meat shipments in February and March are typically down because of Lent, this year\u2019s meat shipments were particularly weak. Overall, professional and business services firms indicated they expect strong demand to continue through the next quarter, while freight firms expect demand to be flat.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"April 17, 2019\nSummary of Economic Activity\nSixth District business contacts indicated that economic conditions improved, albeit at a modest pace, from the previous report. The majority of contacts expect growth to continue at relatively the same pace over the next few months. While the labor market remained tight, wage growth remained subdued for most jobs, with the exception of in-demand or hard-to-fill positions. Most firms noted that nonlabor input cost pressures were muted, though some observed increases related to tariffs, freight, and construction costs. Overall, retail sales grew slightly and automotive dealers remarked that demand for vehicles weakened since the previous report. Hospitality contacts reported solid activity. Residential real estate contacts indicated an improvement in home sales as increased supply reduced price pressures since the end of last year. On balance, commercial real estate conditions continued to advance. Manufacturers cited increases in new orders and production levels. District bankers noted banking activity remained steady.\nEmployment and Wages\nWhile District business contacts maintained that they continued to add to staffing levels, several contacts communicated that hiring remained limited by tight labor markets. Some firms mentioned setting up satellite locations in larger, metropolitan cities or moving to more populated suburban areas to find workers. In addition, businesses continued investing more heavily in training and development and viewed such expenditures as providing a competitive advantage in both recruiting and retention. More broadly, businesses continued to fine tune their suite of tools used to attract and retain workers through enhanced benefits, renewed focus on culture, visas to employ immigrants, tuition reimbursement, and increased compensation. Reports also indicated that firms continued to invest in automation to offset labor costs.\nDistrict firms noted that annual wage increases, on average, remained around 3 percent, though much higher for in-demand and difficult-to-fill positions (e.g., medical professionals, engineers, drivers, skilled laborers, IT professionals, and executives). Some employers shared that although wage growth had successfully helped secure staff, there was little appetite for significant upward movement in 2019.\nPrices\nFirms across the District noted little change in pricing pressure since the last report. Those impacted by tariffs, freight, and construction costs continued to experience price increases. The Atlanta Fed\u2019s Business Inflation Expectations survey showed year-over-year unit costs were up 2.0 percent in March. Survey respondents also indicated that they expect unit costs to rise 1.9 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retailers reported softening sales growth in February followed by an uptick in sales growth during the first two weeks of March. Automotive dealers reported a decline in demand for February compared to the same period last year. Most retailers expect similar levels of activity over the coming months.\nTourism contacts across the District noted overall activity was good. Advance bookings for 2019 were strong. Contacts noted that demand for hotel rooms continued to be robust even though the window for bookings has become shorter as a result of the increased usage of smartphone travel apps where travelers can take advantage of lower room rates for last minute travel plans. On balance, business sentiment among travel and hospitality contacts is cautiously optimistic for 2019.\nConstruction and Real Estate\nReports from District brokers and homebuilders came in slightly more optimistic than the previous report as activity moved into the early stages of the spring selling season. The recent moderation in mortgage rates was cited as helping to alleviate some of the pressure on housing affordability in the District. Though still flat or down from a year ago, existing home sales in many markets across the District improved at the start of 2019 from lows experienced at the close of 2018. Inventory levels, albeit increasing on a year-over-year basis, remained low in most markets. Home price appreciation continued to moderate as weaker year-over-year sales and slightly rising inventory levels created less upward pressure on prices. As a result of the spring selling season, the near term outlook among real estate contacts remains positive.\nOverall economic growth continued to positively influence and propel commercial real estate fundamentals in most District markets and property sectors. Multifamily occupancies remained tight, and overall rents grew at a more robust pace compared with a year ago. Industrial sector dynamics remained robust, while office fundamentals accelerated. Contacts noted that moderating interest rates may encourage some commercial buyers back into the market.\nManufacturing\nDistrict manufacturing contacts indicated that overall business conditions remained solid over the reporting period. New orders and production levels continued to rise, albeit at a slightly slower pace than the previous report. Supply delivery times were reportedly longer, while finished inventory levels increased moderately. Purchasing managers\u2019 expectations for future production levels remained generally positive, with nearly half of contacts expecting higher production levels over the next six months.\nTransportation\nTransportation activity across the District was largely unchanged since the last report. Ports cited continued growth in containerized cargo, and logistics contacts reported further expansion of e-commerce activity. Demand for warehouse space increased. On a year-over-year basis, however, overall railroad traffic slowed since the previous report, driven primarily by significant declines in farm products, excluding grain, and metallic ores, which were somewhat offset by double-digit increases in grain and primary forest products; intermodal volumes fell substantially over the reporting period.\nBanking and Finance\nConditions at financial institutions in the District were stable. Earnings improved due in part to the effects of tax reform changes and the positive impact of increasing interest rates. Overall loan growth was stable although borrowing levels in the consumer portfolio started to decline. Asset quality metrics at financial institutions were strong. Despite the increased competition for deposits, which increased funding costs, transaction accounts remained a significant portion of the deposit base and provided the majority of funding.\nEnergy\nEnergy sector contacts described District activity as steady to up from the previous report. Offshore exploration and production increased gradually in the Gulf of Mexico, while onshore shale drilling remained robust. Contacts described petrochemical refining and chemical processing plant expansion activity as balanced from the prior period, yet many expect an uptick in activity in subsequent quarters. Crude oil export terminal project planning and development continued along the Gulf Coast, as businesses aim to capitalize on growing crude oil exports. Firms engaged in natural gas and crude oil pipeline projects noted that construction remained very active. Utilities demand increased across residential, commercial, and industrial sectors, due to the cold weather and an uptick in industrial activity. Utilities contacts shared they were initiating planning for power transmission and distribution projects. Renewables industry contacts also mentioned that various new projects were in the planning stage, particularly construction of wind and solar systems across the U.S.\nAgriculture\nAgricultural conditions across the District were mixed. Recent reports showed that much of the District was drought-free although some areas experienced abnormally dry to moderate drought conditions. In early March, tornadoes in Alabama damaged several thousand acres of timber. In late-March, weekly cash prices were up for corn and beef, while cotton, rice, soybean, broiler and egg prices were down from a year ago.\nFor more information about District economic conditions visit: www.frbatlanta.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"

Philadelphia

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"April 17, 2019\nSummary of Economic Activity\nOn balance, aggregate Third District business activity resumed a slight pace of growth during the current Beige Book period following a brief pause in the prior period. Nonfinancial services accelerated a bit to a modest pace of growth, while manufacturing, homebuilding, and tourism resumed a slight pace of growth. Consumer spending continued to grow slightly for nonauto retail goods and held steady for autos. Weak global demand and trade uncertainty continued to constrain firm growth and prompt inventory adjustments. Labor demand continued to exceed supply in most sectors, which constrained employment growth to a modest pace, increased search times, and spurred moderate wage increases. Overall, price pressures remained modest. The firms\u2019 outlook for growth over the next six months remained positive but edged lower overall, with about half of all firms anticipating increases in general activity and a third expecting no change.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. Just one-fifth of the manufacturing firms reported an increase in staff, while about two-fifths of nonmanufacturing firms noted increases. Average hours appeared to expand somewhat among most firms.\nContacts continued to report that tight labor market conditions were constraining growth. One staffing firm noted that firms struggled to staff extra shifts. Another contact reported that restaurants had lost workers who had returned to their home countries. While most manufacturing firms also noted difficulty in finding labor, two firms said it \"just takes longer,\" two more reported successfully attracting employees and reducing turnover by increasing wages and other benefits, and another firm noted that Pennsylvania has good labor availability.\nWage growth continued at a moderate pace, with reports of wage and benefit cost increases averaging about 3 percent. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged up to 45 percent. However, several contacts noted that the pace of wage growth had slacked off a bit.\nPrices\nPrice increases remained modest for most firms. The share of manufacturing firms reporting increases in prices paid and prices received edged lower to about 25 percent; however, the share of nonmanufacturing firms reporting increases rose. Most banking contacts continued to note few signs of inflation.\nLooking ahead six months, the percentage of manufacturing firms that expect to pay higher prices for inputs rebounded to 55, and the share of firms expecting to receive higher prices for their own goods rose to nearly 40 percent.\nManufacturing\nOn balance, manufacturers reported a slight increase in activity after noting no change in the prior period. The percentage of firms that reported increased shipments rose, easily outpacing the percentage reporting decreases. However, the percentage of firms that reported increased new orders was only a tad higher than the percentage reporting decreases.\nThe makers of primary and fabricated metal products and of industrial equipment tended to note gains in new orders and shipments; the makers of chemicals, paper products, and electronic products noted some weakness or declines since the prior period. Overall, the majority of these sectoral trends for this period were weaker than those reported for the same period last year.\nComments on current business conditions were mainly negative and often cited decreased global demand. One firm noted that customers were taking longer to pay. One large firm reported that its input costs continue to rise as more and more suppliers pass on their tariff costs. In addition, this firm noted that it has cut back on hiring because of tariff uncertainty. Another contact noted that one small builder had stockpiled a three-year supply of nails.\nManufacturers continued to expect general activity to increase over the next six months. However, expectations were somewhat lower this period, as were expectations of shipments, new orders, and planned capital expenditures. Expectations of future employment held steady. On balance, expectations for each of these indicators were below their historic nonrecession averages, except for capital expenditures, which remained on par.\nConsumer Spending\nOn balance, nonauto retailers continued to report slight growth. Store traffic was much better in March than in February on a year-over-year basis, although several winter storms had reduced March sales in 2018. Contacts noted that leasing activity seems stable and reasonable.\nAuto sales continued at high levels, but reports were mixed. In Pennsylvania, dealers reported strong year-over-year growth for March and for the first quarter, but they had reported comparable declines for the same periods last year. New Jersey dealers reported declining sales for March, but sales were flat for the first quarter.\nTourism activity picked up slightly as the winter season drew to a close. One contact noted that a late winter snowstorm had moved ski resorts above budget, while a high-end shore hotel had its best February ever. Most contacts were optimistic for the coming summer season.\nNonfinancial Services\nOn balance, activity at service-sector firms picked up to a modest pace of growth, with a rise in the percentage of firms reporting increased current revenues. However, the share of firms reporting an increase in new orders changed little. One large firm continued to report no sign of deterioration in its accounts receivable. Although the percentage fell, more than half of the firms still expect future growth.\nFinancial Services\nFinancial firms reported an uptick to a moderate pace of growth in overall loan volumes (excluding credit cards) on a year-over-year basis, but a continuation of modest growth in credit card lending.\nDuring the current period (reported without seasonal adjustments), volumes grew robustly in commercial real estate loans and in commercial and industrial lending. Loans grew slightly for homes and autos. Home equity lines and other consumer loans (not elsewhere classified) declined.\nA few contacts voiced concerns about looser lending standards; more noted overly aggressive pricing, especially on commercial loans. Overall, contacts continued to note few problems with credit quality. Bankers reported that they and their customers remained largely optimistic for the remainder of 2019.\nReal Estate and Construction\nHomebuilders reported an uptick in contract signings for March, putting them back on pace to nearly match 2018 levels of activity. Demand remains greatest for more affordable units. Builders noted that margins remain very thin and that land availability remains a constraint.\nExisting home sales continued to decline moderately across most local markets. Sellers remain sidelined, and extremely low inventories continue to constrain sales.\nOn balance, commercial real estate construction and leasing activity continued to edge down slightly from relatively high levels. Contractors noted that activity was about the same, but the backlog is smaller, and design firms are less busy. Demand remained strong for industrial and warehouse space; however, absorption has become difficult in smaller markets with an insufficient supply of labor.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"April 17, 2019\nSummary of Economic Activty\nModerate expansion continued in the Eleventh District economy. Manufacturing output increased. Retail sales were flat, and growth in the nonfinancial services sector softened. Loan volumes expanded led by growth in commercial real estate lending, and home sales rose, further boosting optimism in outlooks. Soil moisture was mostly adequate, though rains delayed crop planting in some areas. Activity in the energy sector expanded. Employment rose moderately, despite a tight labor market. Wage growth remained elevated, while price growth was mixed. Outlooks stayed positive or improved in most sectors with the exception of nonfinancial services.\nEmployment and Wages\nEmployment expanded moderately during the reporting period. A lack of qualified job candidates continued to challenge businesses across sectors and skill levels, but shortages appeared to be most severe for mid-skilled positions such as construction personnel and truck drivers. Airlines said they continued to hire pilots and flight attendants, and staffing firms reported ongoing hiring. Multiple firms in the energy sector said they expected to hold head counts steady this year.\nWage pressures generally remained elevated, and one energy sector contact noted that they were having to pay hot oil truck drivers $130,000 annually to retain them.\nPrices\nInput price pressures accelerated slightly in the service sector but were stable in manufacturing. Transportation service firms mentioned higher fuel costs and fees, and retailers noted rising cost pressures. One retailer said that tariffs and labor shortages throughout their supply chain were putting upward pressure on costs. Homebuilders generally cited stable but elevated material costs. Selling price growth was modest to moderate, and passing on cost increases to customers remained difficult. Energy firms reported that breakeven prices for new wells were roughly flat to down year over year in part due to lower costs and/or higher efficiency. A staffing firm, who had let go several clients because they were unable to negotiate higher bill rates with them, said that one of these clients had returned after accepting higher rates.\nManufacturing\nExpansion in the manufacturing sector continued at a moderate pace. Output growth picked up for nondurables, and remained positive for durables, particularly for construction-related products, transportation equipment, and computer and electronic product manufacturing. Outlooks stayed positive, and a few firms said the recent progress made on U.S. trade deals and the pause in short-term interest rate hikes have helped stabilize the outlook.\nGulf Coast refinery operating rates remained healthy in February. Margins firmed up during the reporting period; however, higher prices for heavy crudes have eroded the outlook for margins over the medium term.\nRetail Sales\nRetail sales were flat in March, with multiple contacts noting slower demand. Online-sales growth remained weak. Reports on auto sales were mixed; solid in Central and South Texas but soft in Houston. Outlooks worsened, and a few contacts cited supply chain uncertainty or weakening business confidence as factors affecting expectations.\nNonfinancial Services\nGrowth in nonfinancial services activity slowed slightly, but remained positive and widespread across industries. Revenue growth was solid among professional and business services and accommodation and food services. Staffing services firms cited double-digit year-over-year growth in demand, with increases continuing to be broad-based geographically and across industries. Overall, revenues rose in the transportation services industry, but reports were mixed. Rail and air shipping volumes were down year over year, but sea cargo rose significantly due to strength in steel and container shipments over the same period. Airlines noted steady passenger demand for domestic travel, but demand for international travel was weak. Service-sector outlooks were markedly weaker than the last report, with political uncertainty, trade policy issues, and health of the global economy cited as potential headwinds.\nConstruction and Real Estate\nActivity in the housing market improved further, with multiple contacts citing the recent drop in mortgage rates as a factor boosting growth. Contacts reported a noticeable pickup in foot traffic and home sales starting in mid-February through March, but sales were generally flat relative to year-ago levels. Activity in Austin, Fort Worth, and Houston was stronger than in Dallas and San Antonio. Outlooks stayed optimistic, and builders were generally on plan for 2019.\nApartment demand was seasonally slow during the first quarter. Rent growth accelerated in Austin, Dallas, and San Antonio, remained solid in Fort Worth, but rents were flat in Houston. Multifamily construction remained active, and investment activity was stable in the first quarter.\nIndustrial leasing was solid in Austin and Dallas-Fort Worth but slowed in Houston in the first quarter. Solid job growth and limited new supply is supporting absorption in the Houston office market, although overall conditions remain soft. Office leasing slowed in Dallas-Fort Worth in the first quarter.\nFinancial Services\nLoan volumes increased over the reporting period, led by growth in commercial real estate lending, while residential real estate volumes also rose. However, consumer and commercial and industrial loan volumes dipped. Loan pricing remained competitive, and net interest margins declined. Deposit volumes rose, while credit standards eased moderately. Outlooks remained optimistic, but the cost of regulatory compliance and an increasingly competitive lending environment were cited as concerns by banking contacts.\nEnergy\nEnergy activity grew modestly, and outlooks improved. Production rose at a slow pace, but drilling activity continued to slide as firms reined in spending, including orders for new equipment. Oilfield services firms and equipment suppliers noted surplus capacity for fracking services and slim margins. Availability of additional pipeline capacity out of the Permian Basin has propped up crude oil priced in West Texas relative to the Gulf Coast. Firms responding to the first-quarter Dallas Fed Energy Survey, on average, expect the WTI oil price to be around $60 per barrel at yearend 2019--above the reported average breakeven price to profitably drill new wells. Uncertainty in price outlooks declined partly because contacts were more confident that OPEC would sustain production cuts in the second half of the year.\nAgriculture\nSoil moisture was mostly adequate, and there was a surplus in some areas, particularly the eastern part of the state. Some row crop plantings were delayed as a result of wet fields, but overall production prospects remained quite bullish. The wheat crop was in far better condition than last year thanks to favorable weather, but prices remained low leading some producers to consider harvesting the wheat for hay or silage, or grazing cattle on it. A large U.S. cotton crop was expected, which could depress prices, and there is still much uncertainty regarding tariffs.\nFor more information about District economic conditions visit: 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"

San Francisco

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"Beige Book Report: San Francisco\nApril 17, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-February through March. Conditions in the labor market remained tight, hiring activity remained generally stable, and wage growth was moderate. Price inflation was unchanged on balance. Sales of retail goods increased modestly, while activity in consumer and business services increased moderately. Conditions in the manufacturing sector improved modestly, and conditions in agriculture deteriorated somewhat. Contacts reported that residential real estate market activity expanded moderately and commercial activity was robust. Lending activity was mixed.\nEmployment and Wages\nConditions in the labor market remained tight, and hiring activity remained generally stable over the reporting period. Across the District, contacts reported an increase in competition for workers and a shrinking pool of qualified applicants across industries and skill levels. A large San Francisco software and consulting company reported searching for candidates outside the District and even abroad in order to fill its vacancies. In the Mountain West, contacts in the retail and financial services sectors reported failing to fill positions over extended periods, as well as difficulties in retaining qualified workers. Elsewhere, contacts in the manufacturing, utilities, and financial sectors reported a flat hiring rate. A quick service restaurant chain in the Pacific Northwest also noted that employment levels remained unchanged. In California, a few contacts in the hospitality and banking sectors anticipated slower hiring activity later in the year.\nWage growth continued to pick up broadly. Contacts across the District noted persistent upward compensation pressures due to brisk labor demand and labor shortages. Contacts emphasized that wage growth was stronger for higher-skilled workers, though the higher minimum wages in California and Oregon continued to put upward pressures on wages for lower-skilled workers. Contacts continued to report enhanced bonus structures and benefit offerings to better attract and retain experienced workers. A labor union representative highlighted the potential for downward wage pressures within the entertainment industry following recent large mergers and worker layoffs.\nPrices\nPrice inflation was unchanged on balance over the reporting period. Contacts in the construction sector mentioned price increases for most building materials, except lumber. Contacts in the banking, food, and transportation sectors generally reported being able to pass increased labor costs to final consumers, resulting in modest price inflation in those sectors. A contact in the California utility sector observed that price inflation in that sector remained damped as fuel costs did not rise, and excess capacity persisted. Contacts in the agriculture sector noted subdued market prices overall. Oversupply and weak export demand depressed prices for dairy and nut products. One contact observed that some crop prices in the Central Valley of California increased. A contact in California mentioned that high inventory levels suppressed price increases in the semiconductor sector.\nRetail Trade and Services\nSales of retail goods increased modestly. Contacts across the District reported higher-than-anticipated retail sales following the conclusion of the partial government shutdown. A contact in the Mountain West noted that rebounding consumer confidence also contributed to higher-than-expected retail sales. A contact in Southern California reported higher consumer spending at airports.\nActivity in the consumer and business services sectors increased moderately on balance. Demand for passenger and cargo air transportation expanded solidly. Activity in the quick service restaurant segment was slightly stronger on a year-over-year basis. A contact in the hospitality sector in Southern California noted that hotel bookings declined noticeably, driven by fewer reservations at more affordable properties.\nManufacturing\nConditions in the manufacturing sector improved modestly. A steel manufacturer in Oregon continued to note elevated capacity utilization relative to historical averages, due to lower competition from abroad. A contact in Arizona who provides transportation services to the oil and asphalt sector noted solid demand from producers in that sector. Deliveries of commercial aircraft were flat from the same period last year, while new orders fell a notch. A contact in Northern California reported that demand in the semiconductor industry fell modestly in the beginning of the year.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated somewhat. Many contacts continued to report that trade policy tensions and a stronger dollar constrained sales to export markets. A contact in Idaho noted that crop inventories rose to record levels as farmers waited for a resolution to trade negotiations and a recovery in various market prices. In addition, domestic demand for agricultural goods was mixed, increasing only slightly on balance. Oversupply in dairy markets persisted, hurting profitability and forcing some producers in the Mountain West to sell below break-even prices. Contacts reported that higher-than-expected rainfall since the beginning of the year positively affected agricultural production, but raised concerns that continued heavy rainfall could depress output ahead. In the utilities sector, activity remained mostly flat.\nReal Estate and Construction\nReal estate markets expanded moderately. Most contacts reported increased activity over the reporting period, following a relatively soft period at the beginning of the year. Contacts noted that declines in mortgage rates spurred demand for both single- and multi-family housing, but that inventory for both remained low, leading to a slight pickup in prices. Contacts in the Pacific Northwest and Mountain West generally noted stable to slightly increased residential construction activity, while a contact in Southern California mentioned that construction spending tapered. A contact in the Mountain West observed that some homebuilders opted to relocate to lower-cost markets outside the Twelfth District. Contacts in Idaho and Arizona reported that rental market activity was robust, partly due to a limited supply of starter homes and elevated home prices. Contacts generally noted that time-on-market had risen slightly but was still low by historical standards.\nIn the commercial real estate market, contacts reported robust activity. Across the District, contacts generally noted that construction activity continued to follow a strong trend. Contacts noted that rents for industrial spaces increased moderately. In California, a contact observed that building activity slowed somewhat after the completion of several large projects.\nFinancial Institutions\nLending activity was mixed over the reporting period. A few contacts in Central California and Idaho highlighted strong lending activity. Elsewhere in the District, contacts reported a slowdown in loan demand. Contacts at community banks in Oregon and Central California noted that competition between lenders remained brisk, especially for high quality loans. In general, loan quality remained high, though some contacts observed a modest deterioration in commercial creditworthiness. A contact in the Mountain West noted that the balance sheets of certain agricultural producers weakened notably due to low market prices and weak export demand.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nApril 17, 2019\nThis report was prepared at the Federal Reserve Bank of St. Louis based on information collected on or before April 8, 2019. 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\nEconomic activity expanded at a slight-to-moderate pace in March and early April. While most Districts reported that growth continued at a similar pace as the previous report, a few Districts reported some strengthening. There was little change in the outlook among contacts in reporting Districts, with those expecting slight-to-modest growth in the months ahead. Reports on consumer spending were mixed but suggested sluggish sales for both general retailers and auto dealers. Reports on tourism were generally more upbeat. Reports on loan demand were mixed, but indicated steady growth. Reports on manufacturing activity were favorable, although contacts in many Districts noted trade-related uncertainty. Most Districts reported stronger home sales, although some Districts noted low demand for higher-priced homes. Among reporting Districts, agricultural conditions remained weak, with contacts expressing concerns over the impact of current and future rainfall and flooding.\nEmployment and Wages\nEmployment continued to increase nationwide, with nine Districts reporting modest or moderate growth and the other three reporting slight growth. While contacts reported gains across a variety of industries, employment increases were most highly concentrated in high-skilled jobs. However, labor markets remained tight, restraining the rate of growth. A majority of Districts cited shortages of skilled laborers, most commonly in manufacturing and construction. Contacts also reported some difficulties finding qualified workers for technical and professional positions. Many Districts reported that firms have offered perks such as bonuses and expanded benefits packages in order to attract and retain employees. This tight labor market also led to continued wage pressures, as most Districts reported moderate wage growth. Wages for both skilled and unskilled positions generally grew at about the same pace as earlier this year.\nPrices\nOn balance, prices have risen modestly since the previous report. Input costs increased in the modest-to-moderate range. Tariffs, freight costs, and rising wages were often cited as key factors driving this trend. The ability of firms to pass increased input costs on to consumers was mixed. Changes in material costs were likewise mixed, with several Districts noting increases in metal prices and decreases in lumber prices. Construction firms across most Districts nevertheless reported net increases in material costs, with several also reporting passing those costs on to their customers. Some Districts noted increasing fuel prices, while others noted increasing oil prices and decreasing natural gas prices. Crop price pressures generally remain historically low, but price changes since the last report have varied by commodity.\nHighlights by Federal Reserve District\nBoston\nEconomic activity continued to expand, although manufacturers cited a slowing pace. Even as labor markets remained tight, wage increases were moderate. Price increases were mostly modest, although some contacts said they continued to fear the impact of tariffs. Aside from manufacturers, outlooks remained positive.\nNew York\nEconomic activity grew slightly in the latest reporting period. Labor markets remained exceptionally tight and wage growth was steady. The pace of both input price and selling price increases slowed considerably. Consumer spending and tourism were somewhat weaker. Rental markets for both residential and commercial real estate picked up. Banks reported somewhat stronger loan demand and no change in delinquency rates.\nPhiladelphia\nOn balance, business activity resumed a slight pace of growth during the current Beige Book period following a brief pause in the prior period. Weak global demand and trade uncertainty constrained expansions, while a tight labor market constrained hiring and spurred wage increases. Inflation remained modest, and firms remained positive about the six-month outlook.\nCleveland\nEconomic activity in the District increased modestly. Residential and nonresidential construction and professional and business services firms saw the greatest demand growth. Other sectors saw muted demand change. Firms expanded employment moderately. Wages climbed moderately for a wide range of industries and occupations. Selling prices rose moderately despite a deceleration of materials cost increases.\nRichmond\nThe regional economy grew moderately, overall, with expansion reported across most industry sectors. Trucking companies saw demand return to a strong level after a slow start to the year. On the whole, manufacturing and nonfinancial service firms saw modest growth. Tourism was strong in recent weeks; however, some retailers reported sluggish conditions.\nAtlanta\nEconomic activity in the District grew modestly. The labor market remained tight and wages increased, on balance. Nonlabor input costs were mostly subdued. Retail sales grew slightly, and tourism remained robust. Home sales improved, and commercial real estate activity accelerated. Manufacturers noted increases in new orders, and production and inventories improved. Banking activity was stable.\nChicago\nEconomic activity increased slightly on balance. Employment increased modestly; business spending and construction and real estate increased slightly; and consumer spending and manufacturing were little changed on balance. Wages and prices rose modestly, and financial conditions improved slightly. Farmers continued to be challenged by low crop prices.\nSt. Louis\nEconomic activity has improved slightly since the previous report. Reports from District bankers indicated a moderate increase in loan volumes. Retailers noted increasing price pressures that they expect to pass along to their customers. Farmers expressed concerns over recent flooding of the Mississippi Valley.\nMinneapolis\nNinth District economic activity grew modestly, with many sectors hampered by worse-than-normal winter weather. Labor demand remained healthy, but signs of weakness surfaced. Residential construction and real estate were soft, but were expected to rebound with warmer weather and declining interest rates. However, flooding in parts of the District was a concern for an already weak farming sector.\nKansas City\nEconomic activity continued to expand slightly, and contacts expected additional growth in the months ahead. Consumer spending was little changed, manufacturing activity rose modestly, and real estate activity expanded slightly. Energy activity held steady, while District farm conditions weakened in part due to severe weather. Bankers noted lower overall loan demand, although residential loan demand rose.\nDallas\nEconomic activity expanded moderately, with a pickup in demand seen in the housing and financial services sec-tors. Retail sales were flat, and growth in nonfinancial services slowed. Hiring continued at a moderate pace, and wage pressures remained elevated. Outlooks stayed positive or improved except for the nonfinancial services sector.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was unchanged on balance. Sales of retail goods increased modestly, and activity in the consumer and business services sectors increased moderately. Conditions in the manufacturing sector improved modestly. Activity in residential real estate markets expanded moderately, and commercial activity was robust. Lending activity was mixed.\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\nApril 17, 2019\nSummary of Economic Activity\nEconomic activity in the Second District expanded slightly since the last report. The labor market has remained exceptionally tight, while wage growth has been steady. The pace of both input price increases and selling price increases slowed considerably. Manufacturing and distribution activity expanded, while business was generally steady in the service sector. Consumer spending has been somewhat weaker, on balance, and tourism has tapered off a bit. Housing markets were mixed, with sales markets steady to softer but rental markets strengthening. Commercial real estate markets have been steady to slightly firmer. Finally, banks reported steady to somewhat stronger loan demand and no change in delinquency rates.\nEmployment and Wages\nThe labor market has remained exceptionally tight across the District, with employers reporting ongoing difficulties finding workers of all skill levels. Businesses continued to report that employment was flat to up slightly, on balance, so far this year. Firms in wholesale, real estate & construction, and transportation noted modest net gains in staffing levels, while contacts in the retail and leisure & hospitality sectors noted modest declines. New York City employment agencies reported strong hiring from nonprofits, legal, consulting, and accounting firms, as well as small to medium-sized finance companies.\nWith tight labor markets, wage growth has been steady in recent months. One major employment agency in New York City noted that salaries have not risen as much as one would expect given the tightness of the labor market. Two employment agency contacts noted a large and widening gap between salary demands and salary offers, noting that this has led some employers to miss out on good candidates. Manufacturers, in particular, were said to be holding the line on wages, while service firms have become somewhat more flexible.\nPrices\nBusinesses reported that both input price increases and selling price increases slowed considerably in the latest reporting period. Input cost pressures tended to be most widespread in the wholesale & retail trade, education & health, and business & professional services sectors. Contacts across most industry sectors reported steady to modestly rising selling prices, with the most widespread rises reported in the wholesale trade and real estate & construction sectors.\nRetailers generally indicated that selling prices have been essentially flat. One major chain reports somewhat steeper discounting to clear out excess inventories, but another contact notes less seasonal discounting than in years past. Nightly rates for New York City hotel rooms and prices for Broadway theatre admissions have slipped in recent weeks and were down roughly 10 percent from a year earlier.\nConsumer Spending\nRetail sales picked up modestly in March. A major retail chain noted that sales in the region were up slightly from a year ago in March and above plan, led by New York City stores. With the change in seasons, retailers in upstate New York generally reported fairly solid shopper traffic and ongoing modest growth in sales activity. Inventories were generally said to be at or modestly above desired levels.\nNew vehicle sales remained quite weak through March, according to dealers in upstate New York, falling well below year-ago levels. With this slowdown, new vehicle inventories have grown above desired levels. Sales of used vehicles were said to be steady to down slightly in recent months. Dealers indicated that consumer credit has remained widely available.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA), which had been at or near record levels for most of the past year, fell to a 14-month low in March, based on the Conference Board\u2019s monthly survey.\nManufacturing and Distribution\nThe manufacturing and distribution sectors continued to expand in the latest reporting period. Manufacturers reported slight increases in activity in recent months, while wholesale distributors and transportation firms continued to report fairly brisk growth.\nLooking ahead, contacts in the manufacturing and distribution sectors have become less optimistic about future business conditions. A number of contacts continued to express concern about trade uncertainty, tariffs, and the recent increase in New York State\u2019s minimum wage.\nServices\nOverall, service-sector business was characterized as flat in the latest reporting period. Contacts in the business & professional services sectors reported some deceleration in activity, while information-related businesses noted a slight decline in activity.\nLeisure & hospitality businesses reported little or no growth in recent months. Tourism to New York City has softened noticeably, particularly in the last couple of weeks. Hotel occupancy rates and revenues weakened in the latter part of March, slipping well below comparable 2018 levels. Likewise, Broadway theaters reported that attendance and especially revenues became progressively weaker during March, slipping below year-ago levels. Part of this apparent softening may be attributable to unseasonably cold weather and a later Easter.\nReal Estate and Construction\nHousing markets across the District have been mixed since the last report, with home sales and prices flat, on balance, but rental markets strengthening. Homes sales in upstate New York have picked up seasonally, and persistently low inventories of unsold homes have continued to boost prices. In New York City, in contrast, the inventory of unsold homes climbed further in the first quarter, prices were flat to down slightly, and the volume of transactions fell to its lowest level in a decade. The market for newly-constructed condos has been particularly weak. There has been some concern about the federal tax changes, which greatly limit the tax-deductibility of homeowner expenses, and also about a hike in New York State\u2019s transfer tax on high-end properties.\nResidential rents across the District have risen modestly since the last report and are up from a year earlier. In New York City, rents have resumed a modest upward trend as rental vacancy rates have declined from already low levels and landlord concessions, though still prevalent, have receded gradually.\nCommercial real estate markets have been steady to slightly firmer in the latest reporting period. Office availability rates and asking rents have been steady overall. The market for retail space has been mixed, with rents edging down across the New York City area but rising modestly across most of upstate New York. Retail vacancy rates have been mostly flat. Industrial markets, on the other hand, have continued to strengthen: rents have continued to climb at a moderate rate, while availability rates have held steady at fairly low levels.\nNew multi-family construction starts remained sluggish, but there continues to be a sizable volume of residential space under construction in and around New York City. In New York City, office construction has picked up, and there continues to be a high volume of office development in progress, with a large amount of space scheduled to come on-line over the remainder of 2019.\nBanking and Finance\nSmall to medium-sized banks in the District reported somewhat higher demand for consumer loans and residential mortgages, but no change in demand for commercial and industrial (C&I) loans or commercial mortgages. Refinancing activity remained little changed. Bankers noted higher credit standards for commercial mortgages and C&I loans, and no change in standards for other types of loans. Lower loan spreads were reported for consumer loans and residential mortgages, while spreads were steady for all other categories. The average deposit rate was reported to be up fairly sharply. Finally, banks reported that delinquency rates held steady across all loan categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"April 17, 2019\nSummary of Economic Activity\nThe Ninth District economy grew modestly overall since the last report. Employment grew modestly, while wage pressures rose moderately and price pressures were modest. The District economy saw growth in professional services, commercial construction and real estate, manufacturing, energy, and mining. However, consumer spending was mixed, while residential construction and real estate saw small declines, and agriculture remained weak.\nEmployment and Wages\nEmployment grew modestly since the last report. Ad hoc surveys by the Minneapolis Fed found varying demand for labor. In Montana, 30 percent of employers polled said they were hiring to add head count; a survey of human resources professionals in central Minnesota found that more than half were trying to increase head count. A poll of 20 Minnesota staffing firms, most of them in Minneapolis-St. Paul, found that recent job orders were modestly higher over the same period last year, while hours booked were lower and unfilled job orders somewhat higher as a result of continued tight labor supply. Expectations for job orders in the second quarter were also notably higher. A central Minnesota banker said some companies have money to expand but were fearful that they won\u2019t be able to fill the jobs they create. A North Dakota staffing contact said, \"We have to be careful who we tell we have workers for.\" Yet some signs of weakness were present. Initial unemployment claims rose significantly in Montana over the most recent six-week period (through mid-March) compared with a year earlier, and a modest increase was also seen in South Dakota. Layoffs in retail continued, and a Minnesota financial services firm announced a layoff of 210 workers. February job postings fell notably over a year earlier in Minnesota (8 percent), Michigan\u2019s Upper Peninsula (12 percent), and Montana (17 percent); job postings in the Dakotas were mostly flat. Widespread spring flooding was also likely to hamper hiring.\nWage pressures rose moderately. A major retailer publicly announced a one-dollar increase to base pay, to $13 an hour, starting in June. Staffing contacts in Michigan\u2019s U.P. and western South Dakota noted that pay rates have risen 5 percent and 8 percent, respectively, over the past 12 months. Two ad hoc polls by the Minneapolis Fed (one in Minnesota, one District-wide) found that wages have risen by more than 3 percent over last year. However, a majority of respondents to three other ad hoc polls (one in Montana and two in Minnesota) pegged recent wage increases below 3 percent; they also expected roughly the same level of wage pressure going forward.\nPrices\nPrice pressures increased modestly. A Minneapolis Fed business survey indicated that a slight majority of firms increased output prices in the first quarter of 2019 relative to the same period a year earlier; a similar proportion planned price increases in the second quarter. A larger share of firms reported input price increases. Contacts reported that tariffs continued to create significant uncertainty about the outlook for raw materials, notably for metals. Retail fuel prices in District states in early April were substantially higher relative to the previous reporting period. Prices received by farmers in February increased from a year earlier for corn, wheat, hay, milk, and turkeys; prices for soybeans, eggs, chickens, cattle, and hogs decreased.\nConsumer Spending\nConsumer spending was mixed across the District since the last report. February sales tax collections fell 4 percent in Minnesota compared with a year earlier, and hotel demand was also lower. However, in North Dakota, February motor vehicle excise and other sales taxes were higher over the same period. Total gaming receipts in South Dakota were about 2 percent higher in the first two months of the year compared with last year, and statewide taxable sales were also 4 percent higher over this period. New and used auto sales slumped in the western portion of the District in February compared with a year earlier, but March sales saw a solid rebound. Sales of recreational vehicles were also lower over the first two months of the year compared with a year earlier, especially in Minnesota. Montana\u2019s ski season was strong in the first quarter compared with a year earlier, and lodging sales taxes in the state were about 15 percent higher. But some regions were hurt by widespread snowfall; a contact in Michigan\u2019s U.P. noted that snowmobile tourism was down there because other regions had their own snow; February traffic across the Mackinac Bridge (a gateway to winter tourism in the U.P.) was down 10 percent over last year.\nServices\nActivity in the professional services sector grew modestly overall. Contacts in the trucking industry reported that extreme winter cold and heavy snows led to delays and a reduction in activity, but sources predicted a rebound due to pent-up demand. An ad hoc poll of accountants in Minneapolis-St. Paul found that half saw increased activity in the first quarter, while one-quarter saw a decline. The group also was slightly more positive about activity over the coming two quarters. A survey of job openings found that statewide STEM openings rose by 15 percent in February over a year earlier.\nConstruction and Real Estate\nCommercial construction rose modestly since the last report. An industry database showed that the value of total construction starts in the first two months of the year was lower in District states compared with a year earlier, but likely due in part to extreme weather. Industry contacts said project pipelines were healthy heading into the spring building season, and a second database showed that the number of total continuing projects (as of late March) were at levels similar to last year over the same period. For larger cities in the District with available first-quarter data, Billings, Mont., Fargo and Bismarck (N.D.), and Sioux Falls, S.D., saw growth in commercial permitting over last year, while Rapid City, S.D., experienced a decline. Residential construction was lower. Total permitted housing units in the first quarter were down significantly from last year in Minneapolis-St. Paul and Sioux Falls, while Bismarck was up modestly and Fargo and Billings were mostly flat. Extreme winter weather was again cited for the decline, and industry contacts expected activity to rebound with the return of warmer weather and a recent decline in mortgage rates.\nCommercial real estate grew modestly since the last report. In Minneapolis-St. Paul, multifamily permitting slowed down in the first quarter, but new-unit deliveries this year were expected to remain strong and vacancy rates tight. New office construction in the region has fallen, but a significant amount of renovated space was scheduled to re-enter the market this year. Industrial vacancy rates remained low. In Sioux Falls, multifamily development has slowed and vacancy rates have risen to about 10 percent. Retail vacancy was high in the city\u2019s busiest retail corridor, but activity was reported to be stronger in other, outlying areas of the region. Residential real estate in the District was lower compared with the same period a year ago. February home sales were mixed compared with a year ago, rising modestly across Minnesota, but falling in many other markets. However, preliminary March data suggested home sales fell in Billings, Sioux Falls, and Minneapolis-St. Paul. Sources expected a rebound in home sales in the near term.\nManufacturing\nDistrict manufacturing activity increased briskly. An index of manufacturing conditions indicated increased activity in March compared with a month earlier in Minnesota and the Dakotas. Demand for capital equipment remained strong, according to contacts. Agricultural machinery producers reported solid sales, with domestic weakness more than offset by strong export activity. Officials approved plans for a $54-million compressed gas plant in Minnesota.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak. Heavy snows and resultant early spring flooding were likely to delay planting in many areas. In South Dakota and southern Minnesota, where flooding was most severe, the impact could be considerable. District oil and gas exploration activity as of early April increased relative to the previous report. District iron ore mines continued to operate at near capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nApril 17, 2019\nSummary of Economic Activity\nTenth District economic activity continued to expand slightly in March, and contacts expected additional growth in the months ahead. Consumer spending was little changed, but contacts expected modest increases moving into the summer months. Manufacturing activity expanded modestly, and capital spending plans rose moderately as manufacturers expected rising sales and high capacity utilization moving forward. District real estate activity rose slightly. Energy activity held steady since the previous survey period, but respondents\u2019 expectations were positive due to higher oil prices. District agricultural conditions weakened slightly, and recent severe weather could stress farm operations in the months ahead. Bankers reported a decline in loan demand for a majority of categories. Employment levels edged higher, and a majority of contacts expected employment to rise in the months ahead. Wages continued to rise at a modest pace since the previous survey period and were strongly above year-ago levels. Input and selling prices were mostly higher across sectors, and additional gains were expected.\nEmployment and Wages\nEmployment across the District edged higher in March as slight decreases in the overall services sector were offset by modest gains in the manufacturing and energy sectors. Contacts in the auto sales, transportation, professional and high-tech services, real estate, health services, and tourism and hotels sectors noted declines in employment since the previous survey period, while the retail trade, wholesale trade, restaurant, manufacturing, and energy sectors reported rising employment levels. However, a majority of contacts from both services and manufacturing sectors noted higher levels of employment compared to year-ago levels and expected additional growth moving forward. Employee hours fell across most services sectors, but respondents in the manufacturing and energy sectors noted slightly higher average employee workweeks.\nA majority of respondents continued to report labor short-ages for low- and medium-skill workers, including auto technicians, truck drivers, and all positions for retail stores and restaurants. A few respondents also noted shortages in high-skill positions such as accountants, pilots, and pharmacists. Wages continued to expand at a modest pace since the previous survey period and were strongly above year-ago levels. Moderate wage gains were anticipated in the months ahead.\nPrices\nDistrict input and selling prices were mostly higher across sectors, with growth in input prices outpacing that of selling prices. Contacts expected an acceleration in the pace of growth of input and selling prices in the months ahead. Respondents in the retail sector reported strong growth in input prices and moderately higher selling prices since the previous survey period. Input prices in the restaurant and transportation sectors grew modestly and restaurant selling prices were slightly higher while transportation selling prices were flat. Contacts in both industries expected input and selling prices to grow strongly moving forward. Construction supply respondents noted steady prices since the previous survey period but expected moderate increases in the coming months. Manufacturers reported that prices of finished products edged up, while prices of raw materials grew modestly.\nConsumer Spending\nConsumer spending was little changed compared to the previous survey period, but contacts expected modest increases in sales in the months ahead. Retail sales dropped slightly and auto sales were flat compared to the previous survey period, but each remained above year-ago levels. Retail contacts noted lower-priced items and seasonal goods sold well, while higher-priced items sold poorly. Auto contacts reported that inventory levels were well above both month-ago and year-ago levels. Restaurant sales were flat compared to the previous survey period, and one contact attributed weak sales to harsh weather conditions. Tourism sales rose slightly in March, and contacts anticipated increases in sales in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity grew modestly since the previous survey period, and business contacts in wholesale trade, transportation, and professional and high-tech sectors reported mixed sales. Factory activity increased at both durable and nondurable goods plants due primarily to increases in food and beverage products and wood, pa-per, and printing manufacturing. Production, shipments, and new orders were above year-ago levels in the manufacturing sector, with additional gains expected in the coming months. Manufacturing contacts anticipated moderate increases in capital spending in the next few months, with many contacts noting high levels of expected sales growth and capacity utilization as reasons for increased capital spending plans.\nOutside of manufacturing, firms in the wholesale trade and transportation sectors experienced modestly lower sales compared to the previous survey period, while contacts in the professional and high-tech sector reported a slight increase. Contacts in both wholesale trade and professional and high-tech services expected sales to increase moderately in the months ahead, while transportation sector contacts anticipated modest sales growth.\nReal Estate and Construction\nDistrict real estate activity expanded slightly in March, and contacts expected additional growth in the coming months. Residential home sales were flat compared to the previous survey period and moderately lower than year-ago levels. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Despite significantly higher residential inventory levels, home prices rose slightly higher. Residential sales, inventories, and selling prices were expected to rise in the months ahead. Residential construction activity was modestly higher than year-ago levels as housing starts, traffic of potential buyers, and sales rose. Contacts expected additional gains in residential construction activity in the months ahead. Commercial real estate activity edged up since the previous survey period as sales, absorption, construction underway, completions, and prices rose while vacancies fell. Respondents in the commercial real estate sector projected an acceleration in activity moving forward.\nBanking\nBankers reported a slight decrease in overall loan demand since the previous survey period, most notably for commercial real estate, commercial and industrial, consumer installment, and agricultural loans. However, demand for residential real estate loans increased from previous survey levels. Bankers indicated a modest improvement in loan quality compared to a year ago and expected a slight decline in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories, and deposit levels increased.\nEnergy\nEnergy activity held steady compared to the previous survey period, but expectations for future activity were positive as the price of oil has continued to rebound. Although oil prices were lower than a year ago, they were still higher than most firms\u2019 average price needed to be profitable. Across the District, the number of active oil and gas rigs continued to decline, especially in Oklahoma, New Mexico, and Colorado. However, production per rig continued to increase and overall oil and gas production remained at high levels due to continued productivity gains. In addition, more than half of District energy contacts expected pipeline capacity to increase in the next year.\nAgriculture\nThe farm economy in the Tenth District weakened slightly from the prior reporting period, and severe weather conditions could weigh on the outlook moving forward. Across the region, corn and wheat inventories were slightly higher than a year ago, and prices for corn and wheat were slightly lower. Soybean inventories in the District were significantly higher than a year ago, with prices moderately lower. In the livestock sector, a slight increase in cattle prices and a sharp increase in hog prices provided some support for revenues. However, recent severe flooding and blizzards throughout the District resulted in losses of cattle and stored crops as well as damage to roads, fields, and other infrastructure. Although the total impacts of the floods remained unknown as recovery ensues, conditions could put additional stress on some farm operations in the coming months.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"March 6, 2019\nSummary of Economic Activity\nThe Eleventh District economy expanded at a moderate pace. Activity in the manufacturing, housing, and nonfinancial services sectors improved. Loan volumes ticked up, and retail sales grew modestly. Abundant soil moisture boosted outlooks in the agricultural sector. Drilling activity declined. Employment expanded moderately, despite a tight labor market. Wage growth remained elevated, while price growth eased. Outlooks improved; however, some contacts reported weaker-than-expected output/revenue growth over the reporting period and mentioned factors such as tariffs, slower activity in the energy sector, increased uncertainty, weaker global economy, and labor constraints.\nEmployment and Wages\nEmployment grew moderately during the reporting period. A lack of qualified candidates continued to challenge businesses across sectors and skill levels, but shortages remained most severe for mid-skilled positions such as nurse aides, heavy equipment technicians, auto mechanics, construction personnel, and factory floor workers. There were multiple mentions of restaurant worker shortages, and one commercial landscape management firm said they were looking to fill 75-100 entry-level positions.\nWage pressures generally remained elevated. One staffing firm noted that employers were especially willing to raise wages for jobs paying less than $15 per hour. A durable goods manufacturer said raising starting hourly pay by at least 15 percent had helped draw in more and better-qualified applicants.\nLooking ahead, firms were bullish on their hiring plans. Forty-eight percent of the 384 firms responding to supplemental questions in the February Texas Business Outlook Surveys said they expect to increase their employment over the next six to twelve months while only 8 percent said they expected to decrease jobs.\nPrices\nInput price growth moderated, particularly in the retail sector. Homebuilders generally cited stable material costs, but lower fuel prices were mentioned by transportation service contacts. Selling price growth was slight in the construction and manufacturing sectors but moderate in service-providing industries. Passing on cost increases to customers was becoming more difficult, and contacts from various industries mentioned that margins continued to be under pressure from high costs and/or increased competition. Conversely, two staffing firms said they were able to raise bill rates as planned.\nManufacturing\nOverall output growth improved slightly during the reporting period, led by an increase in fabricated metals and transportation equipment manufacturing. Outlooks among manufacturers improved compared with the previous reporting period, but trade issues, labor constraints, the rising cost of credit, and political uncertainty were cited as factors damping outlooks.\nGulf Coast refinery operating rates remained healthy in January, but contacts said that an oversupplied gasoline market will drive utilization rates lower. Outlooks were less optimistic, with demand growth projected to be soft, particularly in Mexico\u2014a major export market.\nRetail Sales\nReports on retail spending were mixed, though overall, sales expanded modestly. Some retailers noted a slight uptick in sales activity following the end of the government shutdown. By contrast, others said unfavorable weather conditions and a higher cost of credit slowed sales. Growth in online sales was softer than in the last reporting period, and auto sales weakened. Outlooks improved slightly, although two contacts said that any new auto-related tariffs would hurt future sales and/or business activity.\nNonfinancial Services\nActivity in the nonfinancial services sector accelerated in the reporting period. The increase was widespread and led by growth in the professional, scientific and technical services sector. Demand for staffing services strengthened after a deceleration in activity at yearend 2018, and growth was broad-based geographically and across industries. Revenues rose in the health care and administrative support services industries. Reports from transportation services firms were mixed, with rail shipments down year over year, but air and sea cargo volumes up significantly over the same period. Airlines, accommodation, and food services firms saw slower activity in the earlier part of the reporting period partly because of the government shutdown, but demand/revenues in both industries have firmed up since then.\nUncertainty continued to cloud many contacts\u2019 outlooks in the service sector, and trade policy issues with China and Brexit were cited as significant potential headwinds.\nConstruction and Real Estate\nActivity in the housing market improved. Contacts noted an uptick in traffic and new home sales since the start of the year, following a slowdown at yearend 2018. Builders remained selective in signing new deals, and housing starts were expected to be relatively flat in 2019. Outlooks were more optimistic than in the last report, though a few contacts said it was too early to tell whether the recent uptick would translate into a good spring market.\nConditions were stable in the apartment market, and the expectation was for rent growth to remain solid in Austin and Fort Worth and to firm up in Houston. Industrial activity generally remained solid, and reports on the office market indicated that leasing was most active for new or recently renovated class A space.\nFinancial Services\nLoan volumes increased slightly over the reporting period, led by higher commercial real estate lending. Consumer lending ticked up, which one contact attributed to loan requests from workers affected by the recent government shutdown. Commercial and industrial and residential real estate loan volumes dipped. Loan pricing remained competitive, while deposit volumes declined notably. Outlooks were slightly more optimistic than they were six weeks ago; however, bankers remained concerned about the lending impact of uncertainty in U.S. and global markets.\nEnergy\nDrilling activity in the Eleventh District slowed, with the rig count declining during the reporting period. Availability of additional pipeline capacity in the Permian Basin, as early as the end of February, pushed up crude oil prices in West Texas relative to the Gulf Coast. Firms were more conservative in their capital spending plans than in the last report, with most noting that they had revised down their capital budgets based on WTI crude priced between $50 and $55. Contacts noted significantly higher uncertainty stemming from U.S.-Iran and U.S.-Venezuela policies, softening global demand, and trepidation about OPEC\u2019s willingness to maintain production cuts.\nAgriculture\nProspects for 2019 crops heading into the spring planting season were strong thanks to favorable soil moisture conditions. Producers were behind in field preparation work because of soil saturation, with planting expected to be delayed in some regions. Overall, contacts expect average to above-average crop yields this year but noted the financial situation of many producers continued to be a concern due to generally low crop prices. On the livestock side, grazing conditions were looking better this year than last and beef demand remained strong.\nFor more information about District economic conditions visit: 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"

St Louis

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"Beige Book Report: St Louis\nMarch 6, 2019\nSummary of Economic Activity\nEconomic conditions have been unchanged since our previous report. Labor market conditions remained tight as firms continued to note difficulties finding qualified workers. Wages increased at a moderate pace, and survey respondents reported a slight increase in prices charged to consumers. Reports on consumer spending were mixed. Manufacturing activity continued to improve at a moderate pace. Residential real estate contacts were relatively pessimistic compared with previous reports. District bankers reported a slight decrease in loan demand. Agricultural conditions declined slightly, and contacts expressed concerns over rising input costs and low commodity prices. Overall, the outlook among contacts continued to weaken for the fourth consecutive quarter but remains slightly optimistic. On net, a slightly greater share of contacts expect conditions in 2019 to be better or somewhat better than in 2018.\nEmployment and Wages\nEmployment has grown slightly since the previous reporting period. On net, 11 percent of contacts reported that employment was higher than a year ago. Worker shortages continued to restrict hiring. Contacts reported a tight labor market for skilled jobs in construction, healthcare, and manufacturing. One contact in the tech industry noted a shortage of technical workers, citing difficulties finding and retaining migrant workers and temporary employees. Contacts also reported difficulties finding unskilled workers with reliable means of transportation to work. Louisville contacts in higher education noted that enrollments are down as the employee-friendly labor market has led potential students to enter the workforce instead of pursuing a college degree.\nWages have increased moderately since the previous report. On net, 40 percent of contacts reported that wages were higher or slightly higher than a year ago, and 39 percent reported that labor costs increased. Contacts in construction and healthcare indicated that the tight labor market led to pay raises. One construction firm reported raising base salaries for the first time in over a decade. Small business wages throughout the District grew modestly.\nPrices\nPrices have increased slightly since the previous report. On net, 20 percent of contacts held that consumer prices increased relative to last year, which is a moderately smaller share than three months prior. Nonlabor costs have increased modestly. On net, 30 percent of business contacts reported that nonlabor costs increased from a year ago. Agriculture prices generally decreased across the District. The prices of corn, cotton, and soybeans have all shown slight to modest declines since the previous report. Coal and steel prices likewise decreased modestly, although coal prices remained elevated compared with one year ago.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate mixed consumer activity since the previous report. January real sales tax collections increased in Kentucky, decreased in Missouri, and were flat in Arkansas and Tennessee relative to a year ago. Retailers in West Tennessee reported mixed activity, and contacts in Missouri indicated that poor weather negatively impacted sales. Surveyed auto dealers were split between sales meeting and falling short of expectations. Multiple dealers expressed concerns over higher interest rates, and there were reports of a shift in demand toward low-end vehicles. Arkansas tourism sales tax revenue was flat year over year.\nManufacturing\nManufacturing activity has increased moderately since our previous report. Contacts reported that production, new orders, and capacity utilization increased in the first quarter relative to one year ago, and they expect this growth to continue into the second quarter. Survey-based indexes also indicated that Arkansas and Missouri manufacturing activity continued to expand from December to January. Several firms announced plans to expand facilities and hire new employees, including manufacturers in the automotive and furniture industries. However, a Memphis medicine manufacturer announced plans to lay off workers by mid-March.\nNonfinancial Services\nActivity in the services sector has modestly improved since the previous report. Local contacts indicated that sales midway through the first quarter met or exceeded expectations. On net, 20 percent of contacts reported higher dollar sales than a year ago, and 35 percent predicted continuing improvement over the next quarter. Posted vacancies for nonfinancial service jobs increased across Louisville, Memphis, and St. Louis from December to January. Major transportation firms in the District announced plans to expand full-time and part-time hiring.\nReal Estate and Construction\nResidential real estate activity has declined slightly since the previous report. On net, 10 percent of respondents reported a decrease in demand for single-family homes compared with a year ago, and about two-thirds of contacts noted that first-quarter sales have fallen short of expectations. Contacts continued to report inventory shortages.\nResidential construction activity was flat. Contacts reported no change in construction activity relative to the same time last year. About 10 percent of contacts, on net, expect activity to increase in the second quarter.\nCommercial real estate activity was mixed. Survey respondents reported an increase in demand for industrial space year over year but no change in the demand for office buildings and a decrease in demand for retail properties. These contacts expect demand for office and industrial space to increase in the next quarter and the demand for retail properties to continue to decline.\nCommercial construction activity improved slightly. Contacts reported increased demand for construction of office and retail property types. One respondent noted that labor shortages are slowing down project construction schedules. Memphis area contacts reported that some companies are choosing to renovate existing facilities rather than build new ones.\nBanking and Finance\nBanking conditions in the District have weakened slightly since the previous report. Demand for commercial and industry loans decreased relative to a year ago, while demand for mortgages was flat. Bankers expect no change to overall loan demand in the second quarter. Credit standards were generally flat compared with year-ago levels but continued to tighten for commercial and industrial loans. Delinquencies fell on a year-over-year basis but are expected to remain unchanged in the second quarter.\nAgriculture and Natural Resources\nDistrict agriculture conditions declined slightly from the previous reporting period. The number of acres of winter wheat planted this season decreased slightly from last year\u2019s total. Local agriculture contacts continued to express pessimism about the industry in the near term as low commodity prices and rising input costs strain farm incomes.\nNatural resource extraction conditions declined modestly from December to January, with seasonally adjusted coal production falling 6 percent. January production increased nearly 5 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\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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"March 6, 2019\nSummary of Economic Activity\nReports from business contacts in the First District indicate that activity was somewhat mixed since the last report. Retailers reported moderate increases in sales, and restaurant sales were also up. Manufacturers\u2019 results, by contrast, were varied, with half of this round\u2019s respondents citing declines in sales or revenue or a marked slowdown in the pace of growth. Staffing firms also reported revenue declines, largely attributable to a shortfall of candidates in the current tight labor market. Commercial real estate markets were similar or slightly improved since the last report. Residential real estate markets in most areas saw declines in closed sales and increases in median sales prices. Manufacturers said they were cautious about 2019; other contacts\u2019 outlooks remained mostly positive.\nEmployment and Wages\nBusiness contacts said that labor markets remained tight but wage pressures continued to be moderate. Beyond a shortage of workers in certain skill categories, such as information technology, retail respondents reported no real problems filling job openings. Depending on local labor market conditions, some retailers reported seeing higher wage costs. The restaurant industry complained of severe labor shortages. Hiring by manufacturers was mixed. A furniture maker laid off 10 workers in January. A semiconductor manufacturer facing big declines in demand from China put a hiring freeze in place, but they were reluctant to institute layoffs since it takes three to six months to train new workers. Three-quarters of manufacturing contacts reported continuing to hire at their normal pace; none cited unusual wage pressure. Staffing firms reported tight labor markets and some increases in bill and pay rates (that is, wages).\nPrices\nPricing reports were mixed. Retailers said price declines for certain food categories have slowed down and some grocery categories saw price increases. A prominent big-box retailer reported that some consumer goods manufacturers announced plans to raise prices by 7 percent to 10 percent, though when these cost increases pass through to retail prices depends on when contracts with individual retail chains are renewed. Manufacturing contacts reported no unusual pricing pressures.\nRetail and Tourism\nRetailers contacted for this round reported that on a year-over-year basis, comparable-store sales were up by mid-single-digit percentages. Capital spending plans for 2019 are a bit higher than 2018. One contact observed that consumers seem willing to spend on all categories of goods, \u201cwhether a $10 T-shirt or a $2,000 television set.\u201d Moderate but positive growth is expected for the rest of this year, though there is some lingering worry that higher tariffs, if implemented, could put a damper on sales of affected products.\nA contact in the Massachusetts restaurant industry reported that based on meal tax receipts, restaurant sales were up 5.4 percent year-over-year in January. However, these overall results were largely driven by new entrants, as established locations reported sales ranging from flat to down or up 1 percent. Such lackluster performance, higher operating costs, acute labor shortages, and higher labor costs (in part attributable to scheduled increases in the minimum wage for tipped workers) have prompted recent restaurant closings by some experienced and high-profile operators. Given the greater competition from the proliferation of restaurants, operators are reluctant to raise menu prices to cover their higher costs. Despite the threat of more closings, aggregate expectations for the Massachusetts restaurant industry in 2019 are positive.\nManufacturing and Related Services\nThe news from manufacturers was mixed. Of eight responding firms, two reported substantial drops in sales and two reported significant weakness. The two firms that reported serious issues were a semiconductor manufacturer and a furniture builder. The furniture firm makes its products in factories in New England; they reported sales in January were down 30 percent versus the same period a year earlier; but better results over President\u2019s Day weekend reduced concern. The semiconductor firm sells mostly to the auto industry and said that a 40 percent drop in new orders from China was the biggest fall in sales since the collapse of Lehman in 2008. Two other firms, both with heavy exposure to semiconductors, said that the market had slowed significantly since earlier in 2018. Four other contacts reported good overall sales.\nCapital expenditures were down for several contacts and unchanged for others. One said that they had \u201cmothballed\u201d plans for a major expansion of a semiconductor wafer plant; another said they might delay construction of a new plant due to start this summer.\nMost manufacturing contacts expressed caution about 2019. The ones facing the most severe declines were waiting to see if the weakness was transitory, while others said they were very uncertain. The slowdown in China, whether or not the result of trade issues, cast a shadow over the manufacturing sector.\nStaffing Services\nNew England staffing firms reported negative single-digit revenue growth for the year 2018. Regardless of industry and placement type, all respondents cited low unemployment rates and limited applicant supply as challenges to their business, and remarked on the healthy number of job requests from clients. A few staffing firms said the tight labor market made it possible to raise rates, with no push-back from clients. Most firms reported ongoing work to strengthen relationships with community groups and advertise for candidates on social media channels. The partial government shutdown reportedly created uncertainty among client organizations, who were less willing to make hiring decisions near the end of 2018. Under tight labor market conditions and with a limited talent pool, respondents expressed mixed views on the outlook, but a majority were optimistic.\nCommercial Real Estate\nCommercial real estate fundamentals in the First District were either flat or up slightly in recent weeks, depending on the location and property type. Office leasing activity remained strong in both Boston and Portland, with asking rents continuing to rise in the former and holding steady in the latter. Office leasing was described as stable at a modest pace in Providence and slow (but also stable) in Hartford. In Providence, office rents were up 2 percent to 4 percent from one year ago; in Hartford, rents have been flat for an extended period. Industrial leasing demand was robust in most of the First District, although low inventories held back activity in Rhode Island. Contacts in Providence and Hartford perceived that investors were increasingly seeking to purchase properties in smaller cities in order to obtain higher yields than in Boston, but hard numbers on transactions volume were not available.\nPlanned construction of speculative office space tailored to the life sciences industry increased in the Boston area. Commercial real estate lenders were reported to be offering increasingly narrow interest rate spreads and generous loan terms. Construction costs continued to rise on average, and one Boston contact saw steep increases in subcontracting costs from a year ago that were attributed to scarce labor in the skilled trades.\nMost contacts maintained a positive outlook. However, some expect economic growth--and hence demand for commercial real estate--to slow in 2019.\nResidential Real Estate\nHeading into 2019, residential real estate markets in the First District experienced a slowdown in sales. Sales decreased or stayed flat in all reporting areas for both single family homes and condos. (Most areas reported year-over-year changes from December 2017 to December 2018, while New Hampshire reported statistics through January 2019.) Contacts cited interest rate hikes, appreciating prices, and the recent partial government shut down as possible reasons for lower sales.\nFor single family homes, median sales prices increased in all reporting areas but Massachusetts. Inventory dropped in all areas except Rhode Island. For condos, prices declined in Rhode Island, Massachusetts, and New Hampshire, stayed flat in Boston, and increased slightly in Maine. Condo inventory increased in most areas, while New Hampshire saw a moderate drop. Vermont data refer to single family homes and condos combined; the median sales price increased, while inventories declined.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nMarch 6, 2019\nThis report was prepared at the Federal Reserve Bank of Kansas City based on information collected on or before February 25, 2019. 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\nEconomic activity continued to expand in late January and February, with ten Districts reporting slight-to-moderate growth, and Philadelphia and St. Louis reporting flat economic conditions. About half of the Districts noted that the government shutdown had led to slower economic activity in some sectors including retail, auto sales, tourism, real estate, restaurants, manufacturing, and staffing services. Consumer spending activity was mixed across the country, with contacts from several Districts attributing lower retail and auto sales to harsh winter weather and to higher costs of credit. Manufacturing activity strengthened on balance, but numerous manufacturing contacts conveyed concerns about weakening global demand, higher costs due to tariffs, and ongoing trade policy uncertainty. Activity in the nonfinancial services sector increased at a modest-to-moderate pace in most Districts, driven in part by growth in the professional, scientific, and technical services sub-sector. Residential construction activity was steady or slightly higher across most of the U.S., but residential home sales were generally lower. Several real estate contacts noted that inventories had risen slightly but remained historically low, while home prices continued to appreciate but at a slightly slower pace. Agricultural conditions remained weak, and energy activity was mixed across Districts.\nEmployment and Wages\nEmployment increased in most Districts, with modest-to-moderate gains in a majority of Districts and steady to slightly higher employment in the rest. Labor markets remained tight for all skill levels, including notable worker shortages for positions relating to information technology, manufacturing, trucking, restaurants, and construction. Contacts reported labor shortages were restricting employment growth in some areas. Contacts in the higher education sector from the St. Louis District indicated falling enrollment as potential students were increasingly choosing to enter the labor market. Wages continued to increase for both low- and high-skilled positions across the nation, and a majority of Districts reported moderately higher wages. In addition, contacts in about half of the Districts noted rising non-wage forms of employee compensation, including bonuses, relocation assistance, vacation time, and flexible work arrangements.\nPrices\nPrices continued to increase at a modest-to-moderate pace, with several Districts noting faster growth for input prices than selling prices. The ability to pass on higher input costs to consumers varied by region and industry, and a few Districts noted that demand and the level of industry competition played a role in this variance. A few Districts continued to report upward price pressures from tariffs on certain goods and services. However, several Districts noted that the price of steel, which has been impacted by tariffs, had stabilized or fallen recently. In addition, energy costs, including fuel, declined in some areas. Agriculture commodity prices were mixed, though soybeans and dairy prices were notably weak.\nHighlights by Federal Reserve District\nBoston\nRetailers and the restaurant industry reported continued growth in sales. Most manufacturers cited sales increases, but some said sales were down from a year earlier. Staffing firms also reported revenue declines, which they attributed to tight labor markets. Some retailers reported price increases. Aside from manufacturers, outlooks remained positive.\nNew York\nRegional economic activity increased slightly in the latest reporting period, while labor markets remained tight and wage growth picked up further. Input costs rose at a steady pace, while selling prices accelerated slightly. Consumer spending weakened, while housing markets were steady to slightly softer. Most sectors saw modest growth in activity. Banks reported weaker loan demand and a modest pickup in delinquency rates.\nPhiladelphia\nOn balance, growth of aggregate Third District business activity appeared to pause during the current Beige Book period. Most sectors showed little or no change from the prior period. Lack of qualified labor continued to constrain hiring and raise wage pressures, while price increases remained modest. Nevertheless, the firms remained generally positive about the six-month outlook.\nCleveland\nThe District economy grew at a modest pace, with services driving much of that growth. Seasonal factors temporarily weighed on growth in construction and freight. Employment increased modestly in many sectors. Wages grew moderately across the board. Selling prices rose moderately, as companies passed through cost increases to their customers. A drop in mortgage rates spurred slight improvement in home sales.\nRichmond\nOn balance, the regional economy expanded at a modest pace. Port activity, trucking, and tourism were generally increasing at a moderate to robust rate. Labor demand strengthened moderately, overall. Manufacturers, retailers, and nonfinancial services firms gave mixed accounts. Some retail and professional business services in and around D.C. cited delays and lost activity due to the partial federal government shutdown.\nAtlanta\nEconomic activity moderately expanded. The District\u2019s labor market remained tight and wages increased, on average. Nonlabor input costs continued to rise. Retail sales were flat, and tourism was robust. Home sales continued to slow, and commercial real estate was steady. Manufacturers noted that new orders were flat, but production and inventories increased. Bankers noted steady activity.\nChicago\nEconomic activity increased slightly on balance. Employment and business spending increased slightly; manufacturing and construction and real estate activity were little changed; and consumer spending fell modestly. Wages rose modestly, prices rose slightly, and financial conditions improved modestly. Contacts expected crop incomes to be lower in 2019 than in 2018.\nSt. Louis\nEconomic activity was unchanged from the previous report. Manufacturing activity continued to improve at a moderate pace. District bankers reported a slight decrease in loan volumes in the first quarter. Residential real estate contacts reported that recent sales have fallen below expectations. Local farmers expressed concerns regarding the near-term status of the industry.\nMinneapolis\nNinth District economic activity grew modestly. Labor demand remained healthy, but signs of weakness surfaced. Price and wage pressures were moderate. Consumer spending offered mixed signals on economic activity. Manufacturing, energy, and mining activity grew, but agricultural financial conditions continued to deteriorate and no change was expected in the coming months.\nKansas City\nEconomic activity expanded slightly, and additional gains were expected in the months ahead. Consumer spending increased slightly, with gains in retail, restaurant, auto and tourism sales. Manufacturing, wholesale trade, transportation, and professional and high-tech firms also reported rising activity. However, residential real estate activity fell modestly, and agricultural conditions remained weak.\nDallas\nEconomic activity expanded moderately, with a slight pickup in demand seen across the manufacturing, services, and housing sectors. Drilling activity dipped. Hiring continued at a moderate pace, and employment outlooks were bullish. Input price pressures moderated but wage pressures remained elevated. Outlooks were more optimistic than the previous report.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was unchanged. Sales of retail goods expanded modestly, and activity in the consumer and business services sectors was strong. Conditions in the manufacturing sector strengthened moderately. Activity in real estate markets expanded moderately on balance. Overall lending activity was flat.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"March 6, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly on balance in January and early February, though contacts expected growth to return to a modest pace over the next 6 to 12 months. Employment and business spending increased slightly; manufacturing and construction and real estate activity were little changed; and consumer spending fell modestly. Wages rose modestly, prices rose slightly, and financial conditions improved modestly. Contacts expected crop incomes to be lower in 2019 than in 2018. Only a small share of contacts indicated that the government shutdown had hurt product demand or affected business decisions.\nEmployment and Wages\nEmployment increased slightly over the reporting period and contacts expected a similar-sized increase over the next 6 to 12 months. Hiring was focused on professional and technical, production, and sales workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. A staffing firm that primarily supplies manufacturers with production workers reported continued difficulty in filling orders and a small decline in billable hours. A number of manufacturing contacts noted that a slowdown in demand had reduced their reliance on overtime and lessened the urgency of filling open positions. Wage growth remained modest overall. Contacts were most likely to report wage increases for managerial, professional and technical, and production workers. Many firms reported growing benefits costs.\nPrices\nPrices rose slightly in January and early February, though contacts expected price increases to pick up to a modest rate over the next 6 to 12 months. Retail prices were little changed. Producer prices rose modestly, reflecting in part the pass-through of higher labor, materials, and freight costs.\nConsumer Spending\nConsumer spending fell modestly over the reporting period. Nonauto retail sales decreased modestly, with declines in the furniture, appliances, apparel, and home improvement sectors outweighing increases in the hardware, lawn and garden, and personal services categories. Numerous contacts attributed slower sales to the harsh winter weather that occurred over the reporting period. Light vehicle sales also fell. Dealers believed that bad weather played a role in the decline and noted some improvement in early February compared with January, though some also expressed concern about underlying weakness in demand.\nBusiness Spending\nBusiness spending increased slightly in January and early February. Retail contacts said that inventories were generally at comfortable levels, though some auto dealers reported elevated inventories. Most manufacturers indicated that stocks were at comfortable levels, though heavy-duty truck inventories were low. Capital spending increased slightly, with contacts expecting somewhat faster growth over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Energy demand from commercial and industrial users was little changed. Demand for transportation services was flat, but remained at a strong level.\nConstruction and Real Estate\nConstruction and real estate activity was little changed over the reporting period. Residential real estate activity slowed some, held back by tight inventories for lower-priced homes and reduced demand for higher-priced homes. One contact noted that while entry-level inventories remained tight, they had risen for the first time in four years. Investor demand for multifamily properties remained strong. Home prices and rents edged higher. Nonresidential construction was unchanged on balance, though one contact noted a pickup in bidding activity. Contacts indicated that shortages of materials and workers were leading to delays in completing projects. Commercial real estate activity was also unchanged, with growth in demand for industrial space offset by declines in demand for big box retail and office space. Contacts noted that in many areas the availability of industrial space was quite limited. Rents and the overall availability of sublease space were flat. Vacancy rates edged higher.\nManufacturing\nManufacturing production was little changed in January and early February, though contacts were generally pleased with the level of activity. Demand for steel increased, but at a slower rate than in most of 2018. Growth in heavy machinery demand was also slower than a year ago, but remained solid across major selling sectors. Heavy truck production was little changed but continued at a strong pace, and one contact noted that large backlogs suggested the level of output would be sustained through much of 2019. Specialty metals manufacturers reported slight increases in order books, highlighting growth in the medical devices, aerospace, and defense sectors. Auto production declined slightly, but remained at a solid level.\nBanking and Finance\nFinancial conditions improved modestly over the reporting period. Market participants noted a decline in volatility and rising equities prices. Business loan demand rose slightly, led by increased lending to the manufacturing and food and beverage sectors. Loan quality was little changed, though one contact noted increased delinquencies among retailers. Loan standards were little changed. Consumer loan demand decreased slightly, primarily because of lower home loan volumes; loan quality and standards were little changed.\nAgriculture\nPrices for corn were up a bit over the reporting period, while soybean and wheat prices moved lower. Contacts expected crop incomes to be lower in 2019 compared with 2018, anticipating that prices will stay low and the harvest will be smaller than 2018\u2019s bumper crop. They also thought low soybean prices would lead farmers to switch some fields from soybeans to corn. Contacts noted positive reports on trade talks between the U.S. and China\u2014including news that China bought some US soybeans. Livestock prices increased overall, and harsh winter weather required extra feeding expenditures for animals.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"March 6, 2019\nSummary of Economic Activity\nThe Ninth District economy grew modestly overall since the last report. Employment grew slightly, hampered by tight labor and some signs of weakness. Wage and price pressures were moderate. The District economy showed growth in services, manufacturing, residential construction, commercial real estate, energy, and mining. However, consumer spending and commercial construction were mixed, and agriculture remained weak.\nEmployment and Wages\nEmployment rose slightly overall since the last report, with some signs of weakness. Recent job postings data (December or January, depending on the state) were mixed among District states compared with a year earlier. North Dakota and Montana both saw healthy increases in job postings, but declines were seen in Minnesota, South Dakota, and the Upper Peninsula of Michigan. Several January polls of Minnesota businesses by the Minneapolis Fed generally found solid hiring demand. A poll of large employers found moderate hiring at in-state operations, yet more aggressive hiring at operations outside the state. Labor markets continued to be tight. Initial unemployment insurance (UI) claims fell in most District states during the first five weeks of 2019 compared with the same period a year earlier; Minnesota was an exception, seeing a 3 percent increase. Continuing UI claims fell 13 percent across District states over this period. There were also some signs of employment weakness. A Minneapolis-St. Paul staffing contact saw job orders and total hours in December and January fall by the \u201chigh single digits.\u201d Two major retailers announced plans to close dozens of stores across the District by this spring. And an eastern North Dakota manufacturer announced that it will close a facility, affecting 300 workers, though a contact there said most workers \u201cshould be able to find employment elsewhere.\u201d\nWage pressures rose moderately. A Minnesota staffing contact noted that there was \u201cstill a lot of wage pressure,\u201d estimating that wages had risen 5 percent over the past year. Recent polls by the Minneapolis Fed found that annual wage increases continued to average around 3 percent, with variations higher and lower depending on sector and geography. For example, average wage increases reported by South Dakota retailers were lower than those of Minnesota construction firms. However, five polls each revealed expectations that wages for the coming year would rise at a slightly slower rate than the previous year.\nPrices\nPrice pressures were moderate overall since the last report, but input costs increased faster than overall prices. Nearly a third of respondents to a recent survey of large firms reported input price increases of more than 3 percent from a year ago, while a slightly larger share reported increases of 2 percent to 3 percent. The pace of increase in steel prices stabilized recently, according to contacts in manufacturing and utilities. Retail fuel prices in District states as of mid-February increased slightly from the previous reporting period but remained substantially lower than their level a year earlier; natural gas prices remained elevated. Prices received by farmers for corn, wheat, and hay increased in November compared with a year earlier; prices for soybeans, milk, eggs, hogs, cattle, and turkeys decreased.\nConsumer Spending\nConsumer spending was mixed since the last report. A vehicle dealership with multiple locations in the District said total sales of both new and used vehicles were lower in January compared with a year earlier. A District contact noted that RV sales saw a slowdown in the second half of 2018 and that he anticipated \u201c2019 being down again\u201d by roughly 5 percent due to higher interest rates and higher unit costs. Sales and other consumer taxes in North Dakota were notably higher in December, but flat in January compared with a year earlier. A poll of South Dakota retailers showed flat sales in the fourth quarter compared with a year earlier, with only slightly higher expectations for the first half of 2019. However, District airports generally showed higher enplanements in January; in Bozeman, Mont., January passengers rose 20 percent over a year earlier, and car rentals were also higher. The ski season in northwestern Montana was \u201cgoing really well,\u201d according to a local source, and lodging sales taxes across the state were higher in January compared with a year earlier. Minnesota hotels saw an up-and-down performance. December occupancy and revenue per available room rose slightly, but January figures declined.\nServices\nActivity in the services sector increased briskly. Contacts in banking and financial services generally described conditions as strong, with bullish sentiment among corporate clients. Demand for loans was strong even as the cost of credit was increasing. Rail freight demand was solid, according to industry sources. Domestic shipments on the Great Lakes nearly doubled in January relative to a year earlier; total volume for the season was up 4 percent.\nConstruction and Real Estate\nCommercial construction was mixed since the last report. An industry database showed that the cumulative value of construction starts in December rose across the District compared with the same period a year earlier; however, January values declined slightly, possibly influenced by extreme weather. A Minnesota source noted that the pace of projects was moderating, but added, \u201cThat\u2019s not a bad thing\u201d given the previous pace. He also noted that the rising pace of construction costs created \u201ca shrinking pool of projects that make economic sense.\u201d Residential construction was slightly higher across the District; a modest increase was seen in Minneapolis-St. Paul in January compared with a year earlier, while Billings, Mont., and Rochester and St. Cloud (Minn.) saw small declines.\nCommercial real estate grew moderately since the last report. Industrial property vacancies remained low in the Minneapolis-St. Paul region despite significant new construction, and average price per square foot remained healthy. Office vacancy rates in the region were stable at somewhat elevated levels. Multifamily vacancy rates have stayed low throughout much of the region, while new construction continued. Retail vacancies have risen in many District markets, as major bankruptcies continued to roll through the chain-retail industry. Residential real estate was widely lower. January home sales registered a decline across most of the District\u2019s larger cities, with a number seeing double-digit drops compared with a year earlier.\nManufacturing\nDistrict manufacturing activity increased modestly since the last report. An index of manufacturing conditions indicated increased activity in January compared with a month earlier in Minnesota and South Dakota; the index for North Dakota indicated flat to slightly decreased activity. Two small firms began expansions at facilities in Minnesota. In contrast, a supplier of capital equipment reported that customers were cutting back on investments. A filtration plant in Minnesota announced that it was cutting around 100 workers.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. Crop production estimates indicated that 2018 was a strong year throughout the District, with new records in some states. However, producers continued to struggle with low commodity prices and expressed concerns about the effects of trade tensions. Respondents to the Minneapolis Fed\u2019s fourth-quarter (January) survey of agricultural credit conditions indicated that farm income and capital spending decreased relative to a year earlier, with further declines expected for the coming three months. Oil and gas drilling in North Dakota and Montana as of mid-February increased from a month earlier. District iron ore mines continued to operate at near capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nMarch 6, 2019\nSummary of Economic Activity\nTenth District economic activity expanded slightly in late January and February, and contacts expected additional gains in the months ahead. Consumer spending expanded slightly, led by modest gains in the auto and tourism sectors. Manufacturing activity also grew at a slight pace despite a decline in new orders for exports. Sales rose in the professional and high-tech, transportation, and wholesale trade sectors, and contacts expected additional gains moving forward. Commercial real estate activity continued to rise slightly, while residential real estate activity declined further. Conditions in the energy sector held steady since the previous survey period, and contacts were optimistic that OPEC production cuts and recent commodity price increases would boost overall activity in the coming months. Farm income continued to decline slightly, although farmland values remained relatively steady. Bankers reported a modest decline in loan demand, but loan quality, credit standards and deposit levels were stable. Overall employment and employee hours held steady across the District, although conditions were mixed across sectors. Wages continued to rise at a modest pace, with additional gains expected moving forward. Input and selling prices rose further, led by higher prices in the retail sector.\nEmployment and Wages\nOverall District employment and employee hours held steady in late January and February, and respondents projected slight gains in the months ahead. Contacts in the wholesale trade, real estate, health services, restaurant, and tourism sectors noted steady-to-modestly higher levels of employment, while those in the retail trade, auto sales, transportation, and professional and high-tech services noted a decline. Employee hours were mixed across sectors since the previous survey, but hours in all sectors were steady-to-modestly higher than year-ago levels.\nA majority of respondents continued to report labor shortages for low- and medium-skill workers, including positions for truck drivers, all retail store positions, skilled technicians, and specialty-trade construction workers. A few contacts also noted shortages for high-skilled positions such as those in information technology, engineering, and finance. Wages continued to expand at a modest pace since the previous survey period and were strongly above year-ago levels. Additional modest wage gains were projected for the months ahead.\nPrices\nContacts in a majority of sectors reported rising input and selling prices, with overall input prices up moderately and selling prices up modestly. In addition, contacts expected prices to increase further in the months ahead. Input prices in the retail sector grew at a strong pace since the last survey, while input prices in the restaurant sector rose modestly. Contacts in both sectors noted steady selling prices and expected growth of input prices to continue to outpace that of selling prices moving forward. Input prices in the construction supply sector fell since the previous survey period, while transportation respondents noted steady input prices. Both sectors reported moderately higher input prices over year-ago levels. Manufacturers reported a modest increase in the prices of finished products and raw materials, and both were projected to expand further in the coming months.\nConsumer Spending\nConsumer spending expanded slightly compared to the previous survey, and contacts expected modest gains in the months ahead. Retail sales increased slightly in late January and February and were moderately above year-ago levels. Respondents expected retail sales to increase modestly in the next few months. Auto sales grew modestly since the last survey period as well as compared to year-ago levels. SUVs and trucks sold well, while sedans sold poorly. Auto contacts expected strong increases in capital spending in the months ahead despite many contacts noting increases in the cost of credit. Restaurant sales rose slightly, and contacts expected sales to increase in the coming months. Tourism activity increased modestly compared to the previous survey period, and contacts anticipated slight sales increases in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity grew slightly since the previous survey period, and business contacts in wholesale trade, transportation, and professional and high-tech sectors also reported rising sales. Factory activity increased at both durable and nondurable goods plants, with faster growth at durable goods plants due primarily to increases in electrical equipment and appliances, and furniture manufacturing. Production, shipments, and new orders each ticked down compared to the previous survey period, but remained above year-ago levels. Contacts reported slightly lower new orders for exports compared to both the previous survey period and year-ago levels.\nOutside of manufacturing, firms in the wholesale trade and professional and high-tech sectors experienced moderate growth in sales, while sales rose slightly at transportation firms compared to the previous survey period. In the coming months, wholesale trade, transportation, and professional and high-tech contacts anticipated moderate sales growth.\nReal Estate and Construction\nDistrict real estate activity remained mixed as residential real estate activity declined modestly while commercial real estate activity rose slightly. However, contacts in both commercial and residential real estate projected gains in the months ahead. Residential home sales fell at a modest pace in late January and February, although they remained moderately above year-ago levels. Residential inventories held steady, and selling prices rose moderately. Residential home sales, inventories, and prices were expected to rise in the coming months. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential construction activity declined modestly including fewer housing starts, less potential buyer traffic, and lower construction supply sales. Respondents in the residential construction sector expected activity to rise in the months ahead. Commercial real estate activity continued to expand slightly as sales and absorption rose, and vacancy rates declined slightly. Commercial real estate contacts expected a similar pace of growth moving forward.\nBanking\nBankers reported a modest decrease in overall loan demand including moderate decreases in the demand for commercial real estate loans, and slight-to-modest decreases in the demand for commercial and industrial loans, residential real estate loans, consumer installment, and agricultural loans. Loan quality remained unchanged compared to a year ago, but bankers expected a modest decline in loan quality over the next six months. Credit standards also remained largely unchanged in all major loan categories, and deposit levels were stable.\nEnergy\nDistrict energy activity was generally steady compared with the previous survey period. The number of active oil rigs fell across the District, primarily in Oklahoma and Kansas, and the natural gas rig count was also down slightly. However, production of oil and natural gas remained at high levels, and overall rig productivity continued to improve. Regional energy firms expected the expansion of LNG pipeline capacity later this year to help accommodate increased production. Oil prices rose modestly after dropping in late 2018, but remained below year-ago levels. Additional OPEC production cuts and price increases have buoyed expectations among District contacts for future energy activity.\nAgriculture\nFarm income continued to decline slightly, but farmland values remained relatively stable in the Tenth District. Farm income decreased throughout the region in the last survey period according to District representatives, but modest increases in both crop and livestock prices could improve revenues for some farm operations moving forward. Demand for agricultural loans remained strong, and contacts reported a slight reduction in funding availability. Additionally, repayment rates on agricultural loans slowed modestly, and interest rates on farm loans increased slightly. Despite persistent weaknesses in farm finances and higher interest rates, farmland values remained relatively stable. However, a majority of contacts expected farmland values to decline moderately in 2019. However, District contacts indicated that demand for farmland remained high, and the volume of farmland sales compared to last year increased modestly in Nebraska and Kansas.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"March 6, 2019\nSummary of Economic Activity\nEconomic activity in the Fourth District grew at a modest pace since our last report. Professional and business services saw moderate demand growth. Home sales increased slightly because of a drop in mortgage rates. Retailers noted a slight softening in demand after the holiday season, while banking conditions improved modestly after seasonal slowness. Seasonal factors weighed on growth in nonresidential construction and transportation. Manufacturers gave mixed reports, as some saw a pickup in demand, while others reported slowness and uncertainty in the global economy weighed on growth. Employment in the District increased modestly, with much of the growth coming from nonfinancial services and from manufacturing. Wages rose moderately across many sectors and occupations. District companies increased their selling prices moderately. Construction companies passed on strong input cost increases. By contrast, manufacturers\u2019 prices remained more stable as the input cost pressures they had been facing in prior periods abated. Transportation companies raised prices, but retailers did not raise prices to cover transportation cost increases.\nEmployment and Wages\nDistrict contacts reported modest increases in staffing levels. Construction companies added some office staff but, because of the winter weather, did not hire field workers. They expect to resume increasing field staff in the spring. Manufacturers added both salaried and hourly staff, with one contact stating that her company had been hiring more of its temporary staff into full-time employment. Staffing companies reported increased placements and noted that nursing, information technology, and manufacturing staff are particularly in demand. Professional and business services firms, especially information technology firms, accelerated hiring to meet strong demand and expected to continue to add to their payrolls in the next few months. Trucking companies continued to add drivers when possible, but railroad companies downsized their staff. Railroad companies expected further staff reductions in the next few months. Retailers indicated that staff turnover was higher than usual in the beginning of the year and that they were hiring to maintain staff levels. Still, nondurable goods retailers continued to increase wages in line with inflation. Retailers planned to hold staff levels steady in the next few months.\nWages in the District rose at a moderate pace that was similar to that of the previous survey round. Wage growth was broad-based, as wages rose for a wide range of industries and occupations. Bankers raised wages both for low-wage and for high-wage positions, citing competitive labor markets. A couple of construction companies granted large retention-focused merit increases to office staff, but other companies mentioned that they tended to grant raises during busier seasons. Manufacturers re-evaluated wage rates for blue-collar laborers, and many manufacturers increased pay beyond the rate of inflation. Auto dealers also noted that pay for qualified technicians rose. Trucking companies continued to compete on wages, noting that demand for drivers exceeded supply. Some retailers felt pressure from local minimum wage increases. Staffing firms also noted upward wage pressures. One firm stated that new hires have been pressuring the firm to increase its starting wages; another stated that it now offers raises every 6 months instead of every 18 months, as it did previously. The rate of hiring by professional and business services firms accelerated somewhat. Nevertheless, wage increases in the industry decelerated, with a number of firms stating that wages were already high.\nPrices\nSelling prices rose moderately, with many businesses reporting that they were keeping up with input cost inflation. Upward cost pressures were strong for construction firms, which reported higher concrete prices. Nonresidential builders, and to a lesser extent homebuilders, raised their selling prices to maintain their margins. Upward cost pressures in manufacturing eased, as a number of producers reported stable or even lower steel prices after the tariff-driven steel price escalation in 2018. Because manufacturers did not see the same cost pressures as construction firms, they did not raise their prices to the same extent. Some producers actually cut their prices because of the lower steel prices. Retailers cited tariffs and higher transportation prices as elevating their costs. Yet, the majority of retailers held their prices steady, while auto dealers and producers gave fewer new-vehicle incentives. Transportation contacts reported elevated input costs as higher maintenance, repair, and other services costs outweighed savings from stable or lower fuel prices. However, pricing power was strong for transportation firms. The majority of freight contacts were able to raise their fees thanks to continued strong demand for their services.\nConsumer Spending\nRetailers reported slightly softer demand following the strong holiday season. By contrast, contacts had indicated in the prior survey round that they had expected solid growth through the first quarter of 2019. One auto retailer noted that sales of new vehicles had decreased slightly because of higher prices, while the demand for used vehicles increased. Retailers expect demand growth going into the second quarter of 2019 to be the same or better than in 2018.\nManufacturing\nManufacturers in the District gave mixed reports. Many contacts reported that activity picked up during the last two months as a result of the usual seasonal build up and that they expect growth to continue. However, others expressed concerns about a number of factors that dragged down demand and weighed on the outlook for future growth. These include 1) supply chain constraints that have affected the availability of intermediate goods and components, 2) slower global growth--particularly in Europe and China--that contributed to a slowing in orders, 3) continued uncertainty about the future of tariffs on steel and aluminum and ongoing US-China trade negotiations, and 4) decreased consumer confidence. In addition to the ongoing trade negotiations between China and the United States, one manufacturer noted that if Chinese policymakers choose to stimulate heavy industry in their country, the outlook for his organization would be better than it would be absent intervention in the Chinese market.\nReal Estate and Construction\nDemand for residential real estate and construction improved slightly, as lower mortgage rates spurred home sales. Homebuilders and real estate agents expressed optimism that conditions will improve in the next few months, though they attributed this expectation primarily to warmer weather. Real estate agents reported that homeownership, relative to renting, rose in the region.\nNonresidential construction remained steady, as negative seasonal effects countered underlying demand growth. Nonresidential builders noted that they believed normal seasonal variation caused the pause in demand growth, and they expected growth to resume once winter ends. Nonresidential builders\u2019 backlogs increased, as the stable and strong demand outpaced their ability to work through it during the winter. Builders acquired more public projects than private work.\nFinancial Services\nBanking conditions recovered after a seasonal slowdown. Though some seasonal softness remained on the consumer side, this was offset by strength in commercial and industrial lending. Consumer demand for credit declined as consumers used the first quarter to pay off credit card balances following the holiday season. Reports about mortgage and auto lending were mixed. Some bankers indicated they felt the housing market was slowing, while others expected a seasonal upswing in mortgage demand. Commercial demand was concentrated among large and middle-market firms for mergers and acquisitions and some CRE projects, though one banker noted that \u201cprecautionary demand for cash and liquidity\u201d had increased from commercial customers.\nNonfinancial Services\nProfessional and business services firms reported moderate demand and growth. A contact at a design firm noted that previously postponed projects were coming to fruition because consumer confidence improved. These firms expected sales and growth to be strong over the next few months. Freight contacts reported demand was flat because of extreme weather in the Midwest and Northeast. These contacts expect shipping volumes to be stable in the coming months. The majority of nonfinancial services firms expected to modestly increase their prices charged over the course of 2019.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"March 6, 2019\nSummary of Economic Activity\nSixth District business contacts reported that economic activity continued to advance at a moderate pace over the reporting period and the outlook among contacts remained positive. Labor markets continued to tighten, and some firms noted relocating certain segments of their operations to gain access to larger pools of talent. On balance, firms noted growth in wages since the previous report, along with mounting pressure in a number of hard-to-fill positions. Nonlabor costs continued to rise, particularly for those goods and services impacted by tariffs. Retail sales growth was flat over the reporting period, and vehicle sales were slow. Reports from the hospitality sector were upbeat, with solid growth in business and leisure travel over year earlier levels. The slowdown in residential real estate activity noted in the last report continued, and commercial real estate activity remained steady. Manufacturers reported that new orders were flat; however, production levels increased. Banking contacts indicated that conditions remained stable.\nEmployment and Wages\nBusiness contacts continued to cite challenges finding and retaining workers, particularly in information technology, construction, food services, medical, finance, manufacturing, and transportation. In response to these challenges, some firms shared that they were considering or had already taken steps to relocate portions of their business, mainly information technology, finance and accounting, customer service, and upper management positions, to larger urban locations with greater access to talent. Several contacts continued to report that their inability to find workers hindered their firm\u2019s ability to grow and meet rising demand. Consequently, many cited a renewed focus on productivity enhancements using existing and/or new technology and automated systems.\nOn average, firms across the District reported wage increases from 2 1/2 to 4 percent. Increases were greater and pressure was described as more acute in urban areas and/or among hard-to-fill positions, including jobs in nursing and other medical fields, engineering, manufacturing, retail, hospitality, and banking and finance. Similar to previous reports, many contacts shared that even after increasing wages, they struggled to attract enough qualified candidates, and thus indicated expanding non-wage offerings, such as additional vacation time, flexible work arrangements, and/or reduced hours for full-time, exempt employees.\nPrices\nIncreases in some nonlabor input costs continued to be reported by business contacts. Rising costs were predominately noted in goods and services impacted by tariffs, as well as in transportation and construction. The Atlanta Fed\u2019s Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in February. Survey respondents indicated they expect unit costs to rise 1.9 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retailers reported flat sales growth since the previous report. Automotive dealers reported a slow start to 2019. Retail and automotive contacts expect modest sales growth, on a year-over-year basis, for 2019.\nOn balance, travel and tourism contacts reported a strong start to 2019 with solid growth in business and leisure travel compared to the same time period last year. The outlook for activity remains positive with healthy advance bookings reported through the first quarter of this year.\nConstruction and Real Estate\nAlthough affordability remains a challenge for the housing sector, the recent moderation in interest rates alleviated some pressure and led to increasing optimism among sellers and homebuilders as they head into the peak selling season. Existing home sales in 2018 were flat or down in many markets throughout the District compared to the previous year. Inventory levels, though increasing on a year-over-year basis, remained low in most markets. Home price appreciation moderated in many markets as declining sales and rising inventory levels led to less upward pressure on prices.\nCommercial real estate leasing and sales activity remained steady across most District markets. Overall, rents grew and vacancies trended downward at a modest pace. Strength remained in the industrial, multifamily, and medical sectors. Office market contacts reported overall persistent strength; however, higher levels of employee densification and greater deliveries of space appeared to be creating pockets of slowing in some local markets.\nManufacturing\nManufacturing contacts described overall business conditions as relatively healthy during the reporting period. While new order levels were somewhat flat, production levels were reported to have increased, along with a small rise in finished inventories. Purchasing managers reported no significant change in wait times for supply deliveries. Expectations for future production levels remained strong, with over one-half of contacts expecting higher production over the next six months.\nTransportation\nDistrict transportation firms cited mixed results since the previous report. Railroad contacts noted that total rail traffic was up modestly compared with year-earlier levels; however, intermodal shipments declined slightly. Port contacts cited substantial increases in container traffic, bulk and break bulk cargo, and autos. Trucking activity slowed since the previous report, in line with expectations. Most transportation contacts in the District expect higher demand in 2019.\nBanking and Finance\nFinancial institutions remained healthy due in part to sustained earnings growth and a relatively benign credit environment. Increasing interest rates had a positive impact on earnings though funding costs put some pressure on net interest margins for a number of institutions. Loan growth was stable even as overall asset growth slowed due to a declining securities portfolio. Overall, credit quality metrics remained positive with charge-offs and nonaccrual loans still near historical lows.\nEnergy\nNew discoveries in the Gulf of Mexico contributed to increased activity in offshore exploration and production. Exports of crude continued to accelerate. Pipeline construction and operations remained strong across the District, particularly among firms planning to export crude from Louisiana ports. Chemical and petrochemical industry contacts reported steady activity and slightly higher levels of capacity utilization over the previous reporting period. While some new refinery and chemical projects were announced, many contacts indicated that activity was in a lull during the first quarter and was expected to pick up later in the year. From the utilities perspective, cold weather created a surge of demand among residential and commercial customers.\nAgriculture\nAgricultural conditions across the District were mixed. Recent reports showed that most of the District was drought-free, with the exception of small areas in south Florida and coastal Louisiana where conditions were abnormally dry. The February forecast for Florida's orange crops was unchanged from the previous month but remained significantly ahead of last year\u2019s production. Since November, weekly cash prices were up for corn, soybeans, beef and broilers, while cotton and rice prices were down.\nFor more information about District economic conditions visit: www.frbatlanta.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"

Philadelphia

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"March 6, 2019\nSummary of Economic Activity\nOn balance, growth of aggregate Third District business activity appeared to pause for much of the current Beige Book period; however, late reports indicated a resumption of slight growth in some sectors. Significant sectors, including manufacturing, nonfinancial services, and nonauto retail sales, slowed from modest growth in the prior period to little or no change in the current period. Factors cited for the slowdown included weak global demand and uncertainty because of trade wars and the government shutdown. Nevertheless, employment continued to grow at a modest pace, although the labor market remained tight and upward wage pressures remained moderate. Price pressures remained modest. Despite the apparent pause in growth, firms\u2019 outlook for growth over the next six months remained positive, with two-thirds of the nonmanufacturing firms and nearly half of the manufacturers anticipating increases in general activity.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. About one-fourth of the firms reported an increase in staff. Manufacturers have noted little change in the average hours worked since the prior Beige Book period; however, average hours appeared to contract a bit among other firms.\nMost contacts continued to note that the labor market was very tight and that hiring and retaining workers remained difficult. Firms are responding by raising wages, increasing job flexibility, training new hires who have fewer skills than desired, and making greater use of trial periods of temp agency placements.\nWage growth continued at a moderate pace, with reports of wage and benefit cost increases averaging about 3.0 percent. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged higher to near 40 percent. Contacts noted that recent state increases in the minimum wage may cause some wage compression, but most firms were already paying above the new minimums. A few that were not continue to look toward automation.\nPrices\nPrice increases remained modest for most firms. The share of manufacturing firms reporting increases in prices paid and prices received averaged around 30 percent. The share was much lower among nonmanufacturing firms. Several contacts noted that food commodity prices had remained modest or were better than expected.\nLooking ahead six months, the percentage of manufacturing firms that expect to pay higher prices for inputs fell to 40 percent from 60 percent. Those firms expecting to receive higher prices for their own goods fell to 30 percent from near 50 percent.\nManufacturing\nManufacturing activity appeared to decline slightly \u2013 a reversal of trend from modest growth. The percentage of firms that reported increased shipments and new orders fell almost to one-fifth, but the percentage reporting decreases rose to about one-fourth.\nThe makers of chemicals, primary and fabricated metal products, and electronic and industrial equipment mostly have noted no change in new orders and shipments \u2013 and occasionally declines \u2013 since the prior period. However, these changes were weaker than those reported for the same period last year. The makers of lumber and paper products also reported flat or negative activity, changes which were comparable to the prior year.\nExplanations cited for the slowdown included falling demand from European and Asian markets, with tariffs and Brexit as prime factors. Reduced demand from domestic sources was attributed to several factors: a pullback in orders following an excessive inventory buildup; lower oil prices, which have dampened capital expenditures from energy producers; and uncertainty during the government shutdown.\nDespite the current period\u2019s pause, manufacturers\u2019 expectations of general activity six months from now did not shift. Moreover, expectations of future shipments also held steady. However, expectations of future new orders, employment, and capital spending edged lower. On balance, expectations for each of these indicators were near or above their historic nonrecession averages.\nConsumer Spending\nOn balance, nonauto retailers reported slight gains in the new year. While some brick-and-mortar retailers continue to lose market share to online stores, contacts cited low unemployment rates, relatively high consumer confidence, and relatively low gas prices as factors contributing to ongoing gains in current sales and in expected sales. However, the government shutdown was costly for a few smaller Center City Philadelphia businesses, such as coffee shops, that serve federal office buildings and national historic areas.\nAuto sales continued to bump along at relatively high levels, with little overall change compared with the same period last year. Sales reports for January were mixed, and some early reports for February noted a decline.\nTourism activity was off a bit, according to contacts. One contact noted an unexpected downtick in activity in the Poconos--partially due to poor weather in January. Philadelphia hotels were challenged compared with last year; the Eagles\u2019 2019 playoff run included no home games, then the government shutdown closed several national park attractions, reducing tourism activity in the city. An analyst noted concerns with ongoing trade uncertainty and the strong dollar, which reduces foreign tourist visits and average visitor spending.\nNonfinancial Services\nOn balance, service-sector firms grew slightly as midperiod reports suggested a brief pause in activity. The percentage of firms reporting increases in sales and in new orders remained nearly the same, while reports of declining sales and fewer new orders edged higher on average. Expectations of future growth rebounded to two-thirds of the firms from half in the prior period.\nFinancial Services\nFinancial firms continued to report modest growth on a year-over-year basis in credit card lending and in overall loan volumes (excluding credit cards).\nDuring the current period (reported without seasonal adjustments), volumes grew robustly in commercial and industrial lending and in other consumer loans (not elsewhere classified). Loans grew modestly in commercial real estate and home mortgages; auto loans were flat; and home equity lines declined.\nBankers cited client uncertainty stemming from trade policy, the government shutdown, and global outlooks but described no concerns with the underlying U.S. economy. Lending standards were mostly unchanged, with a few banks tightening in specific segments. Contacts also noted no problems with credit quality.\nReal Estate and Construction\nAccording to homebuilders, contract signings appear to have held steady, although excessive rain has hampered construction activity. One builder--just returned from a national trade conference \u2013 reported that after a year-end slowdown, activity had picked up by February, nationally and locally.\nExisting home sales continued to decline moderately across most local markets. Contacts noted no early signs that the spring selling season would bring an end to the extremely low inventories that have constrained sales.\nOn balance, commercial real estate construction and leasing activity appear to have edged down slightly from relatively high levels. However, most contacts remain very busy. Consolidations in health care and education are fueling new projects for architects and engineers. Contacts noted that absorption of new hotel properties and high-end multifamily units have largely kept pace with construction. The strong market for industrial and warehouse space continued for smaller spaces; however, demand may have eased a bit for warehouses in excess of 1 million square feet.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\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\nMarch 6, 2019\nSummary of Economic Activity\nEconomic activity in the Second District has increased slightly since the last report. The labor market has remained tight, and wage growth has picked up further\u2014mainly in lower wage industries. Businesses noted continued widespread cost pressures and increasingly widespread hikes in selling prices. Manufacturing activity expanded slightly, while business picked up in a number of service industries. Consumer spending has been weaker, on balance, and tourism has been mixed. Housing markets have been stable to slightly softer, while commercial real estate markets have remained steady overall. Finally, banks reported steady to weaker loan demand and a modest upturn in delinquency rates.\nEmployment and Wages\nThe labor market has remained tight across the District, with employers reporting ongoing difficulties in filling job openings, particularly for skilled trades and technical fields. Businesses generally reported that employment was flat to up slightly, on balance, since the beginning of the year. Firms in the wholesale, finance, and education & health sectors reported modest net hiring, while contacts in the manufacturing, transportation, professional & business services, and real estate & construction sectors indicated that employment was essentially flat. Contacts in the retail and information industries noted modest net declines in staffing levels.\nWages have picked up further, particularly in the lower-wage retail and leisure & hospitality industries. A number of business contacts in New York State\u2019s manufacturing, retail, and leisure & hospitality sectors indicated that the year-end hike in the minimum wage was affecting their employment and compensation decisions.\nPrices\nBusinesses reported ongoing widespread escalation in input prices and increasingly widespread hikes in selling prices in the latest reporting period. Input price pressures tended to be most widespread in transportation and wholesale & retail trade sectors. Contacts across most industry sectors reported steady to moderately rising selling prices, with the most widespread rises reported from wholesalers. Contacts in the real estate and education & health sectors reported that selling prices were flat overall.\nRetailers generally indicated that selling prices were up modestly in early 2019, though one major chain reported more discounting than usual to clear out excess holiday-season inventories. Nightly rates for New York City hotel rooms were little changed from a year earlier, and average ticket prices for Broadway shows continued to slip further and were down 5-6 percent from a year earlier.\nConsumer Spending\nRetail sales were mixed but sluggish, on balance. A major retail chain noted that sales were well below plan in January and down from a year earlier before rebounding modestly in early February; the weakness was partly attributed to adverse weather and the government shutdown. Reports from retailers in upstate New York were more upbeat, characterizing sales activity as solid. Inventories, which were a bit leaner than usual going into the holiday season, were generally said to be in good shape as of mid-February.\nNew vehicle sales have weakened in early 2019, according to dealers in upstate New York, falling well below early-2018 levels. Some of this weakness was attributed to harsh winter weather. New vehicle inventories remained somewhat high, on balance. Sales of used vehicles were mixed but, on balance, steady. Dealers indicated that credit conditions remained in good shape.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA), which had climbed to a cyclical high in November, retreated in December and edged down further in January, based on the Conference Board\u2019s monthly survey.\nManufacturing and Distribution\nThe manufacturing and distribution sectors picked up somewhat in the latest reporting period. Manufacturers noted a modest pickup in growth, while wholesale distributors and transportation firms reported solid gains, following weak reports at the end of 2018.\nLooking ahead, contacts in the manufacturing and wholesale trade sectors have regained a fairly high level of optimism, but those in the transportation sector have remained more circumspect. A number of contacts continued to express concern about tariffs and trade restrictions, as well as New York State\u2019s minimum wage hikes.\nServices\nOverall, business has been mixed but, on balance, up modestly in the latest reporting period. Contacts in the information and health & education sectors reported flat activity in early 2019, while businesses in professional & business services noted some pickup in activity.\nLeisure & hospitality businesses reported steady, moderate growth. Tourism was mixed in New York City, following a brisk holiday season. A local tourism-sector expert indicated that hotel occupancy rates, though still fairly elevated, slipped below year-ago levels. However, Broadway theaters continued to report strong year-over-year gains in revenues and especially attendance, which was up nearly 20 percent from a year earlier in both January and early February.\nReal Estate and Construction\nHousing markets across the District have been stable to somewhat softer since the last report. Homes sales in upstate New York have slowed further, though the inventory of homes on the market has remained low, and prices have continued to rise. In New York City, sales of existing co-ops and condos have slowed further. Selling prices for newly-built condos have weakened further, while resale prices on existing apartments have been mostly flat to down slightly. The inventory of unsold homes has continued to climb but is still fairly low by historical standards. Housing markets in the rest of the metro area followed a similar pattern. A local housing expert noted that potential buyers have been hesitant. At the high end of the market, an oversupply and concern about the curtailed federal tax deductibility of homeowner expenses have weighed on the market. At the lower end, some potential buyers have become more inclined to rent than to buy.\nResidential rents across the District have picked up somewhat since the last report but remain roughly on par with a year earlier. In New York City, the prevalence of landlord concessions appears to have receded somewhat and rents have risen modestly, as rental vacancy rates have remained low. The recent withdrawal of Amazon\u2019s planned expansion in northwestern Queens has reportedly had little effect on the area\u2019s housing market.\nCommercial real estate markets have been mixed but little changed overall. Both office availability rates and asking rents have remained steady, on balance. Retail markets have continued to soften, as vacancies have continued to rise. Industrial markets, on the other hand, have remained firm: While availability rates have leveled off at low levels, rents have continued to climb briskly\u2014mainly in the New York City metropolitan region.\nNew multi-family construction starts remained sluggish, though a substantial volume of residential development remains under construction--particularly in New York City. New office construction starts picked up in New York City but remained sluggish elsewhere.\nBanking and Finance\nSmall to medium-sized banks in the District reported lower demand for consumer loans, residential mortgages, and commercial mortgages, but slightly higher demand for commercial and industrial (C&I) loans. Refinancing activity was reported to be little changed. Banks reported higher credit standards for commercial mortgages but unchanged standards across other categories. Higher loan spreads were reported on residential mortgages, while spreads were steady for all other categories. Finally, banks reported increased delinquency rates on consumer and C&I loans but unchanged delinquency rates on residential and commercial mortgages.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\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\nMarch 6, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of January through mid-February. Conditions in the labor market remained tight, and wage growth was moderate. Price inflation was unchanged. Sales of retail goods expanded modestly, while activity in consumer and business services was strong. Conditions in the manufacturing sector strengthened moderately, and conditions in agriculture deteriorated modestly. On balance, contacts reported that residential and commercial real estate market activity expanded moderately. Overall lending activity was flat.\nEmployment and Wages\nConditions in the labor market remained tight, with persistent worker shortages reported across many industries and skill levels. Hiring picked up moderately on balance. Employment at a large San Francisco software and consulting company grew notably as demand for its services increased. A cattle ranching company in Arizona also increased employment to meet growing demand. In the Mountain West, a regional bank noted that its hiring was limited only by a shortage of qualified labor. The bank hoped to be able to increase employment further when it expands its lending business later this year. A steel manufacturer in Oregon reported that hiring activity was flat. A fruit grower in the Pacific Northwest noted that weaker profit potential stemming from lower market prices resulted in excess labor capacity in the industry and could lead to layoffs.\nWage growth continued to increase moderately across most sectors due to continued brisk labor demand amidst persistent shortages of qualified workers. Contacts emphasized that wage growth was especially noticeable for higher-skilled workers. Demand for high-skilled warehouse workers and truck drivers picked up in the Mountain West, resulting in wage pressures. Employers continued to raise starting salaries for most information technology and cybersecurity positions. A community bank in Central California enhanced its bonus structure and increased its retirement benefits to better retain and attract experienced loan officers.\nPrices\nOverall, price inflation was unchanged over the reporting period. A contact in Seattle noted somewhat higher prices at grocery stores and restaurants due to the robust local economy. A contact in the California utility sector observed modest upward pricing pressures for electricity rates due mainly to higher financing costs following recent wildfires. A contact in Central California saw slightly higher crop prices, due in part to lower inventories, while elsewhere in the District, pricing pressures for fruit and dairy remained subdued. A contact in the Mountain West observed that fuel prices fell further. Lumber prices were stable, but at a noticeably lower level than last year, and contacts in California and Oregon reported that price inflation of other building materials was weak.\nRetail Trade and Services\nSales of retail goods expanded modestly. Contacts in the Mountain West reported that retail sales activity beat expectations for a moderation following the holiday season and against the backdrop of the government shutdown. A contact in the home goods retail sector in Arizona noted solid sales activity. One contact in the Mountain West reported that retailers are attentive to ongoing trade negotiations, as certain product supply chains depend on inputs from China and could be negatively impacted if no resolution is reached in the coming months.\nActivity in the consumer and business services sectors was strong. Demand for software products and consulting services expanded solidly in Northern California, and one contact noted that, with IPO activity expected to pick up in the coming year, the outlook for most technology consulting and financial services businesses was optimistic. A major shipping and logistics business reported plans to increase investment in automation to meet growing consumer and business demand more efficiently.\nManufacturing\nConditions in the manufacturing sector strengthened moderately overall. A steel manufacturer in Oregon noted strong activity in the industry due to lower competition from abroad arising from trade policy actions. A contact in Northern California reported that activity in the semiconductor industry continued on solid footing. Deliveries of commercial aircraft were flat from the same period last year, while new orders increased significantly. A contact in the Pacific Northwest observed that activity at sawmills ticked down, due in part to poor weather affecting raw material deliveries and slower growth in the national housing market. The outlook in the manufactured lumber sector was for solid building activity as weather conditions improve.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated modestly. Many contacts continued to cite trade policy changes as a source of weaker sales abroad and general uncertainty, though factors such as a stronger dollar and the moderation in the housing market also played a role. A contact in Eastern Washington observed that demand from China for fruit crops declined, and a contact in California noted that walnut exports declined. A raw lumber producer in Oregon reported that sales were significantly lower on a year-over-year basis, due to moderating construction activity and lower demand from China. Oversupply in dairy markets persisted, hurting profitability and forcing some producers in the Mountain West to exit the market. In Idaho, profitability at beef producers picked up, though it was still below levels seen a year ago. A California contact noted that the outlooks for crop yields and inventories improved further after rainfall beat expectations over the reporting period.\nReal Estate and Construction\nReal estate markets expanded moderately on balance. While most contacts continued to acknowledge slower activity over the past several months, they did not notice any significant deterioration over the reporting period. Contacts in the Pacific Northwest and Mountain West generally noted stable to slightly improved residential construction activity. A contact in Oregon reported a modest increase in building and selling activity due in part to lower mortgage rates, though a few other contacts observed a slight decline in building activity in some areas due to softer demand. A contact in Central California observed tepid selling activity, while contacts in Southern California and Idaho saw solid demand supporting still-elevated home prices. Contacts generally noted that residential inventories and time-on-market had risen slightly but were still low by historical standards.\nIn the commercial real estate market, contacts reported stable construction activity. Contacts in the Pacific Northwest generally noted that construction activity has not deviated noticeably from its solid trend. However, in Oregon, a contact observed that building activity was down slightly on a year-over-year basis. A contact in Central California saw commercial leasing and sales activity slow modestly.\nFinancial Institutions\nLending activity was generally flat over the reporting period. A contact at a national small business lending service based in California reported that loan demand significantly beat expectations. However, contacts in the Mountain West noted that while most business borrowers renewed loans at existing levels, a few reduced credit lines due to lower demand for their products. Contacts at community banks in Oregon and Central California noted that loan growth slowed slightly, while competition between lenders was brisk. Most contacts reported that credit quality remained healthy. However, a contact in the Mountain West reported that the balance sheets of dairy producers weakened as profitability declined in that market.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"March 6, 2019\nSummary of Economic Activity\nThe Fifth District economy continued to grow at a modest pace in recent weeks. Port activity remained robust; however, some contacts expressed concern that trade policy could negatively affect volumes in the next several months. Meanwhile, trucking demand growth slowed to a moderate pace. Manufacturing activity was mixed, and firms continued to report uncertainties and higher materials costs associated with tariffs and trade. Travel and tourism rose moderately, overall. However, a sharp decline in tourism was reported by several firms in and around the District of Columbia, which was attributed to the partial federal government shutdown. Retailers gave mixed reports; some with lower sales citied poor weather or the shutdown. Several nonfinancial services firms also reported project delays and lost revenue due to the shutdown, but other businesses saw increased demand for their services. Residential and commercial real estate sales and leasing rose modestly, on balance. Banks reported modest growth in loan volumes. Labor demand strengthened moderately, wages rose modestly, and many firms reported using non-wage benefits to attract and retain talent. Price growth remained moderate, overall.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks. Staffing firms reported that the volume of worker conversion from temporary to permanent increased modestly. Meanwhile, employers continued to report very tight labor markets and difficulties finding qualified workers, particularly hourly workers. Additionally, firms reported high demand for construction workers, executive assistants, HR professionals, engineers, IT professionals, accounting and finance professionals, plant production workers, mechanics, and truckers. Wage increases remained modest, overall. Meanwhile, many firms reported offering bonuses or relocation assistance to attract and retain talent.\nPrices\nPrice growth remained moderate, overall, since our previous Beige Book report. Manufacturing prices received continued to increase at a moderate rate. Also, input price growth slowed slightly but still outpaced growth in selling prices. Manufacturers noted some price declines for energy, petrochemicals, corrugated boxes, and transportation costs, although several firms continued to report paying higher prices for tariffed raw materials, such as steel and aluminum. Services sector firms indicated that prices paid rose at a slightly faster rate than selling prices, but both remained moderate, overall.\nManufacturing\nFifth District manufacturing activity was mixed in recent weeks. Several firms, including a Virginia furniture manufacturer, continued to struggle to deal with uncertainty surrounding tariff-related cost increases. In addition, a cabinet manufacturer reported strong demand and was able to pass through part of the materials cost increase that resulted from the tariffs. Many firms, such as a Maryland concrete company, attributed a decline in business to intemperate weather. Food manufacturers in Maryland and Virginia reported robust growth despite a drop in sales to D.C. area restaurants during the partial government shutdown.\nPorts and Transportation\nPorts in the Fifth District saw robust activity in recent weeks. Growth in imports was particularly strong and continued to surpass growth in exports. Ports invested in capital expansion to allow for continued growth but remained concerned about how business in the next several months might be affected by trade policy. One port executive saw business bounce back after weakness at the end of 2018. Another source reported record business to start the year but expected it to slow in the near future. In addition, an airport saw continued growth in both passenger traffic and cargo.\nTrucking companies saw demand growth slow to a moderate pace. A North Carolina firm attributed some of the slowing to inclement weather but was cutting back on hiring in anticipation of a slower year. In addition, a Virginia firm saw a softening in retail shipments. A company in the District of Columbia reported trimming discretionary spending as business was expected to slow down. Concerns about a decline in the pace of trade growth in the coming year were also expressed.\nRetail, Travel, and Tourism\nTravel and tourism in the Fifth District picked up moderately since our last report. A Virginia resort saw strong business, and an executive at a West Virginia hotel reported that warming weather was helping business. In Charleston, South Carolina, tourism remained steady despite the temporary closure of Fort Sumter during the partial government shutdown. Meanwhile, the Washington, D.C., area saw a sharp drop in visitors during the shutdown and a hotel in Asheville, North Carolina, reported lower occupancy.\nFifth District retailers reported mixed conditions in recent weeks. Many retailers saw a drop in business, which resulted from bad weather, while others struggled with continued cost increases due, in part, to tariffs. A West Virginia auto dealer attributed a sharp decline in sales to the government shutdown leaving potential customers without pay; however, a Virginia dealer reported solid business. Meanwhile, a South Carolina retailer invested in new storage to allow for sales growth, and a West Virginia sporting goods retailer reported steady demand.\nReal Estate and Construction\nResidential real estate contacts indicated modest growth, overall. Home sales rose modestly in recent weeks and buyer traffic was reportedly steady, despite winter storms hitting some areas in the District. Brokers reported that inventories generally remained at low levels. Agents continued to report that lower- to middle-priced homes were absorbed quickly and, in some cases, received multiple offers. District home prices increased slightly, although agents reported slower price growth in homes priced above $800,000. Residential construction was steady in most markets; however, with limited speculative homebuilding.\nCommercial real estate leasing rose modestly in recent weeks. District brokers reported increased demand for restaurant, grocery, and industrial space, while retail activity was stable to increasing. Moreover, vacancy rates decreased slightly across all sub-markets, and contacts reported that limited inventory pushed rental rates up slightly in some areas. On the commercial sales side, brokers reported modest increases in prices and volumes. Multi-family leasing remained healthy, although reports on construction activity varied across the District.\nBanking and Finance\nOn the whole, loan volumes increased modestly since our previous report. Residential mortgage demand was generally described as stable to increasing modestly, and bankers reported that deposits were up moderately. Commercial real estate loan demand remained strong. Other business loan demand increased slightly, on balance, while automotive lending was reportedly flat. Loan and deposit interest rates edged higher while credit quality and credit standards remained strong, overall.\nNonfinancial Services\nReports from nonfinancial services firms were mixed in recent weeks. Demand increased for some engineering consultants, law firms, advertising agencies, hospitals, and IT businesses. Meanwhile, several firms noted a decrease in demand, including those engaged in telecommunications, security services, and federal government contractors. Overall, firms indicated that the partial government shutdown resulted in lost revenue, job cuts, and project delays due to lapses in grant and permit approvals.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\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\nJanuary 16, 2019\nSummary of Economic Activity\nReports from contacts indicate that economic conditions have slightly improved since our previous report. Firms continued to report difficulties finding qualified workers. Overall, wage pressures have increased moderately, with contacts citing minimum wage increases as a contributing factor. Reports on consumer spending were positive. Activity in the manufacturing sector has increased in recent months, although at a slower rate than noted in the previous report. District banking contacts reported positive but slower growth in loan volumes during the fourth quarter. Agricultural conditions improved slightly thanks to higher crop prices; however, overall conditions remain weak in this sector.\nEmployment and Wages\nEmployment has grown slightly since the previous report. Contacts in Arkansas and Missouri reported slight growth in manufacturing employment, and small business employment increased modestly. Information technology firms in the St. Louis area reported plans to increase hiring in early 2019. Contacts throughout the District continued to cite difficulties finding qualified employees. The labor market was particularly tight for technical jobs, with some firms lowering education requirements to attract more candidates. Schools and firms also continued to develop training programs to alleviate shortages in skilled trades.\nWages have increased moderately since the previous report. Pay raises were especially strong for entry-level positions. Contacts in information technology and manufacturing reported that labor market tightness led to increases in starting wages. Furthermore, minimum wage increases in healthcare and the public sector were either announced or took effect throughout the District. Small business wages in Missouri and Tennessee grew moderately.\nPrices\nPrices have remained unchanged on net since the previous report. Metal prices have decreased slightly. Steel prices showed some of the largest declines, but remain elevated in year-over-year terms. Coal prices have risen slightly since the previous report.\nBroadly, agricultural prices have risen slightly since the previous report. Prices for soybeans and soybean meal have risen around 3 percent but remain lower than one year ago. Corn, corn meal, and sorghum all have posted particularly strong gains since the previous report.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate that consumer spending activity has increased modestly since our previous report. November real sales tax collections increased in Arkansas, Tennessee, and Kentucky, but decreased in Missouri relative to a year ago. The West Tennessee consumer outlook remains positive, albeit less positive than earlier this year. On net, West Tennessee consumers expect to spend more compared with last year. Reports from Louisville auto dealers indicated that auto sales do not seem to have been affected by rising interest rates. Arkansas tourism sales tax revenue increased year over year.\nManufacturing\nManufacturing activity has increased at a moderate pace since our previous report. Survey-based indexes showed that Arkansas and Missouri manufacturing activity continued to expand from November to December, but the pace of growth slowed. New orders and production also increased in both states, but at a slower pace than in the previous report. Several contacts expressed an optimistic outlook for the next quarter, including manufacturers of commercial vehicle parts and primary metals. An aluminum producer reported running at nearly full capacity and is considering additional expansion options. Similarly, contacts in the vehicle parts manufacturing industry noted strong sales in October. On the other hand, several manufacturers noted increases in wages leading to higher costs and higher turnover rates, making it difficult for them to recruit engineers and staff.\nNonfinancial Services\nActivity in the nonfinancial services sector has been unchanged since the previous report. The number of vacancies for nonfinancial services occupations in December has decreased over the previous month. This can be attributed to a slowdown following the holiday rush; however, year-to-year vacancies are also down. The transportation industry continues to experience growth. Major logistics firms continue to make investments in distribution centers across the District. Growth is limited in the river transportation industry as barges dependent on coal transportation continue to experience a slowdown in this line of business.\nReal Estate and Construction\nResidential real estate activity has improved slightly since the previous report. Seasonally adjusted home sales for November increased slightly from the previous report across most of the District's four largest MSAs. Inventory levels remained low.\nResidential construction activity was flat. St. Louis builders reported a slight decline in year-to-date single-family permits, but were optimistic that the recent decline in mortgage rates would increase construction activity in the near future. Contacts in Louisville expressed concern regarding rising interest rates and the rising cost of building homes.\nCommercial real estate activity has improved slightly since the previous report. Louisville contacts reported increased demand for retail property types compared with this time last year. Commercial construction activity was flat. Louisville contacts noted that multi-family construction is robust while there is a lack of new warehouse construction.\nBanking and Finance\nBanking conditions in the District have improved modestly since the previous report. According to reports from bankers, outstanding loan volumes grew by 4 percent relative to year-ago levels in the fourth quarter, which was a slight dip from the third quarter, continuing the steady decline in the rate of loan growth since the end of 2016. Commercial and industrial lending continued to be robust, but took a slight downward turn from the third quarter. Residential real estate lending in the District continued to grow slowly and lagged behind national rates for the fourth consecutive quarter. Commercial real estate maintained a positive, but slightly lower, growth rate compared with last quarter. Bankers reported a slight increase in deposits growth.\nAgriculture and Natural Resources\nDistrict agriculture conditions have improved slightly since the previous report. The percentage of winter wheat rated fair or better remained approximately unchanged from the end of October to the end of November and remains at 93 percent. This is an increase from 89 percent of winter wheat rated fair or better at the end of 2017. Contacts continued to report very high crop yields for 2018. However, farmers still face headwinds due to low crop prices and continued trade concerns.\nNatural resource extraction conditions improved slightly from October to November, with seasonally adjusted coal production increasing slightly. November production was also up slightly from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"January 16, 2019\nSummary of Economic Activity\nSixth District business contacts remained largely positive with a majority noting that economic activity grew at a moderate pace over the reporting period. Most contacts expect steady growth in the near-term; however, several contacts cited increased levels of uncertainty going into 2019, to include concerns over politics and trade. As labor markets remained tight, many firms noted increasing retention efforts. On balance, wages increased since the previous report, with pressure growing particularly among low-skill, hourly positions. Nonlabor input costs increased and the ability to pass along the increases varied among firms. Contacts reported that retail sales were solid during the holiday season and vehicle sales were up slightly. Reports from the hospitality sector were positive, reflecting strong advanced bookings for early 2019. Contacts reported that residential real estate activity slowed and commercial real estate activity remained stable over the reporting period. Manufacturers indicated that new orders and production levels decreased since the previous report. Contacts indicated that banking conditions were stable.\nEmployment and Wages\nSimilar to previous reports, business contacts remained focused on employee retention. District employers continued to expand wage and non-wage compensation offerings to retain workers. In spite of these efforts, firms expressed concern about their ability to meet growing demand with existing staffing levels. A few contacts from construction, manufacturing, and health services mentioned they were actively overstaffing certain positions where possible, or were holding on to workers even as demand eased in an effort to position themselves for future growth. Business contacts also mentioned that efforts to build culture and loyalty remained important to retention.\nAverage wage increases were typically reported around 3 percent across the District, a level that most firms intend to maintain in 2019. Broadly, businesses continued to report notable wage pressure among low-skill, hourly jobs, particularly in hospitality and retail. A number of business contacts noted that announcements by large national companies to raise their minimum wage intensified pressure among similar jobs. Challenges with escalating wage pressure were especially acute among small businesses, which reported struggles to compete with large- and medium-sized firms' ability to increase wages.\nPrices\nDistrict firms continued to report rising input costs, particularly for products impacted by tariffs. Price increases related to tariffs were passed along with no significant pushback or impact to margins. However, some businesses reported hesitancy to pass along increases unrelated to tariffs, opting instead to continue to internalize cost pressures through a combination of lower margins and productivity improvements. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 2.2 percent in December. Survey respondents indicated they expect unit costs to rise 2.3 percent over the next twelve months.\nConsumer Spending and Tourism\nOn balance, District retailers reported steady sales levels throughout the holiday season. Online sales levels continued to grow at a faster pace than brick and mortar sales. Recreational goods retailers noted an increase in sales since the last report. Automotive dealers reported an uptick in sales levels in November.\nTravel and tourism contacts across the District noted a strong holiday travel season with growth in business and leisure travel. Hotel demand and average daily rates were higher than expected. The outlook for 2019 remains positive with healthy advanced bookings through the first quarter of the year.\nConstruction and Real Estate\nHousing activity slowed on a year-over-over basis towards the end of 2018. In many District areas, existing home sales either moderated or declined. Although inventory levels remained low, they increased on a year-over-year basis in many markets. New home construction continued to lag behind demand with most new home starts being concentrated in higher price points within prime/high-demand submarkets. Though moderating, rising construction costs and low supply continued to push new home prices higher.\nCommercial real estate leasing and sales activity remained steady during the reporting period. On average, vacancy rates in most District markets continued to trend downward modestly. Strength continued in the industrial, multifamily, and medical sectors. Contacts reported momentum in the industrial sector that continued to outpace the levels of new supply. Contacts continued to report concerns with bankruptcies and slowing activity in the big-box retail sector. Office market contacts reported overall continued strength; however, higher levels of employee densification and greater deliveries of space appear to be creating pockets of slowing in some local markets.\nManufacturing\nReports from manufacturing contacts indicated that business conditions softened slightly since the previous report. New orders and production levels decreased, and purchasing managers reported shorter wait times for supply deliveries. However, expectations for future production levels increased, with over half of contacts expecting higher production over the next six months, up from the previous report.\nTransportation\nThe majority of District transportation contacts reported increased activity since the previous report. Ports noted record container volumes, along with further growth in trade of autos and heavy machinery. According to air cargo contacts, global air freight volumes continued to grow; however, in recent months, growth decelerated in some regions due to a softening in demand. Railroad contacts reported significant year-over-year increases in total traffic, including notable growth in intermodal shipments. Logistics firms saw improvements in volumes of delivered packages as compared with last year's holiday season.\nBanking and Finance\nConditions at financial institutions held steady over the reporting period. Higher interest rates improved earnings and net interest margins for the majority of banks and increased competition for deposits. Loan growth continued but at a slower pace, especially in real estate. Financial institutions continued to loosen underwriting standards on selected portfolios due to slowing demand for credit and increased competition. Credit quality metrics generally remained positive with nonaccrual loans remaining near historical lows; however, some institutions in the District experienced an increase in consumer delinquencies.\nEnergy\nContacts reported that takeaway capacity of oil and gas products from the West Texas Permian region to the Gulf Coast remained extremely tight. Deepwater production continued to pick up in the Gulf Coast, as new drilling platform projects came online in the fourth quarter. Refinery utilization declined in the fourth quarter as many plants engaged in maintenance/turnarounds during the winter months. Demand for renewable energy, especially electricity, continued to grow compared to electricity generated by coal, gas, or nuclear. Industrial consumption was mostly down in late 2018 due to seasonal factors. Weather and improved efficiencies continued to drive down residential and commercial consumption.\nAgriculture\nAgriculture conditions across the District were mixed. Recent reports showed most of the District was drought-free with the exception of parts of south Florida where there were abnormally dry to moderate drought conditions. The USDA designated some counties in Alabama, Florida, Georgia, and Mississippi as natural disaster areas due to damages and losses attributed to Hurricane Michael, Tropical Storm Gordon, and flooding. The December forecast for Florida's orange crops was unchanged from the prior month, but up significantly from last year's production. In mid-December, weekly cash prices for corn, cotton, and beef were up while rice, soybean, broiler, and egg prices were down on a year-over-year basis.\nFor more information about District economic conditions visit: www.frbatlanta.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"

San Francisco

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"Beige Book Report: San Francisco\nJanuary 16, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-November through December. Conditions in the labor market remained tight, and wage growth was moderate. Price inflation was flat. Sales of retail goods expanded moderately, while activity in consumer and business services was solid. Conditions in the manufacturing sector strengthened modestly, and conditions in agriculture deteriorated slightly. On balance, contacts reported that residential and commercial real estate market activity expanded at a solid pace. Lending activity ticked down.\nEmployment and Wages\nConditions in the labor market remained tight. Contacts reported that worker shortages persisted across industries and skill levels. Nonetheless, several contacts reported an uptick in the pace of hiring. A major shipping and logistics business in Northern California hired more seasonal workers than usual in response to strong holiday demand. In the restaurant industry, a contact in the Pacific Northwest observed rising employment levels, while contacts in the Mountain West and Southern California noted intense worker shortages that led one chain to cancel plans to open additional locations. A contact in the California banking industry increased employment as warranted by business demand but noted that future hiring plans would be sensitive to developments in the broader economy.\nWage growth continued to increase moderately. Contacts across the District observed intense compensation pressures for more highly skilled workers. Employers with vacancies in the information technology, cybersecurity, and management fields continued to boost starting salaries to attract qualified candidates. Wages for lower-skilled workers also rose moderately, due to brisk competition and, in some cases, in reaction to imminent minimum wage increases in the new year. A Southern California contact in the business services sector reported that training costs also increased as positions turned over more frequently given the tight job market.\nPrices\nOverall, price inflation was flat over the reporting period. Contacts in manufacturing and utilities observed upward pricing pressures due mainly to a further moderate pickup in the cost of metal inputs and higher financing costs for capital-intensive production. Food and beverage prices increased somewhat, reflecting higher labor costs at producers. The growth of building material prices slowed a bit, due in part to noticeably lower lumber costs, which fell because of the moderation in the housing market. Lower oil prices resulted in reduced fuel surcharges at shipping and logistics businesses and a modest decline in the price of some petroleum-based inputs to manufacturing. In the agriculture sector, prices declined modestly as demand from abroad weakened in response to trade policy changes and the stronger dollar.\nRetail Trade and Services\nSales of retail goods expanded moderately. Contacts observed that a solid holiday shopping season bolstered retail activity over the reporting period, thanks in part to elevated consumer confidence and household wealth. A contact in the Pacific Northwest reported that demand at home-improvement stores increased further. In the food and beverage industry, a contact reported a modest increase in sales driven by increased demand for higher-end products. Automotive sales in the Mountain West declined slightly, due in part to higher financing costs.\nActivity in the consumer and business services sectors was solid. Demand for shipping and logistics services continued to be strong. Demand for automotive repair services in the Mountain West picked up; one contact attributed the increase to drivers preferring to repair instead of replace their vehicles as financing costs increased. A contact in Southern California observed a slight tick down in tourist activity.\nManufacturing\nConditions in the manufacturing sector strengthened modestly overall. Contacts in Northern California reported that activity in the semiconductor industry was solid, but they noted the potential for stock market turbulence to modestly limit new orders. Deliveries and new orders of commercial aircraft increased slightly from the same period last year. A contact in the Pacific Northwest observed that demand for manufactured lumber products ticked down, due in part to somewhat slower growth in the housing market.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated slightly. Many contacts cited trade policy changes and the appreciation of the dollar as drivers of weaker sales in the sector. Demand from abroad for a variety of crops declined noticeably, hurting profitability for certain growers across the District. A few contacts reported higher inventory levels for crops such as soybeans and perishable fruits, while growers sought alternative markets for their products. A contact in California noted that the outlook for crop yields in the new year improved modestly after rainfall beat expectations over the reporting period.\nReal Estate and Construction\nReal estate markets expanded solidly overall, though contacts continued to observe slightly slower growth in recent months, especially in the residential market. A contact in Eastern Washington reported that overall housing permits for construction were slightly lower on a year-over-year basis due to a drop in permits for multi-family units, though single-family units registered a year-over-year increase. In Oregon, housing inventory ticked up but was still very low by historical standards. A contact in Southern California reported that shortages of more-affordable housing units persisted, while construction of higher-end apartment buildings continued despite flagging demand in that segment. A contact in Oregon noted that housing prices were up substantially on a year-over-year basis, thanks in part to brisk demand from out-of-state buyers looking for less expensive housing options.\nIn the commercial real estate market, contacts generally noted solid construction activity and demand. Contacts in the Pacific Northwest observed strong building activity. In Eastern Washington, construction was under way on a major e-commerce distribution center. In Seattle, contacts noted brisk activity in office construction and leasing. Rents were stable at an elevated level, and contacts reported continued low vacancy rates.\nFinancial Institutions\nLending activity ticked down over the reporting period. Growth in loan demand slowed slightly, with contacts generally attributing most of the moderation to higher interest rates. At the same time, for many banks, competitive pressures in loan and deposit pricing increased and net interest margins narrowed. Most contacts reported that credit quality remained healthy. A few observed that lending standards loosened modestly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"January 16, 2019\nSummary of Economic Activity\nThe Ninth District economy grew modestly overall since the last report. Employment grew moderately, though lack of available labor continued to hamper overall hiring. Wage pressures were moderate, while price pressures were modest. The District economy showed growth in consumer spending, manufacturing, commercial real estate, and mining. However, construction and residential real estate were mixed, energy slowed, and agriculture remained weak.\nEmployment and Wages\nEmployment grew moderately since the last report, though lack of available labor continued to hamper overall hiring. Demand for labor across the District has ebbed slightly but remained healthy overall. November job postings fell slightly in Minnesota, South Dakota and Michigan's Upper Peninsula compared with a year earlier, in contrast with double-digit increases in Montana and North Dakota. Among more than a dozen staffing firm contacts, mostly in Minneapolis-St. Paul, a small majority said job orders and total clients were higher in the fourth quarter compared with a year earlier. But tight labor supply was limiting job placements and hours booked among staffing firms, with unfilled job orders seeing a notable increase. Surveys by the Minneapolis Fed in late November and December identified labor availability as the biggest obstacle to short-term growth. In a separate, external survey of Minnesota builders, almost two-thirds said the lack of available labor has forced them to turn down business. A Montana retailer noted that \"every business is hiring and the hiring pool is shallow.\" Very little relief in labor supply was expected. Numerous metro areas were at or near record-low unemployment; unemployment insurance claims over the most recent six-week period (through mid-December) dropped more than 4 percent across District states, and continuing claims dropped by 10 percent.\nWage pressures rose moderately. Recent surveys by the Minneapolis Fed found widespread wage increases that coalesced a little below 3 percent. One survey found more persistent wage increases for new employees and specific positions, rather than company-wide raises. Staffing firm contacts noted continued reluctance among some clients to raise wages enough to change hiring difficulties. \"Clients are not changing with the labor market, so wages are not going up as much as they should,\" said a contact in Minneapolis-St. Paul. A central Minnesota contact said that \"skilled trades are hard to find and wages are not increasing (enough) to bring in good candidates that have the necessary skills and background.\" Most surveys showed that expectations for future wage hikes were slightly below 3 percent. One modest exception was the Minneapolis Fed's annual manufacturing survey (conducted in partnership with the Minnesota Department of Employment and Economic Development). Respondents to this survey expected wages to increase by 3 percent to 5 percent in 2019.\nPrices\nPrice pressures were modest since the last report. Slightly more than half of respondents to the Minneapolis Fed's annual manufacturing survey reported that prices charged for their products increased over the past year, while just over a third reported unchanged prices. For the coming year, a similar proportion expected to increase their prices, while a strong majority expected the rate of inflation in the broader economy to increase. Retail fuel prices continued to fall sharply in District states through the end of 2018, reaching their lowest levels in nearly two years by early January. Prices received by farmers for corn, wheat, hay, hogs, cattle, and eggs increased in October compared with a year earlier; prices for soybeans, milk, chickens, and turkeys decreased.\nConsumer Spending\nConsumer spending rose moderately since the last report. State-level sales tax collections in November were higher in the Dakotas and Wisconsin. Lodging taxes were higher in Montana over this period, but hotel occupancy rates in Minnesota fell and average room rates were flat. Total enplanements at a number of District airports in November rose notably, with the exception of Minneapolis-St. Paul International, which saw a slight decrease. Retail contacts reported a strong holiday shopping season overall. A mall manager in southern Minnesota said foot traffic was up on Black Friday compared with a year earlier, and stayed strong though the holidays despite the loss of a major anchor tenant earlier in the year. The manager added, \"Overall sales and traffic exceeded expectations almost entirely across the board.\"\nConstruction and Real Estate\nCommercial construction was mixed since the last report. An industry database of construction spending showed November activity was slower than a year earlier, particularly for nonresidential building. However, this was possibly related to a particularly strong October. Construction contacts in Minneapolis-St. Paul noted strong demand for new industrial building, but office construction was slow. Another industry database showed that projects out for bid in District states were somewhat higher over the most recent six-week period (through mid-December) compared with a year earlier. The average number of active projects was also higher over the same period; however, this might be the result of projects taking longer due to labor shortages in construction. Available data for November and December showed commercial permitting was higher in the core cities of Minneapolis and St. Paul, but lower across most of the District's other metro cities. Residential construction was mixed. Minneapolis-St. Paul and Bismarck, N.D., saw healthy year-end increases for both single- and multi-family units. But residential activity elsewhere was flat or declined over the same period.\nCommercial real estate increased slightly since the last report. Vacancy rates in multi-family units continued to be low throughout the District despite healthy construction activity. Similar market conditions existed for industrial space in Minneapolis-St. Paul. Large retailers continued to be pressured, with multiple big-box store closures across the District. Residential real estate was mixed. November home sales grew modestly over the previous year in western Wisconsin, Sioux Falls, S.D. and Missoula, Mont., but fell across Minnesota as well as in Bozeman and Great Falls, Mont.\nManufacturing\nDistrict manufacturing activity increased moderately since the previous report. Respondents to the Minneapolis Fed's annual manufacturing survey indicated growth in orders, production, employment, capital investment, and productivity over the past year, with expectations for further growth in 2019. An index of manufacturing conditions produced by Creighton University indicated increased activity in December in Minnesota and the Dakotas. A producer of electrical transmission equipment broke ground on a large new plant in South Dakota.\nAgriculture, Energy, and Natural Resources\nAgricultural conditions in the District were stable at low levels. District oil and gas drilling activity slowed notably recently in response to a rapid decline in the price of crude oil. An industry contact reported that expectations for capital expenditures in the Bakken oil patch have shifted downward dramatically. However, as of late December, the drilling rig count in the region was unchanged from a month earlier. District iron ore mines were operating at near capacity, with a recent estimate suggesting 2018 production would be up slightly from the previous year.\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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"January 16, 2019\nSummary of Economic Activity\nEconomic activity in the First District expanded at a modest to moderate pace since the last report, amid some signs of slowing growth. Retailers reported moderate increases in sales, and tourist activity was strong. Most manufacturers cited increased revenue from a year ago, but some noted the pace of increase was slower recently than earlier in the year. Software and information technology services firms also reported moderate revenue and demand growth in the closing months of the year. Commercial real estate markets were largely unchanged since the last report. Residential real estate markets saw ongoing price increases and mixed sales results; contacts in a couple of markets cited greater \"balance\" as local shortages of housing inventory eased somewhat. While retailers (including an auto dealer) and manufacturers said sizable tariff increases would pose significant problems if they occurred and many respondents cited uncertainty, outlooks remained mostly positive.\nEmployment and Wages\nMany contacts cited selected labor shortages and moderate increases in pay rates at the end of 2018. Retailers noted that their labor costs will continue to go up in 2019, in part because of state minimum wage increases and labor shortages in some markets. On balance, however, they said hiring in the retail sector has not been difficult. By contrast, a tourism contact noted serious concern about ongoing labor shortages on Cape Cod that will be more severe in 2019 if limits on the J-1 and H-2B visa programs are not raised. Manufacturing contacts did not report any significant changes in employment. Some cited difficulties finding workers, especially skilled engineers; however, one contact reported that after a \"market adjustment\" raised compensation by 10 percent to 15 percent, difficulties in hiring and retention dramatically eased. Software and IT services respondents reported annual wage and compensation increases of 2 percent to 4 percent, with no changes in average headcount or turnover rates.\nPrices\nContacts cited modest to moderate increases in selling prices. Retail contacts said they expect to raise their selling prices between 1 percent and 4 percent in 2019, depending on the inputs for a particular item. In manufacturing, pricing pressures were mixed. Input costs were generally down due to lower fuel prices. A producer of frozen fish said they were able to put through their first \"full price increase\" since 2011 \u2013 an across-the-board 5-percent rise. Most software and IT services contacts said there have been no real pricing changes throughout the past year, although two contacts mentioned price increases in 2018 and one is looking towards another increase in upcoming quarters.\nRetail and Tourism\nRetailers contacted for this round reported that comparable store sales increased by 2.8 percent to 4.0 percent year-over-year. All said traffic in their brick-and-mortar stores declined by a few percentage points compared to 2017, but noted that the average in-store purchase was up in 2018 (one retailer said by 5 percent). A contact with a strong online presence said that a significant rise in direct sales made up for the decline in in-store purchases. Retailers expect to see small revenue gains in 2019 over 2018, with consumer confidence high.\nA contact in the automotive industry in southern New England reported that sales were steady but not robust.\nPassenger traffic to Boston's Logan Airport set a new record in 2018; departing flights in December were up 7.4 percent year-over-year. In 2019 new flight services will be added by domestic and international carriers. Strong tourist activity was seen on Cape Cod through December, as retailers and inns reported having a good holiday season. This respondent said that economic fundamentals in the United States remain strong, so 2019 should be a good year for the tourist industry.\nManufacturing and Related Services\nThree-quarters of the manufacturing firms contacted this cycle reported higher sales year-on-year. One firm with lower sales, a chemical company, said that the year-earlier period was exceptionally strong. Another contact attributed the decline to slowing growth in the automotive industry around the world. Some contacts said growth slowed in the fourth quarter relative to earlier in the year. A diversified manufacturer said that customers were taking longer to pay bills. On the plus side, two contacts said that a shortage of trucking capacity that had been a problem in recent years appeared to have eased. Contacts did not report any major revisions to capital expenditure plans.\nRespondents generally expected growth to continue in 2019, but they expressed significant reservations. Contacts viewed the trade situation as a significant risk factor. Several contacts noted that the length of the economic expansion made a downturn more likely, but none pointed to any specific issues with their customers or markets.\nSoftware and Information Technology Services\nSoftware and IT services firms reported moderate growth as the fourth quarter drew to a close. The majority of contacts noted revenue growth in the mid-to-high single digits year-over-year, with corresponding positive growth in product demand as well, both quarter-over-quarter and year-over-year. Looking to 2019, all but one contact reported a desire to focus more on investing in sales and marketing. Overall, contacts expressed wariness about the uncertainty they have felt in markets, but noted no specific impacts on their individual firms to date.\nCommercial Real Estate\nCommercial real estate markets in the First District showed few changes since the last report. Office leasing activity remained muted in the Hartford area, maintained a moderate pace in both the Providence and Portland areas, and stayed strong in the Boston area.\nContacts in each of those metro areas noted that suburban office demand remains weaker than urban office demand. Industrial leasing demand remained very robust in the Boston area but continued to soften in Maine and in Connecticut. In Rhode Island, low inventory of industrial space relative to demand has spurred increased interest in industrial construction, although one contact expected developers to exercise caution.\nInvestment sales demand in Providence strengthened on balance in 2018 from 2017, while in Hartford and Portland investment sales were described as steady in recent months. Boston's investment market, while still characterized as strong, showed some tentative signs of softening, and contacts in that city expressed concerns that property values could face downward pressure as investors rebalance their portfolios after the recent declines in major stock market indexes. At the same time, commercial real estate financing costs remained relatively low as some banks reportedly reduced their interest-rate spreads on commercial mortgages. The outlook remained largely pessimistic for the commercial real estate market in Connecticut, while elsewhere in the District contacts seemed optimistic for the near term but increasingly uncertain about the outlook for late 2019 and beyond.\nResidential Real Estate\nContacts reported that First District residential real estate markets had a strong finish and a good year overall in 2018. For single family homes, closed sales were up year-over-year from November 2017 to November 2018 in Rhode Island, Boston, and Maine, and down in Massachusetts and New Hampshire. (Data are missing for Connecticut because of an ongoing technical issue.) For condos, closed sales decreased in all reporting areas but Rhode Island. Vermont saw a decrease in sales for single family homes and condos combined. Median sales prices increased generally, with the exception of condo markets in Rhode Island and Maine, which reported mild price decreases year-over-year.\nResidential markets in Rhode Island and Boston became more balanced in recent months, with growing supplies of homes for sale and moderation in the pace of home price appreciation. Despite a seller's market environment, contacts said real estate was a preferred investment choice, given the volatile U.S. stock market.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"January 16, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District grew at a modest pace in late November and December, and contacts expected growth to continue at that pace over the next 6 to 12 months. Employment, consumer spending, and business spending increased modestly; manufacturing increased slightly; and construction and real estate activity was little changed. Wages and prices rose modestly and financial conditions deteriorated slightly. Prospects for farm income improved as corn, soybean, and wheat prices moved higher.\nEmployment and Wages\nEmployment growth continued at a modest pace over the reporting period and contacts expected job gains to continue at that rate over the next 6 to 12 months. Hiring was focused on production and professional and technical workers, while there was a decline in the number of contacts planning to hire sales workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. A staffing firm that primarily supplies manufacturers with production workers reported continued difficulty in filling orders and no change in billable hours. Wage growth remained modest overall. Contacts were most likely to report wage increases for managerial, professional and technical, and administrative workers. Multiple manufacturing contacts reported that rising wages for entry-level positions was leading them to invest in automation that would increase these workers' productivity and justify the higher wages. Many firms reported growing benefits costs.\nPrices\nPrices rose modestly in late November and December, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices increased slightly overall. Producer prices again rose moderately, reflecting in part the pass-through of higher labor, materials, and freight costs.\nConsumer Spending\nConsumer spending rose modestly over the reporting period. Nonauto retail sales increased at a moderate pace, as contacts reported solid holiday sales and widespread gains across sales categories. Contacts also highlighted significant growth in the travel and personal service sectors. Light vehicle sales were flat and slightly under dealers' expectations for the reporting period. Some contacts attributed the slower-than-expected vehicle sales to rising interest rates and declines in the stock market.\nBusiness Spending\nBusiness spending increased modestly in late November and December. Retail contacts said that inventories were generally at comfortable levels. Most manufacturing contacts also reported that stocks were at comfortable levels, though steel service center inventories remained below historical norms and one steel consumer reported cutting back their own production because of steel input shortages. Capital spending increased modestly and contacts expected growth to continue at that pace over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Energy demand from commercial and industrial users increased modestly, led by greater consumption by data centers and manufacturers. Demand for transportation services also increased modestly from an already strong level.\nConstruction and Real Estate\nConstruction and real estate activity was little changed over the reporting period. Residential construction increased slightly, with growth concentrated in the suburban single-family market. Nonresidential construction was little changed on balance, with reports of increased activity in the industrial and infrastructure sectors offset by declines elsewhere. Home sales were flat overall, though one contact in the Detroit area reported a moderate decline in sales, particularly for homes under $250,000. Home prices and residential rents increased slightly. Commercial real estate activity was little changed, though the pace remained strong. Vacancy rates, sublease space, and rents were little changed.\nManufacturing\nGrowth in manufacturing production slowed in late November and December, with contacts reporting only a slight increase in output. That said, most contacts were pleased with the level of production. Demand for steel increased, but at a slower rate than earlier in the year. Steel imports continued to decline. Demand for heavy machinery increased moderately, with growth spread across the construction, transportation, and energy sectors. Demand for heavy trucks increased slightly from an already strong level. Specialty metals manufacturers reported modest increases in order books, with contacts highlighting growth in the medical devices, aerospace, and defense sectors. Auto production declined slightly, but remained at a solid level.\nBanking and Finance\nFinancial conditions deteriorated slightly overall during the reporting period. Financial market participants noted substantial declines in equities prices and increased volatility. Business loan demand increased modestly, with contacts highlighting growth in the construction, manufacturing, and transportation sectors. Loan quality and lending standards were little changed. Consumer loan demand increased slightly, supported by increased auto lending. Consumer loan quality and lending standards were little changed. Demand for consumer insurance was also little changed.\nAgriculture\nPrices for corn, soybeans, and wheat moved higher over the reporting period, supported in part by news that trade talks between the U.S. and China had resumed and that China had purchased some U.S. soybeans. A second round of payments from the Federal Government's Market Facilitation Program also supported farm incomes (primarily for soybean producers), although payments have been disrupted by the government shutdown. The shutdown also slowed the release of government reports on agricultural market conditions, leading to greater uncertainty for market participants. Contacts noted that the profitability of the 2018 harvest was still unclear as a large amount of the harvest remained unsold. Lower ethanol prices weighed on ethanol producers, and there were reports of plant closures as well as expectations of more closures in the future. Cattle, egg, and dairy prices all rose, though dairies generally continued to face difficult operating conditions. Hog prices fell over the reporting period. Contacts noted that rising input prices for crop and livestock producers as well as higher interest rates were shrinking margins.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"January 16, 2019\nSummary of Economic Activity\nEconomic activity in the Fourth District increased slightly since our previous report, with firms across industries reporting mostly stable demand. District firms continued hiring at a moderate but slightly softer pace than in recent months. Contacts noted continuing wage pressures to attract and retain workers. Reported wage increases were moderate and in line with recent trends. Upward costs pressures, especially for raw materials, remained elevated. Contacts also noted higher transportation costs. Builders and manufacturers reported being able to pass through cost increases to their customers. Demand was stable or increased in retail, construction, and nonfinancial services but softened slightly in manufacturing and banking, a situation which contacts largely attributed to seasonal factors.\nEmployment and Wages\nDistrict firms added workers at a pace that was moderate but slightly softer than in the previous survey period. Most firms that reported increased hiring also noted improved customer demand, while firms that reported decreased hiring noted seasonal business declines as reasons behind their staffing decisions. Across various industries, several firms reported hiring for new positions because of business expansions. Contacts also reported hiring to replace departed workers. A steel producer noted difficulty finding hourly workers. Driver turnover remained a problem in the freight industry; however, one trucking contact reported some success hiring drivers. Reports of wage pressures were similar to those of the previous period, and firms across many industries offered increased incentives to retain workers and attract new talent. In addition to annual cost-of-living and merit increases, some construction contacts raised incentives for retention, and manufacturers increased base pay to attract skilled new hires.\nPrices\nUpward pressures on input costs and selling prices remained elevated and were similar to those reported in the previous survey period. Contacts reported strong pressure on input costs, especially for raw materials, including steel, concrete, and wood products. Various manufacturing firms continued to attribute cost increases to the effect of tariffs. Freight contacts reported recent decreases in diesel costs but noted that other costs have continued to increase, including truck parts and repairs. Retail contacts in turn noted continuing upward pressure on freight costs. Construction and manufacturing firms raised their prices to pass through higher costs of raw materials to consumers. The ability to pass through cost increases was similar to that reported in prior survey periods. A slightly lower proportion of freight contacts raised their rates compared with those who did so during the prior survey period. Retail contacts reported seasonal price promotions, while some professional services firms noted that increased demand and improved market opportunities have allowed them to raise prices.\nConsumer Spending\nNondurable goods retailers reported slightly improved demand, driven primary by seasonal factors. However, these retailers believe the momentum from the holidays will continue after the holiday shopping season, and they predict customer demand in the first quarter will remain strong. These retailers expect that growth in 2019 will outpace growth in 2018 overall. Nondurable goods retailers continued to see moderate wage and nonlabor cost inflation and raised prices modestly. Auto retailers reported steady to slightly increasing demand overall, driven by used and nonluxury vehicles and increased new-vehicle incentives. While overall demand is up, rising interest rates are holding back demand and shifting it towards less expensive vehicles. Auto retailers expect demand to remain steady in the next quarter but to decrease in 2019 overall.\nManufacturing\nManufacturing conditions softened at the end of the fourth quarter, but many contacts reported that this was largely a result of the usual seasonal slowdown. Continued uncertainty about international trade policy and volatility in financial markets may dampen demand in 2019, and contacts signaled that customers' capital expenditures are slowing. They also acknowledged that some of the strength in 2018 was driven by orders being pulled-ahead amid concern about future price increases, which have now come to pass or will be implemented in early 2019. The outlook for conditions in 2019 remains fair.\nReal Estate and Construction\nResidential builders and realtors reported stable demand in the current period, a break from a trend of softening demand for housing in the recent survey periods. While decreasing home affordability weighed on customer demand over the past year, a slight drop in mortgage rates spurred some demand recently. The decrease in home affordability was driven by rising interest rates and also by rising selling prices as builders boosted prices to cover their increases in wages and nonlabor costs. Realtors noted decreased demand from first-time homebuyers. Housing inventory was stable. Residential builders expect worsening demand both in the first quarter and in 2019 overall.\nConditions in nonresidential construction continued to be strong and improved slightly during the period. Demand from the industrial and education sectors was noted to be especially strong. Backlogs remained elevated and were increasing. Commercial real estate developers reported stable conditions. Most nonresidential builders were optimistic about growth in the first quarter, and commercial real estate developers expect stable conditions. Nonresidential builders expect moderate growth in 2019 overall. Commercial real estate developers' outlooks for 2019 were mixed.\nFinancial Services\nBanking conditions softened slightly, driven by seasonality in commercial real estate, mortgage, and auto lending. Business inquiries were steady, and large and middle-market firms continued to seek financing for plant equipment and mergers and acquisitions. Volatility in financial markets and political uncertainty have had a negative effect on consumer and business confidence and cloud the outlook for loan demand in the coming quarter. Some bankers indicated that rising interest rates may also dampen demand.\nNonfinancial Services\nActivity in nonfinancial services increased at a modest pace. Professional and business services firms noted increased demand, especially in the information sector, in which firms reported regular year-end increases in purchases of software and digital technologies. Freight contacts noted that while demand remains high, capacity constraints continued to limit growth in the industry, and while most freight contacts reported stable demand during the period, some trucking contacts noted softer demand compared with that of the previous quarter because of the pull-ahead of imports from China. Several contacts anticipate continuing high levels of activity, but some reported cautious optimism about the near future.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\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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"January 16, 2019\nSummary of Economic Activity\nOn balance, aggregate business activity in the Third District maintained a modest pace of growth during the current Beige Book period, although slowing occurred among service sectors and some real estate activity declined. The labor market remains tight, which continued to constrain hiring at a modest pace and to apply moderate upward wage pressures. Price pressures remained modest and eased a bit for service sectors. Nonfinancial services eased back to a modest pace of growth, while manufacturing and nonauto retail sales maintained a modest pace. Auto sales were essentially unchanged, and tourism activity continued to grow slightly. Residential real estate sectors tended to decline, while commercial real estate tended to be flat or down slightly. The growth outlook over the next six months remained positive, with half of the nonmanufacturing firms and over 40 percent of the manufacturers anticipating increases in general activity.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. The share of firms reporting an increase in staff generally ranged between 15 and 25 percent among broad sectors. The firms noted very little change in the average hours worked since the prior Beige Book period.\nMany contacts continued to note a tight labor market; however, builders said that construction activity had peaked or was peaking and that residential and commercial contractors were beginning to scramble for new projects to keep their workers employed. Staffing firms reported ongoing difficulty hiring and retaining workers, although one firm noted that orders had slowed a bit.\nOn balance, wage growth continued at a moderate pace as firms typically cited increases for wages and benefits that averaged 3.0 to 3.5 percent. In one of the District's tightest labor markets, average wage rates were up 6.0 percent over the prior year. The share of nonmanufacturing contacts who reported increases in wage and benefit costs remained steady at just over one-third. One staffing firm noted that wage increases had slowed but that several clients would be evaluating starting wages in early 2019, so wage rate hikes were expected to pick back up in the first quarter.\nPrices\nPrice increases remained modest for most firms. More-over, compared with the prior period, a lower percentage of nonmanufacturing firms reported higher prices paid for inputs and prices received for their own goods. The share of manufacturing firms reporting increases in prices paid remained just above 40 percent, while prices received by manufacturers and prices paid by nonmanufacturers increased for about 25 percent of the firms. The share of nonmanufacturing firms reporting increases in prices received fell below 15 percent.\nLooking ahead six months, nearly 60 percent of the manufacturing firms continued to anticipate paying higher prices for inputs, while those firms expecting to receive higher prices for their own goods fell to 45 percent.\nManufacturing\nManufacturing activity continued at a modest pace of growth--typical for the Third District. The percentage of firms that reported increased shipments fell somewhat, while the percentage reporting an increase in new orders edged up.\nThe makers of paper products, primary metal products, and electronic equipment tended to note gains in new orders and shipments; the makers of lumber products, chemicals, fabricated metal products, and industrial equipment reported mixed results. Contacts often cited labor supply issues as a deterrent to growth, in addition to supply chain problems, rising commodity prices, and uncertainty surrounding tariffs. Demand for equipment to supply the oil and gas producing sectors has slackened again.\nOn balance, manufacturers continued to expect general activity to increase over the next six months. Expectations of future increases in new orders, shipments, employment, and capital spending remained nearly the same as the prior period and at high levels.\nConsumer Spending\nNonauto retailers reported a continuation of modest growth through the holiday season. Many contacts noted increased traffic per store and greater spending per customer--citing good weather, low gas prices, and an extended holiday shopping season as supporting factors.\nAuto sales remained essentially flat compared with high 2017 levels--which continued to surprise dealers. While dealers provided early projections of slight year-over-year increases for December, in January, some dealers observed that year-end sales appeared to have slowed.\nTourism activity continued to grow slightly, according to contacts. A lack of snow hampered ski resort activity, but occupancies and spending at mountain resorts and restaurants remained solid. Growth of total Atlantic City casino revenue remained high in November, while traditional revenue from slots and table games fell again, exclusive of the two new casinos.\nNonfinancial Services\nService-sector firms reported a modest pace of growth--a notable slowdown from the prior Beige Book period. The percentage of firms reporting increased sales fell by over 20 percentage points to about 35 percent, and reports of new orders dropped 10 points to about 25 percent. Meanwhile, reports of declining sales and fewer new orders increased. Despite widespread reports of a slowdown, one large firm noted that its customers remain current on their bills. Expectations of future growth remained relatively strong but did fall to half of firms from two-thirds in the prior period.\nFinancial Services\nFinancial firms continued to report modest growth on a year-over-year basis in credit card lending and in overall loan volumes (excluding credit cards).\nDuring the current period (reported without seasonal adjustments), volumes grew moderately in mortgages and in commercial and industrial lending; grew modestly in commercial real estate; and declined somewhat in home equity lines, auto loans, and other consumer loans (not elsewhere classified).\nBankers continued to note a strong underlying economy but reported that clients were \"jittery\" due to economic uncertainty. Contacts continued to cite strong competition for deposits and quality loans but noted little concern over credit quality deterioration.\nReal Estate and Construction\nAccording to homebuilders, activity appears to have fallen modestly--one large builder reported that the market had softened further in November. A smaller central Pennsylvania builder noted slow sales through year-end and the \"lowest traffic in eight to 10 years,\" while a South Jersey builder reported okay sales but that its backlog was down 14 percent compared with last year.\nExisting home sales continued to decline moderately across most local markets--hampered by extremely low inventories. However, recent sales and an inventory drawdown have strengthened the Poconos market, which has labored with an excess of foreclosed properties since the Great Recession.\nOn balance, commercial real estate construction continued to decline slightly off high levels. Contacts noted ongoing strength in industrial/warehouse properties, except in areas with an insufficient labor supply. While architects and engineers remain busy, the pipeline is thinning for new office, retail, and high-rise residential projects. Contractors are preparing for a slight decline in 2019 activity. Commercial leasing activity has held steady, but analysts note an abundance of caution among market participants.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"January 16, 2019\nSummary of Economic Activity\nExpansion in the Eleventh District economy slowed to a more modest pace over the reporting period. While the level of activity generally remained healthy, growth decelerated broadly across the manufacturing, services, retail, and energy sectors. Loan volumes declined slightly and new home sales fell modestly. Conversely, ample soil moisture has boosted crop conditions and improved prospects for the agricultural sector this year. Employment expanded, albeit at a slightly slower pace, despite continued widespread labor shortages. Wage growth remained elevated, while price growth abated to more normal levels. Outlooks were notably less optimistic than in the previous report due to declining oil prices, political and trade uncertainty, higher interest rates, and stock market volatility.\nEmployment and Wages\nEmployment growth continued but slowed slightly over the reporting period, and labor market tightness persisted. Contacts continued to note a lack of available workers, both high skilled and low skilled, with specific mentions of shortages in construction, energy, hospitality, health care, banking, and transportation (truck drivers specifically).\nWage growth had been on the rise for most of 2018 but eased toward yearend in several sectors, while still remaining elevated. Numerous contacts said workers were expecting higher pay, and many raised wages by 3-10 percent in response. One contact implemented a higher minimum wage to reduce employee turnover and attract higher-quality applicants. Firms responding to special questions on wages reported 4.5 percent annual wage growth in 2018, on average, with expectations of growth slowing to 4.0 percent in 2019.\nPrices\nInput price growth abated to more moderate levels across most industries in December. Oil producers reported relatively stable costs due to rising supplies of local sand and ongoing improvements in operational efficiency. Over the reporting period, selling price growth moderated: falling to a more moderate pace in goods-producing industries but remaining elevated in the service sector. Overall, most district firms were not able to raise selling prices fully in step with cost increases. Only about a quarter of the more than 300 Texas business executives surveyed said they were able to pass on to customers most or all of their cost increases. A durable goods manufacturer noted difficulty competing with foreign companies not facing the same raw materials tariffs. Margins at oilfield services firms continued to be under pressure from high costs and increasing competition.\nManufacturing\nOver the reporting period, output growth continued to abate slightly for both durables and nondurables manufacturing. The Texas manufacturing sector ended 2018 with modest growth, a downshift from the more robust expansion seen earlier in the year. Lower fuel prices boosted demand among petroleum refineries.\nOutlooks among manufacturers turned slightly negative in December. Contacts pointed to declining oil prices, labor constraints, political uncertainty, higher interest rates, and reduced activity in the housing and energy sectors as factors restraining growth or damping outlooks.\nRetail Sales\nRetail sales expanded at a slower pace compared with the previous reporting period. Online sales growth picked up, while some contacts reported weakness in in-store sales. Auto sales weakened slightly, with a couple of contacts citing the negative effects of increasing interest rates, and one noting increased competition and price shopping by customers. Retailers along the border noted increased competition in Mexico's retail market and thus fewer Mexican shoppers. Overall, outlooks in the retail sector were notably less optimistic at yearend 2018 than in the prior Beige Book.\nNonfinancial Services\nGrowth in the nonfinancial services sector slowed notably over the reporting period. The slowing was led by staffing services, where demand decelerated from very high levels and revenue declined for some firms. A few staffing contacts reported increased uncertainty and customers delaying hiring plans. Slight revenue reductions were also reported in the health care sector, with multiple contacts mentioning an erosion of pricing power. Reports from transportation services firms were mixed. Leisure and hospitality was a bright spot, with solid revenue growth through yearend, and growth among professional, scientific, and technical services firms remained fairly stable.\nFirms' outlooks deteriorated, with contacts citing softening oil prices, general market volatility, and political and trade uncertainty.\nConstruction and Real Estate\nNew home sales fell modestly since the last Beige Book, while reports on existing-home sales were mixed. Ongoing construction delays, in part due to fall rains, were noted in Houston, and one contact said that builders and developers were adjusting to the new flood plain regulations in the city. Outlooks were cautious, and builders were selective in signing new deals.\nApartment demand was seasonally slow over the reporting period. Rent growth strengthened in Austin, remained modest in Dallas and San Antonio, and slowed in Houston. Contacts continued to note some supply-driven softness in rent growth at the high-end. Industrial and retail activity generally remained healthy. Office demand was mixed, with leasing most active for new Class A office space.\nFinancial Services\nLoan volumes declined slightly over the reporting period, led by a reduction in residential real estate loan volumes. Loan pricing continued to increase but at a slightly faster pace. Deposit volumes rose notably. Outlooks were less optimistic than they were six weeks ago, as more than a third of contacts believe general business activity will be worse six months from now. Bankers cite oil prices, trade relations, increased interest rates, and uncertainties in U.S. and global markets among factors creating a more difficult lending environment.\nEnergy\nEnergy activity remained strong but growth slowed notably, and outlooks worsened. Drilling and completion activity were flat over the reporting period, while the inventory of uncompleted wells continued to grow due to lower oil prices and ongoing pipeline and transportation bottlenecks in the Permian Basin. Lower oil prices were a worry, and about half of energy firms lowered capital spending plans for 2019 in response, according to the Dallas Fed Energy Survey. However, most firms still believe their capital spending will be higher in 2019 compared with 2018. On average, survey respondents expect the WTI oil price to be around $60 per barrel at yearend 2019--above the reported average breakeven price to profitably drill new wells.\nAgriculture\nAmple soil moisture has boosted agricultural producers' outlook for 2019, although prices for several crops remain low. The new farm bill offers farmers greater flexibility in choosing coverage options and reintroduced cotton as a covered commodity after it was removed in the 2014 farm bill. This cotton safety net is meaningful for many cotton growers as they secure financing for the upcoming crop season. Conditions in the livestock sector generally remained favorable, but milk prices have fallen over the reporting period and may cause strain on dairies.\nFor more information about District economic conditions visit: 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"

New York

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"Beige Book Report: New York\nJanuary 16, 2019\nSummary of Economic Activity\nEconomic activity in the Second District has leveled off in the latest reporting period. Still, the labor market has remained tight, and wage growth has picked up slightly. Businesses noted that both input costs and selling prices continued to rise at a steady pace. Manufacturing activity leveled off, while business was down slightly in a number of service industries. On the other hand, tourism has remained fairly robust. Holiday season sales were a bit on the sluggish side but still up from a year ago. Housing markets have shown some further signs of softening, while commercial real estate markets have been steady overall. Finally, banks reported some weakening in loan demand and little change in delinquency rates.\nEmployment and Wages\nThe labor market has remained tight across the District, with employers continuing to report difficulties in filling a wide variety of open positions. Businesses reported that employment was little changed, on balance, since the last report. Firms in manufacturing, wholesale trade, finance, and leisure & hospitality reported modest net hiring, while contacts in the transportation, health & education, and professional & business services sectors indicated that employment was flat to down modestly. Retailers noted little change in holiday-season hiring, relative to the prior year, though more staff was reportedly assigned to handling on-line orders.\nWages have picked up somewhat, particularly in retail and leisure & hospitality. Employers indicated that they are budgeting for moderately larger wage increases in 2019 than they did for 2018. A number of business contacts in New York State, including a few manufacturers, expressed concern about the recent hike in New York's minimum wage.\nPrices\nBusinesses reported little change in the pace of both input price increases and selling price increases in the latest reporting period. Input price pressures tended to be most widespread in manufacturing, finance, and education & health. Contacts across most industry sectors reported steady to moderately rising selling prices. Two exceptions were real estate and transportation, where more contacts said they planned to reduce than raise their prices. A sizable proportion of businesses in transportation and wholesale trade indicated plans to hike prices in the months ahead.\nRetailers generally indicated that selling prices remained stable, though some noted more widespread discounting than in recent years. Average ticket prices for Broadway shows rose less than usual this past December and were down more than 5 percent from a year earlier.\nConsumer Spending\nRetail sales were mixed but, on balance, up modestly. A major retail chain noted that holiday season sales were up modestly from the prior year but slightly below plan. Retailers in upstate New York were somewhat more upbeat, characterizing sales as fairly strong. A growing share of sales have been on-line, including merchandise ordered in advance and picked up at stores. Inventories were a bit leaner than usual going into the holiday season, but they were mostly at or slightly above desired levels at the start of the new year.\nNew vehicle sales were mostly flat in recent weeks, according to dealers in upstate New York, but down from a year earlier. New vehicle inventories remained a bit on the high side. Sales of used vehicles were mixed but, on balance, steady. Dealers indicated that credit conditions remained in good shape.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA), which had climbed to a cyclical high in November, retreated in December but remained quite elevated, based on the Conference Board's monthly survey.\nManufacturing and Distribution\nThe manufacturing and distribution sectors weakened noticeably in the latest reporting period. Manufacturers noted a sharp deceleration in business activity, while wholesale distributors and transportation firms reported outright declines.\nLooking to the months ahead, contacts in these sectors remained somewhat optimistic, on balance, though less so than in recent months. As in recent reports, a handful of contacts continued to express concern about tariffs and trade restrictions.\nServices\nOverall, business has been mixed but, on balance, softer in the latest reporting period. Contacts in the professional & business services, education & health, and information industries reported flat to declining activity at year end, though they remain cautiously optimistic about the near-term outlook.\nLeisure & hospitality businesses reported steady, moderate growth. In particular, New York City saw fairly strong tourism over the holiday season. A local tourism-sector expert indicated that the number of visitors has climbed and hotel occupancy rates remained high, though visitors have been spending less, on average, than in the past. Broadway theaters reported strong gains in revenues and especially attendance, which was up more than 20 percent from a year earlier in December.\nReal Estate and Construction\nHousing markets across the District have softened since the last report. Homes sales in upstate New York have slowed somewhat, and the prevalence of bidding wars has receded; still, the inventory of homes on the market remains exceptionally low, and prices have continued to rise, reflecting solid demand and low supply.\nIn New York City, sales of existing co-ops and condos continued to slow, especially on new developments. Selling prices for newly-built condos have fallen sharply, while resale prices on existing apartments edged down last quarter but remained slightly ahead of a year earlier. The inventory of unsold homes has risen noticeably but is still fairly low by historical standards. Housing markets in the rest of the metro area have seen similar trends: weakening sales, steady prices, and rising (but still low) inventories. A local housing-industry expert noted that the curtailed federal tax deductibility of homeowner expenses has caused trepidation among both current and prospective homeowners.\nResidential rents across the District have been mostly flat and little changed from a year earlier. In New York City, landlord concessions have remained ubiquitous, and this has helped to keep rental vacancy rates low.\nCommercial real estate markets have been mixed but little changed overall. Office availability rates have been steady, while asking rents have been steady to up moderately. Retail markets have continued to soften, and there has been concern that retail vacancies will rise more sharply after the holiday season. Industrial markets, on the other hand, have remained robust: rents have continued to climb briskly and availability rates have been steady at or near multi-year lows.\nNew multi-family construction starts were sluggish, though a substantial volume of residential development remains under construction--particularly in New York City. New commercial construction starts have also been fairly subdued, aside from a sizable volume of new office development in Long Island.\nBanking and Finance\nSmall- to medium-sized banks in the District reported lower demand for consumer loans, residential mortgages, and C&I loans, but steady demand for commercial mortgages. A decrease was also reported in refinancing activity. Bankers noted unchanged credit standards for residential mortgages but tightening standards for other types of loans. There was some further narrowing in loan spreads for consumer loans and residential mortgages. Finally, banks reported that delinquency rates held steady across all categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJanuary 16, 2019\nSummary of Economic Activity\nTenth District economic activity was roughly flat in December and early January, as growth in several sectors was offset by a slowdown in others. Moving forward, expectations were mostly positive for growth in the months ahead. Retail sales were strongly above year-ago levels, but growth in overall consumer spending was tempered by lower auto, restaurant, and tourism sales. Manufacturing activity edged up since the last survey period, and contacts expected modest increases in capital spending in the coming months. Sales rose at a modest pace in the professional and high-tech and wholesale trade sectors but fell modestly in the transportation sector. Residential real estate activity declined modestly, while overall activity in the commercial real estate sector rose slightly. Energy activity eased slightly since the previous survey period, and price expectations for crude oil declined further due to an increase in supply and rising global tensions. The District agricultural outlook remained weak despite slight gains in some commodity prices. Employment and employee hours rose across most industries in the District, and additional gains were anticipated in the months ahead. Wages expanded at a modest pace and were expected to grow at a similar pace moving forward. District prices rose further, and gains in input prices continued to slightly outpace those of selling prices.\nEmployment and Wages\nEmployment across the District rose modestly in December and early January, and employee hours edged up. Employment and employee hours were expected to pickup modestly in the months ahead. Respondents in the retail trade, wholesale trade, transportation, professional services, real estate, health services, restaurant, and manufacturing sectors noted rising employment and employee hours, while contacts in the auto sales and tourism sectors reported a decline. Contacts in the energy sector reported no change in employment levels, although slight gains were anticipated moving forward.\nA majority of respondents continued to report labor shortages for low- and medium-skill workers, including positions for retail sales, mechanics, technicians, truck drivers, restaurant staff, and specialized IT workers. Wages continued to expand at a modest pace since the previous survey period and were moderately above year-ago levels. Wages were expected to continue their current pace of growth in the months ahead.\nPrices\nDistrict input prices were modestly higher since the previous survey period, while selling prices rose slightly. The pace of input and selling price growth was anticipated to accelerate in the months ahead. Input prices in the retail and restaurant sectors rose moderately, while selling prices expanded at a modest pace. Respondents in the transportation sector reported flat input and selling prices since the previous survey period, although both were strongly above year-ago levels. Manufacturers noted modest growth in raw material prices, while finished product prices held steady. Prices for finished products and raw materials in the manufacturing sector were expected to rise moderately moving forward.\nConsumer Spending\nDespite modestly higher retail sales, a decline in auto, restaurant and tourism sales weighed on overall consumer spending compared to the previous survey period. However, contacts expected consumer spending to increase slightly in the coming months. Retail sales rose modestly compared to the previous survey period and were strongly above year-ago levels. Respondents noted seasonal items and lower-priced goods sold well, whereas higher-priced items sold poorly. Auto sales fell modestly since the previous survey period, although contacts expected sales to expand at a modest pace in the coming months. In response to a question about projected capital spending, several auto contacts noted recent downward revisions to capital spending plans for 2019. Restaurant sales dropped moderately since the previous survey period, and contacts anticipated sales to decline modestly in the coming months. Tourism sales sank moderately compared to the previous survey period, but were modestly above year-ago levels. One tourism respondent attributed some of the tumbling sales over the past six months to environmental factors, such as fires and drought seen throughout the summer in parts of the District.\nManufacturing and Other Business Activity\nManufacturing activity edged up compared to the previous survey period, and other business contacts noted mixed sales growth. Although factory activity continued to expand, the pace of growth slowed at both durable and nondurable goods plants due primarily to decreases in metals, electronics, and petroleum/coal products. The level of production and shipments fell slightly whereas new orders and inventories expanded slightly since the previous survey period. Production, shipments, inventories and new orders each remained above year-ago levels, and manufacturers expected modest increases in capital spending in the coming months.\nOutside of manufacturing, firms in the wholesale trade and professional and high-tech sectors experienced modest increases in sales, while transportation firms reported a modest decline. In the coming months, transportation firms anticipated moderate sales growth, and wholesale trade and professional and high-tech contacts expected strong sales growth.\nReal Estate and Construction\nReal estate activity in the District remained mixed as residential real estate activity declined modestly while commercial real estate activity rose slightly. Residential home sales fell at a moderate pace since the previous survey period, and home prices and inventories continued to rise. Residential sales were expected to be flat in the months ahead, while home prices and inventories were projected to rise further. Sales of low- and medium-prices homes continued to outpace sales of higher-priced homes. Residential construction activity declined slightly since the previous survey period but was anticipated to rise slightly moving forward. Activity in the commercial real estate sector continued to expand at a slight pace as sales, prices, construction underway, and absorption rose, while vacancy rates and completions were flat. Contacts in commercial real estate expected additional slight gains in overall activity in the months ahead.\nBanking\nBankers reported a slight increase in overall loan demand compared to the previous survey period. Specifically, respondents reported a slight increase in the demand for commercial and industrial loans. Demand for commercial real estate loans held steady, while demand for residential real estate loans, consumer installment, and agricultural loans fell. Bankers indicated no change in loan quality compared to a year ago and expected a slight decline in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories, and bankers reported a modest increase in deposit levels.\nEnergy\nEnergy activity eased slightly since the last survey period, but production of oil and natural gas remained at high levels. The overall number of active oil rigs across the District was steady, as the number of rigs increased in Kansas and Wyoming and moderated slightly in Oklahoma. The natural gas rig count was relatively flat since the previous survey period. Crude oil inventories remained well above their five-year average, while natural gas stocks dipped lower. In December, crude oil prices continued to fall, though more slowly than in November. Price expectations for crude oil were down due to an increase in supply and rising global tensions. In addition, District energy contacts reported lower capital spending expectations for 2019 as a result of the recent decline in oil prices.\nAgriculture\nThe Tenth District farm economy remained weak despite a slight improvement in prices of some agricultural commodities. In the crop sector, prices increased slightly from the prior period. Corn and wheat prices were slightly higher than year-ago levels, but soybean prices remained lower as uncertainty surrounding trade persisted. Although good yields contributed to higher 2018 corn and soybean production in Nebraska, below average yields in Missouri could put downward pressure on farm income. Cotton prices fell sharply since the prior period on expectations of lower ginning activity which, combined with lower 2018 production in Oklahoma due to poor yields, could also reduce revenues. In the livestock sector, cattle prices increased slightly compared to the previous survey period while hog prices were slightly lower.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"January 16, 2019\nSummary of Economic Activity\nSince our previous Beige Book report, the Fifth District economy expanded at a modest rate. One exception was the manufacturing sector where many firms reported a decline in shipments and new orders and continued to report high input costs due to tariffs. Meanwhile, District ports saw robust activity, mainly from imports as companies tried to get goods in the country ahead of anticipated tariff increases. Trucking remained strong but companies continued to report capacity constraints in both labor and trucks. Travel and tourism increased modestly, overall, while retail shopping was hampered by adverse weather. Residential real estate activity picked up modestly with an increase in home sales but a decline in buyer traffic. Meanwhile, demand for commercial real estate increased moderately, with notable strength in industrial leasing. Lenders saw a modest increase in demand, particularly for commercial lending. On balance, nonfinancial services firms experienced modest growth. Energy sector firms reported moderate growth as coal production increased and pipeline construction continued. The demand for labor increased moderately while wage growth remained modest. Price growth remained moderate, overall, despite firms' reports of higher input costs.\nEmployment and Wages\nOn balance, the demand for labor increased modestly in recent weeks, but firms indicated that hiring remained constrained by the tight labor market. Some of the most hard-to-fill positions were electricians, hotel and restaurant workers, construction workers and managers, computer engineers, and cyber professionals. Meanwhile, a staffing agency reported a decrease in demand for temporary staffing services as more clients were hiring full-time workers instead. Wage growth remained modest, overall; however, a few contacts reported sharp increases in starting wages for particular positions.\nPrices\nSince our previous Beige Book report, price growth remained moderate, overall. According to our most recent surveys, manufacturing firms continued to report margin compression as input price growth outpaced selling price growth. Several manufacturers attributed the rise in input costs to tariffs. A food manufacturer added that the loss of domestic crops due to adverse weather forced them to turn to higher-priced imports, which were subject to tariffs. Likewise, service sector firms saw moderate price growth for selling prices that was outpaced by input price growth. Several services firms also attributed higher input costs to tariffs.\nManufacturing\nA large share of the Fifth District manufacturers surveyed reported a decline in shipments and new orders in recent weeks. Some firms attributed the decrease to slowing global demand, adverse weather conditions, and/or seasonal factors. Meanwhile, rising raw materials costs were widely reported with some price increases being attributed to tariffs. A Maryland can manufacturer looked for ways to increase automation to reduce the number of employees in order to help offset the rising cost of raw materials. A Virginia display case manufacturer had Chinese goods shipped through west coast ports in order to get goods to the country ahead of an anticipated tariff increase. Meanwhile, a West Virginia steel company increased capital expenditures as they experienced strong business.\nPorts and Transportation\nFifth District ports saw robust activity in recent weeks. Import volumes continued to exceed export volumes. Port executives noted a slight softening in auto exports but saw strong growth in imports, particularly from China. They attributed much of the strong import volumes to orders being made early to avoid possible tariff hikes, and they expected trade to soften in the next few months. One port had to store incoming cargo for retailers who did not have adequate storage space. A District airport reported strong demand despite some weather related cancellations.\nDemand for trucking remained strong in recent weeks despite a typical seasonal slowdown in shipping. Trucking firms continued to report capacity constraints. Some companies looked for more drivers to hire while others had enough drivers but not enough trucks. Trucking firms were generally optimistic about future growth and continued to make capital investments, but some contacts expressed concerns about tariffs and rising interest rates.\nRetail, Travel, and Tourism\nTravel and tourism grew modestly in the Fifth District in recent weeks. In Asheville, North Carolina, hotels were fully booked through the holidays, and tourism remained strong in Charleston, South Carolina, despite poor weather. However, hotels in Washington, D.C., saw lower occupancy and fewer meeting space reservations. New hotels and restaurants continued to open around the Fifth District, and some business owners expressed concerns about retaining their staff as competition increases. A Virginia resort executive noted that heavy reliance on J1 visa holders made them vulnerable to possible changes in immigration law.\nRetailers in the Fifth District reported mixed conditions since our last report. Many firms felt that inclement weather hurt their business. A North Carolina auto dealer reported good business, particularly for new cars that had strong manufacturer's incentives, but saw a slight softening in demand for used vehicles. A West Virginia store saw profit margins decline as they were unable to pass along higher transportation costs. Conversely, a Maryland retailer was able to raise prices to pass along higher costs that stemmed from steel tariffs.\nReal Estate and Construction\nResidential real estate firms indicated modest growth, overall. Home sales rose modestly in recent weeks and were reportedly up compared to last year. Sales prices increased modestly, overall. Meanwhile, home inventories remained at low levels, as homes in good condition continued to sell quickly. However, contacts reported a slight uptick in days on the market in the past few weeks because of reduced buyer traffic. In most markets, new residential construction continued at a modest pace with limited speculative construction.\nOn the whole, commercial real estate activity picked up moderately in recent weeks. District brokers continued to report strong industrial leasing activity, and in the office and retail sectors, only a few contacts reported the normal seasonal slowing. District brokers continued to report low vacancy rates and strong absorption rates. Rental rates generally increased across the industrial market while rate increases were reportedly stable to flat for retail and office space. Multifamily leasing remained strong, but reports on construction activity varied across the District.\nBanking and Finance\nLoan demand grew modestly in recent weeks as gains in commercial lending drove the overall increase. Residential mortgage lending was generally reported as flat to down slightly compared to about a month ago, but up from the same time last year. On the commercial side, real estate loan demand picked up moderately. Deposits rose moderately, on balance, in recent weeks. Business loan demand increased slightly while automotive lending was reportedly flat. Credit quality and credit standards remained strong throughout the District.\nNonfinancial Services\nSince our previous Beige Book, nonfinancial services demand increased modestly, overall. The most positive reports came from firms in the tech sector. A software development firm and an IT consulting business reported strong growth. Also, a Fifth District university reported an increase in interest in computer science and IT related majors. Meanwhile, an accounting firm experienced solid growth and expected continued growth in 2019.\nAgriculture and Natural Resources\nEnergy sector contacts reported moderate growth. Coal production increased in West Virginia as the demand for coal exports remained strong and prices were fairly stable. Pipeline construction continued but was running behind schedule due to adverse weather conditions. In addition, construction in some areas was halted over environmental issues.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJanuary 16, 2019\nThis report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before January 7, 2019. 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\nEconomic activity increased in most of the U.S., with eight of twelve Federal Reserve Districts reporting modest to moderate growth. Nonauto retail sales grew modestly, as several Districts reported more holiday traffic compared with last year. Auto sales were flat on balance. The majority of Districts indicated that manufacturing expanded, but that growth had slowed, particularly in the auto and energy sectors. New home construction and existing home sales were little changed, with several Districts reporting that sales were limited by rising prices and low inventory. Commercial real estate activity was also little changed on balance. Most Districts reported modest to moderate growth in activity in the nonfinancial services sector, though a few Districts noted that growth there had slowed. The energy sector expanded at a slower pace, and lower energy prices contributed to a pullback in the industry's capital spending expectations. The agriculture sector struggled as prices generally remained low despite recent increases. Overall, lending volumes grew modestly, though a few Districts noted that growth had slowed. Outlooks generally remained positive, but many Districts reported that contacts had become less optimistic in response to increased financial market volatility, rising short-term interest rates, falling energy prices, and elevated trade and political uncertainty.\nEmployment and Wages\nEmployment increased in most of the country, with a plurality of Districts reporting modest growth. All Districts noted that labor markets were tight and that firms were struggling to find workers at any skill level. Minneapolis indicated that construction firms had turned down business because they could not find workers, and Atlanta reported that a few contacts were either actively overstaffing or retaining employees through lulls in demand in anticipation of future growth. Wages grew throughout the country, with the majority of Districts reporting moderate gains. Wages increased across skill levels, and numerous Districts highlighted rising entry-level wages as firms sought to attract and retain workers and as new minimum wage laws came into effect.\nPrices\nThe majority of Districts reported modest to moderate increases in prices. Most Districts indicated that firms' input costs had risen, but reports were mixed on whether they could pass the higher costs on to customers. Reports often cited rising materials and freight prices as sources of cost increases, and a number of Districts said that higher tariffs were also a factor. While prices of most inputs were up, several Districts noted that fuel costs had gone down. A number of Districts reported rising home prices, while prices for commercial and industrial space either increased or were flat. Prices for agricultural commodities were generally somewhat higher.\nHighlights by Federal Reserve District\nBoston\nBusiness contacts reported continued year-over-year growth in revenues even as they cited signs of a some-what slower pace. Selected labor markets (occupations, locations) remained tight and wage increases were moderate. Some retailers and manufacturers raised selling prices. Most respondents said their outlook was positive, although somewhat less certain than earlier.\nNew York\nRegional economic activity leveled off in the latest reporting period, while labor markets remained tight and wage growth picked up somewhat. Input costs and selling prices rose at a steady pace. Holiday season sales were a bit on the sluggish side but still up from a year ago. Tourism remained brisk, but most other sectors saw activity flatten out or decline slightly. Banks reported a dip in loan demand.\nPhiladelphia\nEconomic activity maintained a modest pace of growth, although further slowing occurred among service sectors and some real estate activity declined. Lack of qualified labor continued to constrain hiring and raise wage pressures. Price increases remained modest. Nevertheless, firms remained generally positive about the six-month outlook.\nCleveland\nEconomic activity in the Fourth District increased slightly. Hiring increased at a moderate pace. Upward pressure on costs and selling prices continued. Retailers reported slightly increased demand. Manufacturing and banking contacts noted a seasonal slowdown. Nonresidential construction continued to be strong and housing demand stabilized. Professional services firms reported increased activity driven by demand for information technologies.\nRichmond\nThe regional economy expanded at a modest rate, on balance, in recent weeks. While many service sector industries saw positive growth, manufacturers reported a decline in shipments and orders and faced higher input costs due to tariffs. Loan demand increased and Fifth District ports experienced robust growth. Overall, labor demand and wages increased modestly while price growth remained moderate.\nAtlanta\nEconomic activity improved at a moderate pace. The District's labor market remained tight and wages in-creased, on average. Nonlabor input costs picked up; however, reports of firms' ability to pass along increases were mixed. Holiday sales were solid. Home sales were subdued. Manufacturers noted a decrease in new orders and production. Bankers noted steady activity.\nChicago\nEconomic activity grew at a modest pace. Employment, consumer spending, and business spending increased modestly; manufacturing increased slightly; and construction and real estate activity was little changed. Wages and prices rose modestly and financial conditions deteriorated slightly. Prospects for farm income improved as corn, soybean, and wheat prices moved higher.\nSt. Louis\nReports from contacts indicate that economic conditions have continued to improve, although the pace of growth has slowed since our previous report. District banking contacts reported positive but slower growth in loan volumes during the fourth quarter.\nMinneapolis\nNinth District economic activity grew moderately. Labor demand has ebbed slightly but remained healthy overall, while labor markets remained very tight. Price pressures were modest. District manufacturers indicated that business conditions were strong and generally expected to continue, with upbeat outlooks for the year to come. Holiday retail spending was strong.\nKansas City\nEconomic activity was flat since the previous survey, but expectations were generally positive. District agricultural conditions remained weak, and activity in the energy sector eased slightly as the outlook for oil prices declined. However, retail sales were strongly above year-ago levels, and manufacturing, wholesale trade, and professional and high-tech sectors continued to expand.\nDallas\nWhile economic activity remained healthy, growth abated to a more modest pace. A broad-based deceleration was seen across manufacturing, services, retail, and energy. Hiring continued, and widespread labor shortages further elevated wages. Price pressures eased slightly. Outlooks were markedly less optimistic than the previous report.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was flat. Sales of retail goods expanded moderately, and activity in the consumer and business services sectors was solid. Conditions in the manufacturing sector strengthened modestly. Activity in real estate markets was solid on balance. Lending activity ticked down.\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\nDecember 5, 2018\nSummary of Economic Activity\nEconomic activity in the Second District has grown modestly in the latest reporting period. The labor market has remained exceptionally tight, and wage growth has remained moderate. Businesses noted continued widespread escalation in input costs but moderate increases in their own selling prices. Prices of final goods and services have generally held steady. Manufacturing and distribution activity continued to grow briskly, while growth in most service industries has been more subdued, though there has been a pickup in the leisure & hospitality industry--particularly tourism. Consumer spending has remained mostly steady in recent weeks. Housing markets have softened further, while commercial real estate markets have been mixed. Finally, banks reported a pickup in loan demand from the business sector and a decline in delinquency rates across the board.\nEmployment and Wages\nThe labor market has remained exceptionally tight across the District. A broad swath of businesses continued to note problems finding qualified workers. Turnover has reportedly increased, and a few contacts cited instances where new hires left for another job soon after or even before their start date. A couple contacts lost existing and prospective skilled workers due to immigration restrictions, including H-1B visas not being renewed.\nBusinesses reported steady to modestly rising employment, on balance. Firms in manufacturing, transportation, and information reported a modest pickup in hiring activity, and most retailers noted a typical seasonal pickup. Contacts in education & health, leisure & hospitality, finance, and wholesale again reported moderate net hiring. A large retail chain hired about the same number of holiday-season workers as in 2017, but the mix shifted a bit from in-store to supporting on-line sales. An upstate New York employment agency noted that clients are increasingly interested in direct hires versus contract workers.\nWage pressures remained widespread, though contacts in most industries noted that overall wage growth has been moderate. One contact did note a spike in salaries of college grads in tech fields. A few contacts noted increased use of non-wage benefits to attract and retain staff, such as increased health benefits and profit-sharing. A number of business contacts in New York State, mostly manufacturers, expressed concern about the upcoming minimum wage hike. One contact expressed concern about an upcoming jump in New York's threshold for counting workers as exempt from overtime.\nPrices\nBusinesses reported continued widespread escalation in input prices but moderate hikes in selling prices. Input price pressures were particularly widespread in manufacturing, leisure & hospitality, and finance. Contacts across all industry sectors reported steady to moderately rising selling prices. A sizable proportion of businesses in leisure & hospitality, wholesale trade, and finance said they plan to hike prices in the months ahead.\nRetailers generally indicated that selling prices, as well as the degree of discounting, have remained stable. Similarly, prices for New York City hotel rooms and Broadway theater tickets have been fairly stable in recent months.\nConsumer Spending\nRetail sales were generally reported to be mixed but, on balance, steady in recent weeks. A major retail chain noted that November sales were on plan and up modestly from last year, helped by a strong Thanksgiving weekend. Retailers in upstate New York reported that sales have been lackluster in November, with discounters out-performing other stores. One contact attributed sluggish store sales to the ongoing shift to on-line shopping. Inventories were generally said to be in good shape.\nNew vehicle sales were mostly flat in October and early November, according to dealers across upstate New York, but down from a year earlier--partly reflecting further reductions in incentives. New vehicle inventories were a bit on the high side. Sales of used vehicles, on the other hand, have been robust, with selling prices a bit higher than anticipated. Dealers indicated that credit conditions remained in good shape, though floor-plan credit has become a bit more expensive.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) retreated in October but remained near a cyclical high, based on the Conference Board's monthly survey.\nManufacturing and Distribution\nManufacturers and wholesale distributors noted ongoing brisk growth in activity in the latest reporting period, while transportation firms indicated steady activity. Looking to the months ahead, manufacturers continued to express fairly widespread optimism, while contacts in the wholesale trade and transportation industries were more guarded in their optimism. A few contacts continued to express concern about tariffs and recent and potential changes in trade policy.\nServices\nGrowth has remained subdued in the latest reporting period. Contacts in professional & business services noted a pause in growth, while businesses engaged in the education & health, leisure & hospitality, and information industries noted a pickup in growth. In one sign of a pickup in tourism, Broadway theaters reported strong gains in both attendance and revenues, both of which have been running 15-20 percent ahead of this time last year. Looking ahead, contacts in education & health and professional & business services were fairly optimistic about the near-term outlook, while leisure & hospitality firms expect business to be flat.\nReal Estate and Construction\nHousing markets across the District have softened further, on balance, since the last report. In upstate New York, sales have slowed, and there have been fewer bidding wars, though the dearth of inventory has continued to boost selling prices. In New York City, sales of both existing co-ops and condos continued to weaken, while selling prices were flat to up slightly. The new development market has been very slack with sales and prices down noticeably. In Long Island, both home sales and prices have continued to rise but the pace has slowed. The inventory of unsold homes continued to rise in both New York City and Long Island, but it is still at a very low level. Much of the softening in and around New York City is attributed to a combination of increased financing costs, volatility in the financial markets, a drop in foreign purchasers, and changes in federal tax law that limit deductibility of homeowner costs. New York City's apartment rental market has been mixed: vacancy rates edged down in response to increased landlord concessions--particularly in new developments--while effective rents have been flat to down slightly.\nCommercial real estate markets have been mixed but mostly steady. Office availability rates were steady to up slightly, while asking rents were up modestly, on average. Retail markets were increasingly slack across most of the District, and there is concern that this trend will accelerate after the holiday season. In contrast, industrial markets have remained solid, with availability rates steady at or near multi-year lows and rents rising briskly across the New York City metropolitan region.\nNew multi-family construction has been mixed but generally sluggish, though a substantial volume of residential development is currently under construction. New commercial construction starts--office, industrial, hospitality, and especially retail--have been very subdued, though there remains a good deal of office and industrial space under construction in and around New York City.\nBanking and Finance\nSmall to medium-sized banks in the District reported lower demand for consumer loans but stronger loan demand from the business sector. Bankers also reported a decrease in refinancing activity. Credit standards were unchanged across all categories. Bankers reported lower loan spreads for residential mortgages, commercial mortgages, and C&I loans, and unchanged loan spreads for consumer loans. Contacts also reported an increase in the average deposit rate. Finally, bankers indicated that delinquency rates declined across all loan categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"December 5, 2018\nSummary of Economic Activity\nExpansion in the Eleventh District economy slowed to a moderate pace during the reporting period. A broad-based deceleration was seen across the manufacturing and retail sectors and in loan volume growth. Home sales were soft partly due to tight inventories and rising mortgage rates. Conversely, drilling activity increased and ample rainfall boosted crop conditions. Employment expanded, despite widespread labor shortages. Wage pressures were strong, and tariffs drove up input costs. Outlooks were less optimistic than the previous report due to increased uncertainty arising from trade disputes, rising interest rates, labor market constraints, and postelection politics.\nEmployment and Wages\nWidespread job growth continued, despite tight labor markets. Labor shortages remained pervasive across industries and skill sets but were the most severe for mid-skilled positions such as truck drivers and blue-collar workers in manufacturing, construction, and energy. Most companies said they were struggling to find qualified workers, and many noted settling for less-qualified candidates to fill vacancies.\nUpward wage pressures remained strong and prevalent, although they did ease somewhat in manufacturing. Many firms noted raising wages to recruit and retain workers, and also using non-wage-based incentives such as better benefits, improved working conditions, and bonuses. A staffing firm said it had become difficult to hire for positions paying less than $15 an hour in Dallas\u2013Fort Worth following Amazon's announcement to raise its minimum wage. A manufacturing equipment supplier reported frequently raising wages to prevent its employees from being poached by other firms, and one contact noted high employee turnover despite paying their groundskeepers $20 an hour.\nPrices\nInput price pressures remained elevated in part due to tariffs, particularly in manufacturing and construction, and firms were struggling to pass these higher costs onto customers. Input and selling price pressures eased in retail, while pricing pressures in other service sectors were largely unchanged. Natural gas prices rose since the last report, while West Texas Intermediate crude oil prices fell from their recent highs. Fuel prices dropped even further, hurting refiners' margins.\nManufacturing\nExpansion in the manufacturing sector slowed during the reporting period, and outlooks were less optimistic than they have been all year. Output growth softened notably in November, with the tariffs, labor constraints, and trade policy uncertainty cited as damping factors. The slowing was broad based but most pronounced in fabricated metals, construction related products, computer and electronics, and food manufacturing. The Gulf Coast refinery utilization rate remained high, while chemical production flattened during the reporting period. Outlooks among downstream energy firms stayed optimistic, although petrochemical companies were experiencing margin compression from higher costs.\nRetail Sales\nRetail sales expanded at a slower pace compared with the previous reporting period. Online sales grew modestly as did motor vehicle sales, but some auto dealers said rising interest rates were shrinking margins. Sales at stores located along the Texas/Mexico border worsened partly due to weakness in the peso/dollar exchange rate, and building material and garden equipment suppliers noted flat activity. Retailers' outlooks were less positive than the last report as tariffs and rising interest rates negatively impacted expectations.\nNonfinancial Services\nThe nonfinancial services sector expanded broadly, with revenue growth firming up among healthcare, information services, and accommodation and food services firms. Demand for staffing services generally remained brisk and broad based, with particular strength noted in orders for healthcare staff, oilfield services labor, and blue-collar workers such as electricians, welders, and plumbers. Activity in the transportation services sector was solid. Courier and air cargo volumes expanded. Rail traffic stayed strong across most business lines, outside of a decline in building products shipments that was driven partly by a slowing housing market. Airlines said passenger demand remained stable and continued strength was expected in domestic air travel. Revenue growth was lackluster among professional, scientific, and technical services firms. Contacts were less optimistic in part due to uncertainty stemming from trade issues and politics.\nConstruction and Real Estate\nActivity in the housing market was soft over the reporting period as the recent rains and rising interest rates affected traffic and sales activity. Still, sales of moderately priced homes mostly remained solid. The wet weather also delayed lot development and homebuilding activity. Home prices were flat to up, and contacts noted usual year-end discounting. Outlooks remained positive, although there is increased trepidation about the impact of rising mortgage rates and/or high construction costs on future sales.\nConditions were little changed in the apartment market, and contacts noted some supply-driven softness at the high-end (prime Class A properties). Investor interest in multifamily properties was high, particularly in Austin and Houston. Industrial and retail markets generally remained healthy.\nFinancial Services\nGrowth in loan volumes moderated over the reporting period. The deceleration was broad based across categories, including commercial and industrial, commercial real estate, and residential real estate. Consumer loan volume growth held steady. The cost of funds and loan pricing rose further, and many contacts noted that loan pricing remained very competitive. Deposit volumes expanded, albeit at a slower rate. Despite the slowing in loan growth, outlooks remained optimistic.\nEnergy\nDrilling activity in the Eleventh District increased, but the number of new wells brought into production in the Permian Basin continued to lag due to ongoing pipeline and transportation capacity constraints. The completion of a new pipeline project ahead of schedule has narrowed the spread between in-basin and West Texas Intermediate crude oil prices. Margins of oilfield services firms continued to be pressured by high costs and increased competition. Conversely, growing supplies of local sand and improvements in operational efficiency supported producers' margins. Overall, outlooks remained positive.\nAgriculture\nAgricultural conditions improved further, with less than one percent of the state in drought as of mid-November. Ample rainfall has built up ground moisture reserves, boosting crop prospects for 2019. However, excessive precipitation in some areas has delayed planting of the winter wheat crop and caused some quality issues for cotton. Overall, agricultural producers were quite optimistic, although some continued to experience financial difficulty from drought conditions earlier in the year.\nFor more information about District economic conditions visit: 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

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"December 5, 2018\nSummary of Economic Activity\nNinth District economic activity increased moderately since the previous report. Employment grew moderately, with hiring demand remaining robust, but a tight labor supply was restraining employment growth. Wage pressures were moderate overall, while price growth remained modest. The District economy showed growth in consumer spending, construction, residential real estate, manufacturing, and energy. Commercial real estate activity was mixed, while agricultural conditions remained weak.\nEmployment and Wages\nEmployment grew moderately since the last report. Hiring demand remained robust, but a tight labor supply was restraining employment growth. Job postings tracked by district states were higher overall in October compared with the same period a year earlier. Minnesota and North Dakota saw particularly strong growth in job postings, while South Dakota and the Upper Peninsula of Michigan had small declines. Ad hoc surveys of businesses in Minnesota, Montana, and South Dakota, conducted in late October and November by the Minneapolis Fed, found that a significant majority of respondents' firms were hiring; many were hiring to both increase total headcount and replace turnover. Numerous construction contacts in Minneapolis-St. Paul said they were hiring, and most were looking to increase total headcount. However, tight labor availability was making it difficult for firms to find necessary workers. Surveys by the Minneapolis Fed found that labor availability was widely seen as the biggest obstacle to short-term growth. Unemployment insurance claims have also continued to drop; over the most recent six-week period (through early November), both initial and continuing claims saw a cumulative decline of 12 percent across District states compared with the same period a year earlier. A Montana contact noted that seasonal layoffs for male-dominated industries like construction have been pushed back this year. \"This hasn't happened before in the years that we've been watching.\"\nWage pressures were moderate overall, with some evidence of stronger pressures for certain industries and worker skills. Several ad hoc surveys by the Minneapolis Fed showed wage increases coalescing around 3 percent over the past 12 months. A small majority of Minnesota and South Dakota firms reported wage increases below 3 percent; however, a small majority of Montana firms reported increases above 3 percent, as did about 70 percent of Minneapolis-St. Paul construction firms. A Minnesota services company announced it was raising its base wage from $12 to $14 per hour in hopes of hiring 300 people by year's end. A tight labor market for high-tech skills in Minneapolis-St. Paul has led to double-digit wage increases for some information technology and other STEM positions over the past 12 months. There were also reports that more companies, especially those in construction trades, were picking up a greater share of workers' health insurance premium costs to attract and retain employees.\nPrices\nPrice growth remained generally modest since the previous report, though input prices saw more pressure. In a recent survey of large firms, about 30 percent saw input prices rise by 3 percent or more over the past 12 months, but 41 percent believe they will rise by 3 percent or more over the coming 12 months. Several contacts reported notable increases in freight and transportation logistics prices. Retail fuel prices in District states as of late November were substantially lower than a month earlier. However, home heating costs were expected to increase faster in District states than nationally this winter, largely due to rises in the prices of heating oil and natural gas, as the average temperature forecast is roughly flat from last year. Prices received by farmers for corn, wheat, hay, and cattle increased in September compared with a year earlier; prices for soybeans, hogs, milk, chickens, eggs, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending grew moderately since the last report. Taxable sales have seen strong growth in South Dakota this fall compared with a year earlier; Wisconsin also saw sales growth year over year, but at slower rates than those seen over summer months. In Minnesota, hotel demand rose, with higher occupancy and revenue per available room in October compared with a year earlier. Tourism activity was solid in Montana, with October visits to Glacier National Park seeing a 9 percent increase. Total enplanements at Montana's two largest airports were also up 9 percent over a year earlier. Attendance at national parks elsewhere in the District were mixed. Total visits in October were down at Mount Rushmore, as well as at Pictured Rocks in Michigan's Upper Peninsula, and vehicle crossings at the U.P.'s Mackinac Bridge have been lower this fall compared with a year earlier.\nConstruction and Real Estate\nCommercial construction activity grew moderately since the last report. Industry data showed that total construction spending in October was higher across much of the District compared with a year earlier. Industry data showed that both new commercial projects and total active construction projects in the District as of early November were slightly higher than a year ago. However, there was also some evidence that the number of active projects may be elevated to some degree by the inability of construction firms to find available labor. Overall, commercial permitting in October was strong in Minneapolis-St. Paul, but otherwise mixed among the District's other metro markets. Several industry contacts in Minneapolis-St. Paul said project pipelines were full heading into the end of the year and early part of 2019, and industrial and medical construction sectors were said to be strong. Another construction contact also noted significant activity in the energy segment in Minnesota. Residential construction activity saw moderate growth. October single-family permitting was higher in a notable majority of District metros compared with a year earlier, while multifamily permitting was mixed.\nCommercial real estate activity was mixed since the last report. In Minneapolis-St. Paul, industrial and multifamily sectors both continued to show healthy leasing demand, with low vacancy rates despite significant new construction. However, both retail and office vacancy rates have been increasing. Several national retailers announced closures in Minnesota, and one specialty retailer announced the closure of eight stores in the state. Consumer shifts to online retailers have contributed to rising vacancy rates in retail space, but have also contributed to lower industrial vacancies due to increased leasing of industrial warehouse space in Minneapolis-St. Paul. Residential real estate activity rose moderately. Closed sales in October were mostly higher compared with a year earlier across most of the District. October home sales were particularly strong in western and northern counties of Wisconsin. Sales in Montana's larger markets were mixed, but softer overall.\nManufacturing\nDistrict manufacturing activity increased modestly since the previous report. An index of manufacturing conditions indicated increased activity in October compared with a month earlier in Minnesota and the Dakotas. An industrial equipment producer announced a large expansion that would nearly double capacity at a plant in Minnesota. However, multiple contacts have reported putting capital spending plans on hold due to uncertainty in their outlooks.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak. According to results from the Minneapolis Fed's third-quarter survey of agricultural credit conditions, roughly three in five lenders surveyed reported that farm incomes decreased in the third quarter relative to a year earlier, while a similar proportion reported decreased capital spending. While early indications were for very strong production in much of the District, in some areas heavy rains and unseasonably cold weather were complicating harvests. District oil and gas exploration activity as of late November increased moderately relative to the last report. North Dakota oil production increased to a new record in September. A major natural gas processing plant began operations in North Dakota.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nDecember 5, 2018\nThis report was prepared at the Federal Reserve Bank of Philadelphia based on information collected on or before November 26, 2018. 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\nMost of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November, though both Dallas and Philadelphia noted slower growth compared with the prior Beige Book period. St. Louis and Kansas City noted just slight growth. On balance, consumer spending held steady \u2013 District reports on growth of nonauto retail sales appeared somewhat weaker while auto sales tended to improve, particularly for used cars. Tourism reports varied but generally kept pace with the economy. Tariffs remained a concern for manufacturers, but a majority of Districts continued to report moderate growth in the sector. All Districts reported growth in nonfinancial services \u2013 ranging from slight to strong. New home construction and existing home sales tended to decline or hold steady, while construction and leasing of nonresidential structures tended to rise or remain flat. Overall, lending volumes grew modestly, although a few Districts noted some slowing. Agricultural conditions and farm incomes were mixed; some Districts noted impacts from excessive rainfall and from tariffs, which have constrained demand. Most energy sectors saw little change or modest growth. Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints.\nEmployment and Wages\nLabor markets tightened further across a broad range of occupations. Over half of the Districts cited firms for which employment, production, and sometimes capacity expansion had been constrained by an inability to attract and retain qualified workers. In fact, several Chicago firms reported that some employees have simply quit \u2013 with no notice nor means of contact. Partly as a consequence of labor shortages, most Districts reported that employment growth leaned to the slower side of a modest to moderate pace. Conversely, most Districts reported that wage growth tended to the higher side of a modest to moderate pace. In addition to raising wages, most Districts noted examples of firms enhancing nonwage benefits, including health benefits, profit-sharing, bonuses, and paid vacation days.\nPrices\nOn balance, prices rose at a modest pace in most Districts, although a few noted moderate increases. Nearly all reported that input costs rose faster than final goods prices. Reports of tariff-induced cost increases have spread more broadly from manufacturers and contractors to retailers and restaurants. Local growing conditions caused prices to vary across farm products and among Districts, but reported soybean prices were typically lower. Several Districts noted falling oil and fuel prices, as well as rising freight costs. House prices continued to rise in a majority of markets.\nHighlights by Federal Reserve District\nBoston\nActivity continued expanding at a moderate pace ac-cording to business contacts across most sectors. Staffing firms said labor markets were very tight across industries and occupations, while retailers and manufacturers cited shortages only for selected jobs. Increases in selling and input prices were reported to be modest.\nNew York\nThe regional economy expanded at a modest pace in the latest reporting period, while labor markets remained exceptionally tight. Widespread escalation in firms' input prices have continued, but wages and selling prices have increased more moderately. Tourism has picked up, while housing markets have softened somewhat. Banks noted widespread improvement in delinquencies.\nPhiladelphia\nEconomic activity continued to expand at a modest pace, although it appears to have eased a bit, with downshifts (or declines) in five distinct sectors. Lack of qualified labor has constrained hiring and raised wage pressure. Price increases remained modest. Nevertheless, firms remain generally positive about the six-month outlook.\nCleveland\nThe District economy grew modestly. Demand was strong in banking, manufacturing, and nonfinancial services. Consumer demand improved slightly, but housing demand softened. Staff levels rose moderately, and wage pressures were widespread. Input costs rose strongly in all industries. Contacts noted that tariffs were lifting prices further down the supply chain. Selling prices rose with less intensity than they did for input costs.\nRichmond\nThe regional economy continued to grow at a moderate rate since our previous report. Labor demand strengthened further while wage growth remained modest. Price growth increased slightly but remained moderate, over-all. Manufacturing and services firms saw a sharp in-crease in input prices, which were attributed to tariffs, shipping costs, and some higher business-to-business and recruitment costs.\nAtlanta\nEconomic conditions moderately improved. Tightness in the labor market persisted and more firms reported increasing wages. Nonlabor costs continued to rise. Retail sales increased across most of the District. Tourism activity was positive. Residential real estate market activity was restrained, and commercial real estate activity remained solid. Manufacturers indicated that activity increased. Credit conditions were stable.\nChicago\nGrowth in economic activity was modest. Manufacturing production grew moderately; employment, consumer spending, and business spending increased modestly; and construction and real estate activity decreased slightly. Wages and prices rose modestly and financial conditions were little changed. Large yields led agricultural conditions to improve some.\nSt. Louis\nEconomic conditions have slightly improved since our previous report. Labor market conditions remain tight, and many firms report raising wages and salaries to attract new workers. The outlook among firms surveyed in mid-November was slightly optimistic, although weaker than the outlook one year ago.\nMinneapolis\nThe Ninth District economy grew moderately. Hiring demand was robust, but a tight labor supply was restraining employment growth. Nevertheless, wage pressures were moderate overall, with exceptions. Some firms reported paying a greater share of workers' health insurance premium costs to attract and retain employees. Price growth was generally modest, though input prices saw more pressure.\nKansas City\nEconomic activity expanded slightly since the previous survey and remained modestly above year-ago levels. Employment and wages rose further, and about half of respondents expected to increase employment in the next twelve months. Manufacturing, wholesale trade, transportation, energy, and professional and high-tech sectors reported the strongest growth in the District, while the agriculture sector remained weak.\nDallas\nGrowth in economic activity slowed to a moderate pace. A broad-based softening was seen in manufacturing, retail, and housing. Drilling activity increased. Hiring continued, and widespread labor shortages pushed up wages. Price pressures eased but remained elevated in part due to the tariffs, and outlooks were less optimistic than the previous report.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions tightened further, and price inflation increased moderately. Sales of retail goods expanded somewhat, and activity in the consumer and business services sectors was solid. Conditions in the manufacturing sector strengthened. Activity in real estate markets was solid on balance. Lending activity ticked down modestly.\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\nDecember 5, 2018\nSummary of Economic Activity\nEconomic conditions have slightly improved since our previous report. Firms indicated modest growth in employment and wages. Wage increases were widespread and higher than previous years for the vast majority of firms. Similarly, price pressures have increased modestly since our previous report. Consumer spending activity improved slightly, although auto sales showed little to no growth. Reports from manufacturing firms were upbeat; many firms reported strong orders and a positive outlook. Conversely, reports from bankers and real estate contacts were generally pessimistic, with these contacts reporting slight declines in activity. Overall, the outlook among all contacts continued to weaken but remains slightly optimistic for the upcoming year. On net, a slightly greater share of contacts expect economic conditions in 2019 to be better or somewhat better than 2018.\nEmployment and Wages\nEmployment has grown modestly since the previous reporting period. On net, 22 percent of business contacts surveyed reported that employment was higher or slightly higher than a year ago. Approximately half of the contacts expected their firm to increase employment over the next year, and the remaining contacts expected employment to remain unchanged. Contacts ranked an inability to find candidates with the required skills as the single greatest factor restraining hiring. The labor market was especially tight in the manufacturing, construction, and transportation sectors. One contact reported that manufacturing firms were turning down new orders due to worker shortages. Firms, particularly small businesses, continue to use nonwage benefits to attract employees. Staffing contacts in St. Louis reported that employees seem to have more leverage than employers for the first time in several years.\nWages have moderately increased since the previous report. On net, 39 percent of survey respondents indicated that wages were higher or slightly higher than a year ago, and 30 percent reported increases in labor costs. Contacts reported that the tight labor market led to increased pay for both new hires and existing employees: 77 percent of firms reported raising wages and salaries by more than they did in the past few years. Additionally, raises for new hires at national retailers have pushed up starting wages. Small business wages increased modestly in the St. Louis area and moderately in Tennessee.\nPrices\nPrices have increased modestly since the previous report. On net, 27 percent of business contacts reported that prices charged to consumers increased relative to last year. Nonlabor costs for businesses also rose modestly. On net, 33 percent of survey respondents held that costs were higher than the same time last year, which is unchanged from our survey three months ago. Metal prices, while remaining high in year-over-year terms, showed little change since the previous report. Agricultural prices remain generally low, and decreased international demand has increased the cost of using grain storage facilities as farmers seek to store, rather than to sell, their crops.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate that consumer spending has slightly increased since our previous report. Real sales tax collections increased in Arkansas, Missouri, Tennessee, and Kentucky relative to a year ago. Reports from St. Louis auto dealers indicated that auto sales slightly increased, while Little Rock and Memphis auto dealers indicated that auto sales were flat relative to a year ago. Auto dealers reported increased demand for new vehicles, but they also expressed concern over higher interest rates on new vehicle loans. Hospitality contacts in Missouri reported that sales were flat year over year. Arkansas tourism sales tax revenue slightly increased year over year.\nManufacturing\nManufacturing activity has increased moderately since our previous report. A large majority of contacts reported that production, new orders, and capacity utilization increased. Several companies reported new capital expenditure and facility expansion plans, including firms that manufacture agricultural chemicals and window coverings.\nContacts are also optimistic about the next quarter, with net majorities expecting increases in production, new orders, and capacity utilization. However, one contact in the chemicals sector is reporting that layoffs will take place between this quarter and the first quarter of 2019, and a few manufacturing contacts expressed concern that labor market tightness is contributing to a shortage of qualified employees.\nNonfinancial Services\nActivity in the nonfinancial services sector has improved slightly since the previous report. Across the District, sales expectations were met. Compared with a year ago, 68 percent of survey respondents noted higher sales and 52 percent expect the next quarter also to be higher year over year. Local contacts note that barge activity has increased due to the large number of storage barges for soybeans affected by recent tariffs. National logistics firms continue to hire temporary workers due to higher seasonal demand.\nReal Estate and Construction\nResidential real estate activity increased slightly. Seasonally adjusted home sales for October increased slightly overall. Contacts continued to report inventory shortages; and, on net, about one-quarter of contacts reported that sales halfway through the fourth quarter have fallen short of expectations.\nResidential construction activity was mixed. October seasonally adjusted permit activity within District MSAs was modestly lower than one year ago. However, about 36 percent of survey respondents, on net, reported an increase in residential construction relative to the same time last year, and the same fraction of respondents reported that they expect this trend to continue into the first quarter of 2019.\nCommercial real estate activity has decreased modestly since the previous report. Contacts reported a decrease in demand for most property types, particularly office and retail, and about 40 percent of respondents, on net, reported a decrease in multifamily demand in the current quarter. About 10 percent of respondents, on net, expect a slowdown in activity to continue into the first quarter of 2019; however, respondents expect demand for retail space to pick up in the first quarter of 2019.\nCommercial construction activity has remained unchanged since our previous report. There was a slight decrease in multifamily permit activity in most of the District's major MSAs relative to the prior month, but local contacts in Little Rock reported that the market was strong and there was robust demand for construction. On net, one-third of contacts expressed an optimistic outlook going into the first quarter of 2019.\nBanking and Finance\nBanking conditions have weakened slightly since the previous report. Loan demand for commercial and industrial loans was unchanged relative to year-ago levels, while loan demand for mortgages slightly declined. Bankers expect stable demand growth overall into the first quarter of 2019. Credit standards overall tightened slightly relative to year-ago levels. Overall delinquencies remained relatively stable on a year-over-year basis, with only a slight increase for the final quarter of 2018. Commercial and industrial loan delinquencies are expected to remain unchanged in the first quarter of 2019.\nAgriculture and Natural Resources\nDistrict agriculture conditions declined modestly from the previous reporting period. Corn, cotton, and soybean yields are expected to be higher than 2017 levels, while rice yields are expected to be lower. Contacts noted that unusually wet weather has impacted crop quality negatively this fall, which contributed to a deterioration in crop prices. In addition, contacts expressed concern over the ongoing tariffs leveled at U.S. agricultural products. There are reports of storage shortages as soybeans that are normally exported to China are being stored in large quantities rather than exported.\nNatural resource extraction conditions declined slightly from September to October, with seasonally adjusted production declining a little over 3 percent. October production increased 3 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\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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"December 5, 2018\nSummary of Economic Activity\nOn balance, aggregate business activity in the Third District continued at a modest pace of growth during the current Beige Book period, although the pace appears to have eased somewhat. The labor market has tightened further, which continues to constrain hiring at a modest pace and to apply moderate upward wage pressures. Price pressures remained modest. Nonfinancial services maintained a moderate pace of growth, while manufacturing eased back to a modest pace. Nonauto retail sales continued at a modest pace, and auto sales remained flat; however, tourism activity appeared to slow to a slight pace of growth. Construction activity appeared to be flat for residential homes and slightly declining for commercial sectors, while modest declines in existing home sales deteriorated to a moderate drop. Commercial leasing maintained modest growth. The growth outlook over the next six months remained positive, with two-thirds of the nonmanufacturing firms and over 40 percent of the manufacturers anticipating increases in general activity.\nEmployment and Wages\nThe pace of employment growth appears to have slowed somewhat during the current Beige Book period but remained modest overall. The share of nonmanufacturing firms reporting an increase in full-time staff fell by half to less than one-fifth, while the share of manufacturing firms reporting an increase in net employment remained near one-fourth. However, average hours worked appeared to fall for more manufacturing firms, while remaining about the same for nonmanufacturers.\nNumerous contacts from many sectors noted that jobs were going unfilled for a lack of qualified labor and that employee retention was a growing problem. One staffing firm noted that its roster of qualified job candidates is essentially tapped out \u2013 it has become very difficult to find qualified applicants to replenish its candidate pool.\nOn balance, wage growth continued at a moderate pace. Various firm contacts speak of annual wage increases of around 3 percent. In fact, the percentage of the nonmanufacturing contacts who reported increases in wage and benefit costs fell to just over one-third from nearly half in the prior period. However, staffing firms in markets with lower unemployment rates report that their average wage is up as high as 6.5 percent over the prior year.\nPrices\nPrice increases remained modest for most firms, with little change from the prior period. On balance, about one-fourth of the nonmanufacturing firms continued to report increases for prices paid and for prices received, and one-fourth of the manufacturing firms also reported increases for prices received. The share of manufacturing firms reporting increases in prices paid remained just above 40 percent.\nOne firm reported that it has passed along its costs from 10 percent steel tariffs but that it expects customers to push back if the tariffs increase to 25 percent. Another firm had absorbed the 10 percent tariffs but is slowly raising prices now in anticipation of higher tariffs.\nLooking ahead six months, manufacturing firms continued to anticipate higher prices, with nearly 60 percent of the firms expecting increases in prices paid and in prices received for their own goods.\nManufacturing\nManufacturing activity eased back to a modest pace of growth \u2013 close to its nonrecession average. Likewise, the firms reported a decrease in new orders, while shipments increased relative to the prior period.\nThe makers of chemicals and of primary and fabricated metal products tended to note gains in new orders and shipments; the makers of paper products and of industrial and electronic equipment reported mixed results. Tariffs remained a major concern for many producers. Still, several firms reported that they were adding capacity, while others noted that operating capacity was constrained by shortages of qualified labor. However, a transportation analyst cautioned that new truck orders are at record levels and could be canceled if clear signs of a downturn emerge.\nOn balance, manufacturers continued to expect general activity to increase over the next six months; however, expectations eased a bit \u2013 slightly below the nonrecession average. Expectations of future increases in new orders, shipments, and employment remained nearly the same as the prior period and at high levels. Furthermore, expectations of future capital expenditures rose to nearly double the indicator's nonrecession average.\nConsumer Spending\nNonauto retailers continued to report modest growth. Mall sales remained relatively strong, and contacts noted successful, innovative replacements for anchor stores that were closed because of bankruptcies. Convenience store sales continued to incrementally improve.\nOn balance, auto sales remained flat compared with high 2017 levels. According to dealers, October year-over-year auto sales rose slightly \u2013 Pennsylvania dealers noted growth, while New Jersey sales were flat. However, early estimates of New Jersey's November sales suggest a decline, and dealers are now less optimistic for year-end sales.\nAccording to tourism contacts, activity appeared to grow at a slight pace overall \u2013 a bit slower than in the prior period. A Philadelphia analyst expects 2018 to be another record year yet noted a somewhat slower growth rate in October and expectations for a slower fourth quarter. In Atlantic City, sports betting and online gambling continued to boost the total casino take in September and October; however, the take for the traditional casino slots and table games fell to single-digit growth. Moreover, after excluding the two new casinos, the casinos' traditional take declined by more than 10 percent.\nNonfinancial Services\nOn balance, service-sector firms continued to report moderate growth in general activity. The percentage of firms reporting increased sales edged up to near 60 percent, and the percentage reporting increased new orders remained close to 33 percent. A media firm noted recent gains from election advertising but a \"tepid\" auto sector. Expectations of future growth held steady, with two-thirds of the firms anticipating increased activity.\nFinancial Services\nFinancial firms continued to report modest growth on a year-over-year basis in credit card lending and in overall loan volumes (excluding credit cards). However, during the current period, credit card lending (reported without seasonal adjustments) grew moderately compared with modest growth during the same period last year, while loan volumes (excluding credit cards) grew at a moderate pace compared with slight growth.\nDuring the current period, volumes grew moderately in mortgages and in commercial and industrial lending; grew modestly in commercial real estate and in home equity lines; and declined slightly in autos and in other consumer loans (not elsewhere classified).\nBankers continued to note rising deposit rate pressure and strong competition for quality loans. They continued to cite concerns that credit standards were slipping but noted few signs of credit quality deterioration.\nReal Estate and Construction\nAccording to homebuilders, activity appears relatively flat overall; a central Pennsylvania builder noted that traffic and sales disappeared during October and November, while a South Jersey builder noted moderate gains. Both builders said that construction activity had peaked or was peaking and that contractors were beginning to look for work. Existing home sales declined moderately across most local markets. \"Inventory is hitting rock bottom,\" according to one large Philadelphia broker.\nOn balance, market analysts reported that construction of new commercial real estate may have declined a bit \u2013 apartment and warehouse projects remained steady, while office and retail projects began to wind down. One developer reported that its 2019 plan assumes that demand for warehouse space continues to outstrip supply but noted that warning signs were rising, including additional retail bankruptcies, rising interest rates, and lower housing starts. Analysts reported that effective rents rose for apartments and warehouse space but edged up, at best, for office and retail space.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"December 5, 2018\nSummary of Economic Activity\nThe Fifth District economy expanded at a moderate rate, overall. Manufacturers gave mixed reports as some firms reported solid growth while others experienced lower demand and higher raw materials prices due to tariffs and some had lingering negative effects from the recent hurricanes. District ports saw robust activity, particularly for imports; however, officials were concerned that the threat of new tariffs boosted imports temporarily and volumes could drop off in the near future. Trucking demand slowed slightly but remained robust. Retail, travel, and tourism rose moderately as customer traffic and hotel bookings picked up in advance of the holiday season. Residential home sales increased modestly overall but varied considerably across markets. Real estate agents reported a decline in buyer traffic and a slight decline in prices for higher-priced homes. Commercial real estate leasing rose moderately for office, retail, and industrial markets. Lenders saw a modest increase in residential mortgage demand and stronger growth for commercial real estate loans. The demand for labor strengthened moderately, and wage increases remained modest across sectors. Price growth remained moderate, overall. However, input prices rose sharply and compressed firms' profit margins.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks. Employment agencies noted an increase in seasonal hiring and expected to post more job openings throughout the holiday season. One staffing agency reported strong demand for all positions and skill levels and stated that 'recruitment is the hardest it has ever been.' Staffing firms saw more companies offering permanent positions to temporary employees. Meanwhile, business owners had difficulty filling positions for IT professionals, accountants, technicians, construction workers, and front-line manufacturing workers. In addition, some firms said that the lack of qualified talent was becoming a constraint on their business. Wage increases remained modest across sectors.\nPrices\nSince our previous Beige Book report, price growth increased but remained moderate, overall. According to our most recent surveys, manufacturer's selling prices rose at a moderate rate while input prices rose sharply. Several firms commented that the strong dollar and tariffs continued to affect the availability and prices of raw materials. Service sector firms reported similar margin compression with moderate growth in prices received but a sharp increase in prices paid. Wholesale and retail services saw higher prices for goods affected by tariffs while businesses reported paying higher prices for business-to-business services and recruitment. Manufacturers and services firms saw higher shipping costs, as well.\nManufacturing\nSince our last report, Fifth District manufacturers gave mixed reports on demand. Tariffs were a significant concern noted by manufacturers, as they were believed to raise costs of raw materials, thereby raising prices and lowering demand. However, a cabinet manufacturer reported an uptick in business in recent weeks, as customers rushed orders in anticipation of higher tariffs in the new year. Meanwhile, a Virginia food manufacturer reported higher-than-anticipated growth that left the company struggling to meet demand. Many manufacturers continued to face high transportation costs. In addition, effects of Hurricanes Florence and Michael lingered, as production had been shut down in places.\nPorts and Transportation\nFifth District ports saw robust business conditions. Export volume softened somewhat, but imports were strong across the District. One port handled record-breaking volumes in October. Port contacts stated that import growth was largely driven by retail, particularly auto. Some expressed concerns that the growth was the result of companies trying to order before another round of tariffs, which could lead to weak activity in the coming months. The softening in exports was partially attributed to agricultural goods, which were reduced by hurricane damage and tariffs. A District airport saw strong growth in imports and exports and was increasing capacity.\nDemand for trucking remained strong, although firms noted a slight slowing of demand compared to the extraordinarily high levels seen in the last year. Trucking firms saw improvements in hiring that allowed them to keep their trucks moving but were hesitant to invest in new trucks and equipment because of concerns about demand in the next year.\nRetail, Travel, and Tourism\nTravel and tourism grew moderately since our last report. Hotel occupancy and room rates remained strong and bookings were picking up going into the holiday season. However, rainy weather suppressed tourism somewhat by preventing outdoor activities and made travel more difficult. Labor issues were reported by some businesses, such as a Virginia resort that had to cut back on scheduled ski lessons because of a lack of instructors while other businesses reported shrinking profit margins as a result of wage increases.\nFifth District retailers reported moderate growth, on balance, with strong demand and high customer traffic. A Virginia sporting goods store reported its best business in several years. Meanwhile, a North Carolina auto dealer reported steady business overall but noted a slowdown in new car sales as customers chose low-cost used cars instead. Several retailers reported narrowing profit margins as cost of goods increased as a result of tariffs, and transportation costs remained high. Some retailers in the Carolinas have not made up business lost because of the hurricanes. And a Virginia produce retailer reported losing crops to the storms.\nReal Estate and Construction\nHome sales increased modestly, overall, but the market was a little less consistent and buyer traffic slowed in recent weeks. Realtors attributed some of the slowdown to rising interest rates. Single-family home inventory remained low while average days on the market edged up in some locations. District home prices were reportedly stable to increasing modestly. Meanwhile, new home construction slowed slightly. A Virginia Realtor reported fewer new home sales at two residential developments and stated that the builder added incentives on existing inventory to help increase sales.\nCommercial real estate leasing rose moderately in re-cent weeks as brokers reported strong demand across office, retail, and industrial markets. Vacancy rates remained low across markets, while rental rates were reportedly stable to increasing modestly. Commercial sales rose modestly, according to a few brokers, with industrial and retail building sites representing the majority of transactions. A broker in Charlotte, North Carolina, said that the number of office building sales had increased in recent weeks for both urban and suburban markets. Commercial construction increased modestly in some regions, which was mainly attributed to strong demand for warehouse and industrial space. Multifamily leasing remained healthy in most markets.\nBanking and Finance\nSince our previous Beige Book, loan demand grew modestly. Overall, bankers said that demand for commercial real estate loans strengthened, while business and auto loan demand was unchanged. Meanwhile, residential mortgage demand grew at a modest pace. Deposit rates increased, and bank executives reported that competition for deposits remained aggressive. Credit quality remained stable and credit standards were generally unchanged. Interest rates for residential and commercial loans rose slightly in recent weeks.\nNonfinancial Services\nDemand for nonfinancial services was little changed in recent weeks. Professional and business services firms gave mixed reports; some said that demand increased while others commented that labor constraints were holding back growth. Enrollments at community colleges fell due to a strong labor market. Meanwhile, accounting and legal services firms experienced moderate growth.\nFor more information about District economic conditions visit: www.richmondfed.org/research/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\nDecember 5, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of early October through mid-November. Conditions in the labor market tightened further, and wage growth was moderate. Price inflation increased moderately. Sales of retail goods expanded somewhat, while activity in consumer and business services was solid. Conditions in the manufacturing sector strengthened, and conditions in agriculture improved modestly. On balance, contacts reported that residential and commercial real estate market activity expanded at a solid pace. Lending activity ticked down modestly.\nEmployment and Wages\nConditions in the labor market tightened further. Across the District, contacts reported an increase in competition for workers and a shrinking pool of qualified applicants. A major shipping and logistics business in Northern California revised upwards plans to hire seasonal workers and expected to convert more seasonal hires to permanent employees than in the past. Contacts continued to note shortages of construction workers, even as the real estate market cooled somewhat in some parts of the District. A contact in the business services sector in Washington observed increased competition from other sectors for skilled accounting and information technology professionals that are in short supply across the state. A few contacts in the banking and agriculture industries in California slowed their pace of hiring due to productivity-enhancing investments.\nWage growth continued to increase moderately across skill levels and industries. Nonwage compensation also increased at several businesses, often in the form of additional paid vacation days. Many contacts reported that turnover was up noticeably, causing labor costs to rise more than anticipated, as new hires negotiated higher starting wages. A contact in Northern California reported that salaries for software engineers continued to increase noticeably. An airline company in the Mountain West noted moderate increases in starting salaries for pilots.\nPrices\nPrice inflation increased moderately over the reporting period. Contacts reported a moderate pickup in the pace of price increases at retailers and quick service restaurant chains, partly due to rising labor costs at these businesses. Businesses in the shipping and logistics industry planned to apply holiday surcharges due to high freight volumes and previous increases in energy costs. A contact in the steel industry was able to increase selling prices modestly due in part to reduced global competition. A contact reported that some businesses in light manufacturing that source input materials from China faced higher production costs. Potato prices were down modestly due to supply outpacing demand after a strong harvest.\nRetail Trade and Services\nSales of retail goods expanded somewhat over the reporting period. A contact in Arizona noted strong consumer demand in the region, which drove retail sales noticeably higher compared to this time last year. A contact in the Mountain West noted that consumers have begun to tend to purchase their lower-cost, basic goods online and higher-cost, luxury items in stores, straining brick and mortar establishments that sell everyday products. A major quick service restaurant chain based in Washington reported that in-store traffic continued to trend downward at a gradual pace.\nOn balance, holiday sales are expected to increase moderately relative to last year's season, due in part to solid momentum in consumer confidence and spending. In the shipping and logistics industry, rising volumes in the past month have led some contacts to expect a robust holiday shopping season. One contact pointed to last year's income tax changes as a driver of a more optimistic outlook for holiday spending. However, another was attentive to the negative impact that the recent stock market declines could have on spending.\nActivity in the consumer and business services sectors was solid. A contact in the shipping and logistics industry reported a further increase in demand for freight services and brisk competition in the industry. A contact in Northern California observed strong demand for software products to address cybersecurity threats and to enhance business productivity. Demand from leisure guests in the hospitality industry was solid, while near-term business reservations declined further.\nManufacturing\nConditions in the manufacturing sector strengthened. Contacts in the steel industry reported that capacity utilization remained stable at an elevated level despite a tick down in sales to automakers and builders. Solid domestic demand from other sectors and beneficial trade policy developments helped to bolster the industry. Contacts in Northern California observed that new orders of semiconductors were strong, input materials were readily available, and inventory levels were healthy. Deliveries of commercial aircraft increased slightly from the same period last year, while new orders grew significantly.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector improved modestly. Profits at beef and pork producers rose noticeably on a year-over-year basis, due to strong domestic demand. A contact in Central California reported that yields were generally solid but that trade policy uncertainty continued to limit the ability of growers to secure longer-term sales contracts. Potato and wheat yields in the Mountain West were strong, though exports of these products declined moderately. Drier-than-usual conditions in parts of California lowered yields for select crops, like nuts and tomatoes, but contacts noted that inventories were at an adequate level to meet demand.\nReal Estate and Construction\nActivity in real estate markets continued to expand at a solid pace, though many contacts observed that the pace of expansion has moderated somewhat in recent months. Residential construction was mixed. In the Mountain West and California, contacts observed generally solid construction activity and a shift into multifamily construction from single family in certain regions. Contacts in the Pacific Northwest reported that building slowed somewhat, citing expectations of weaker demand due to rising mortgage rates as one factor restraining new projects. In most of the District, home prices and rents decelerated modestly, though prices were still high by historical standards, supported by continued elevated demand. Contacts noted slightly more positive developments in the commercial real estate market. A contact in Northern California observed solid leasing demand from businesses, in some cases resulting in rents above advertised rates. Contacts were generally hesitant to interpret any recent moderation in real estate activity as a definite shift in the trajectory of the market.\nFinancial Institutions\nLending activity ticked down modestly over the reporting period. Growth in loan demand slowed modestly overall, with several contacts attributing most of the slowdown to higher interest rates. Net interest margins were flat to down slightly. Activity in the venture capital market was strong and equity valuations remained elevated despite some recent corrections. Credit quality continued to be healthy.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"December 5, 2018\nSummary of Economic Activity\nEconomic activity in the Seventh District grew at a modest pace in October and early November, and contacts expected it to continue at that pace over the next 6 to 12 months. Manufacturing production grew moderately; employment, consumer spending, and business spending increased modestly; and construction and real estate activity decreased slightly. Wages and prices rose modestly and financial conditions were little changed. Large corn and soybean yields led to some improvements in crop producers' incomes.\nEmployment and Wages\nEmployment growth slowed to a modest pace over the reporting period, and contacts expected job gains to continue at that rate over the next 6 to 12 months. Hiring was focused on production, sales, and professional and technical workers, though there was a decline in the number of contacts planning to hire sales workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. A number of contacts said that they had been \"ghosted,\" a situation in which a worker stops coming to work without notice and then is impossible to contact. Wage growth picked up some but remained modest overall. More contacts reported that they were increasing wages for select employees as opposed to raising wages across the board. Contacts were most likely to report wage increases for managerial, professional and technical, administrative, and production workers. Many firms reported rising benefits costs.\nPrices\nPrices rose modestly in October and early November, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices increased slightly overall. Producer prices again rose moderately, reflecting in part the pass-through of higher labor, materials, and freight costs. Energy costs declined some.\nConsumer Spending\nConsumer spending picked up some over the reporting period, but growth remained modest on balance. Nonauto retail sales rose modestly, with gains in the home improvement, hardware, lawn and garden, furniture and appliance, and apparel sectors. Contacts expected good holiday sales this year. Light vehicle sales rose moderately, with gains for both new and used vehicles. Some dealers indicated that generous discounts had noticeably boosted business fleet sales.\nBusiness Spending\nBusiness spending increased modestly in October and early November. Retail contacts said that inventories were generally at comfortable levels. One contact noted that retailers were expecting good holiday sales and had increased inventories accordingly. Contacts also indicated that retailers were building up stock in anticipation of higher tariffs on Chinese imports that are set to take effect in 2019. Most manufacturing contacts also reported stocks were at comfortable levels, though some indicated that inventories were too low because of longer lead times for materials. Capital spending increased modestly, and contacts expected growth to continue at that pace over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. There was also a notable increase in contacts reporting spending for M&A. Demand for energy from commercial and industrial users increased modestly, with growth in manufacturing (particularly from steel producers) offsetting a slight decline in the commercial sector. Demand for transportation services was little changed, but remained at a strong level.\nConstruction and Real Estate\nConstruction and real estate activity decreased slightly over the reporting period. Residential construction declined slightly, with growth in suburban single-family homebuilding offset by declines in other markets. Home sales also declined some. One contact attributed the slowdown to rising interest rates and low inventories for starter homes. Home prices and residential rents increased slightly. Nonresidential construction was little changed overall, though one contact noted increased demand from the education sector. Commercial real estate activity was also little changed, though the pace remained strong. Contacts noted particularly strong demand for industrial space. Commercial rents edged higher and vacancy rates edged lower. The availability of sublease space increased marginally.\nManufacturing\nGrowth in manufacturing production continued at a moderate rate in October and early November. Steel output rose moderately as end-user demand remained at a high level. Steel imports continued to decline. Demand for heavy machinery increased moderately as well, with growth led by the construction and energy sectors. One contact noted that supply chain constraints were holding back growth. Demand for heavy trucks remained strong. Order books for specialty metals manufacturers increased modestly: Growth was spread across a wide variety of sectors, though contacts noted particularly strong demand from the aerospace sector. Auto production was flat, but remained at a solid level.\nBanking and Finance\nOverall, financial conditions were little changed over the reporting period. Financial market participants noted the declines in equities prices and increased volatility. Business loan demand increased modestly, with contacts reporting growth in the construction, manufacturing, transportation, and energy sectors. Loan quality and lending standards were little changed. Consumer loan demand was flat overall, though contacts noted a slight increase in demand for auto loans. Consumer loan quality and lending standards were also little changed.\nAgriculture\nAlthough the harvest took longer than normal, corn and soybean yields were quite large. And, in spite of low prices, crop producers' incomes were better than what had been expected earlier this year. However, crop sales were lower than normal, and a record amount of the harvest was put into storage. This reflected in part higher prices for delivery in later months compared to prices for delivery at harvest. Logistical challenges continued as soybeans that would usually be exported to China were being sent to other markets. Farm equipment dealers reported giving large discounts in order to make sales as many crop farmers continued to face financial challenges. Hog and cattle prices moved higher during the reporting period, but milk prices floundered in part because of weak exports. Farm mediation services remained in demand for troubled operations.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"December 5, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District grew modestly during the survey period, with a majority of firms reporting stable customer demand. Demand was strong in banking, manufacturing, and nonfinancial services, whereas retail demand improved slightly, and housing demand softened. On balance, employers increased staff levels moderately to meet demand, though wage pressures were strong and widespread. Contacts in every industry noted that increased competition for labor was requiring them to boost compensation to retain workers. Nonlabor input costs rose strongly in all industries, led by metals, fuel, and transportation costs. Some contacts noticed that import tariffs were boosting prices further down the supply chain. Selling prices rose with less intensity than they did for input costs.\nEmployment and Wages\nOn balance, contacts reported moderate increases to their staff levels. Hiring activity was very strong in professional and business services, in which three-quarters of contacts reported adding workers. Skilled services aside, employers in many sectors gave mixed reports. Retail contacts noted that the increase in temporary employment for the holiday shopping season this year was comparable to holiday season increases in recent years. Many manufacturers increased headcounts to keep up with demand, but there was an uptick in reports of firms' reducing headcounts. Finally, transportation firms pared their workforces because of lower seasonal demand and to gain efficiencies. Staff levels at construction firms were stable.\nWage pressures were widespread. In every industry, contacts noted that increased competition for labor was requiring their firms to boost compensation in a variety of ways to retain workers. A number of manufacturers noted they increased wages between 0.5 percentage points and 1.0 percentage points over the rate of inflation. One construction contact reported that starting salaries for new graduates was significantly higher this year than it was last year. One transportation employer remarked that his firm preferred to use recruitment and retention bonuses rather than wage increases. One clothing retailer noted that his firm felt pressure to raise its wages as other large retailers boosted their pay.\nPrices\nNonlabor input costs rose strongly in all industries. Higher metals prices because of import tariffs continue to be a pain point for manufacturers and construction firms, although an increasing number of contacts in these industries have been reporting stable prices in recent survey rounds. There were a number of reports of tariffs leading to higher prices further down the supply chain. One transportation contact reported that domestically produced maintenance parts were becoming more expensive because some components are imported from China. One retailer noted that her suppliers were increasing their prices because of the tariffs. In addition to higher metals prices, contacts noted fuel, transportation, food, and polyresin cost increases.\nFinal selling prices rose with slightly less intensity than they did for input costs. The majority of manufacturers held their prices, unlike during the previous five survey rounds, when a majority had raised selling prices. The manufacturers that raised their prices did not, for the most part, report getting pushback from their customers. Some nonresidential builders were able to raise prices enough to increase their margins. One homebuilder noted, however, that his firm held its sticker prices but lowered effective prices by offering incentives on almost every deal. Nearly all nondurable-goods retailers held their prices, while auto dealers all reported higher prices. The majority of transportation firms found success raising their prices. One contact said he managed to raise his fees by 4 percent to 6 percent. Another transportation contact said he noticed that while shippers can secure higher rates, shipping customers were being more selective about nonprice factors, such as service and how the shipper handles its loads.\nConsumer Spending\nConsumer demand improved slightly. Auto sales edged higher thanks to increased sales of used cars. Demand for new cars fell, however, as higher metals prices and rising interest rates eroded affordability. Auto dealers reported that trucks, SUVs, and crossovers continued to gain market share of passenger vehicles. Demand for nondurable goods ticked higher. Retailers with broad footprints noted that sales within the Fourth District were roughly in line with national sales. Inventories were at desired levels, but profit margins for nondurable goods narrowed modestly.\nManufacturing\nBusiness conditions in manufacturing remained solid, although producers struggled with capacity constraints and input price increases. Demand was strong, but some contacts indicated that this demand was due to inventory stockpiling as fixed-price contracts approached renewal and as price increases were imminent. Import tariffs have had mixed effects: some manufacturers reported higher demand as import competition subsided, but others reported that tariffs led to input cost increases and supply chain gaps. The competition for skilled labor remained stiff, and two contacts reported off-schedule capital investments in labor-saving technologies to be able to keep up with strong demand without the need for additional personnel.\nReal Estate and Construction\nHomebuilders reported that demand fell moderately and that they expect housing demand to soften in the near future. Homebuilders note that decreasing home affordability, because of rising construction costs and rising interest rates, drove this decrease in demand. Lower-priced homes continued to outsell higher-priced homes. Real estate agents reported stable housing inventories.\nBusiness conditions improved modestly for nonresidential construction firms. Both private- and public-sector demand improved recently, with particular strength coming from industrial and education customers. Backlogs remained strong and trended upward. Real estate developers were split about their characterizations of market conditions. Developers that experienced weaker market conditions cited closures of retail stores as leading to weaker demand. However, other developers noted stable or even slightly better demand because of strong business confidence.\nFinancial Services\nBanking conditions were strong and steady. Demand for credit remained robust and came from both commercial and consumer segments. However, mortgage demand showed some signs of slowing and was held down by lack of housing inventory and by worries about rising interest rates. Most contacts reported that core deposits rose in response to higher interest rates, although some seasonal factors were at play as the holiday season approached. One contact noted that commercial deposits declined because clients invested cash in operations or equity markets rather than holding reserves.\nNonfinancial Services\nNonfinancial services firms reported strong growth in business activity. Contacts cited strong business confidence, driven by continued US economic growth, as underpinning their clients' willingness to spend on business advisory services. Contacts were split evenly between those that expected business conditions to improve in the near future and those that expected them to be stable. In the transportation sector, demand increased from an already high level. One railroad contact remarked that demand for her firm's intermodal services was strong and that this was a sign that capacity was a constraint for trucking companies. There was some concern that seasonal patterns may be unusual this year as firms try to import goods before additional tariffs on Chinese goods take effect on January 1. Expectations for near-term business conditions in the transportation sector were stable.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nDecember 5, 2018\nSummary of Economic Activity\nTenth District economic activity increased slightly in late October and November and remained modestly above year-ago levels. Consumer spending was fairly flat as gains in retail and auto sales were offset by declines in restaurant and tourism activity. Manufacturing activity continued to expand moderately in both durable and non-durable goods plants. Sales rose at a modest-to-moderate pace in the professional and high-tech, wholesale trade, and transportation sectors, and additional gains were expected in the months ahead. Residential real estate sales declined modestly and residential construction activity held steady, while overall activity in the commercial real estate sector increased. Energy activity expanded, but the outlook was mixed due in part to geopolitical uncertainty. The agricultural outlook remained weak, with lower soybean prices, weakness in dairy and hog markets, deteriorating farm income, and uncertainty surrounding international trade. Employment and employee hours edged up across most industries, and about half of contacts expected to increase employment in the next twelve months due primarily to strong sales growth and overworked staff. Wage growth expanded modestly, and additional gains were expected. Prices continued to rise, with gains in input prices slightly outpacing those of selling prices.\nEmployment and Wages\nOverall employment and employee hours edged up in late October and November across the District, and expectations were for modest gains in the months ahead. Contacts in the retail trade, wholesale trade, auto sales, real estate, professional services, health services, and manufacturing sectors noted flat-to-modestly higher employment, while those in the transportation, restaurant, and tourism sectors reported a decline. The same sectors reporting an increase in employment, with the addition of transportation, also noted rising employee hours. About half of respondents expected employment to increase at their firm over the next twelve months, while the majority of the remaining respondents anticipated unchanged levels of employment. Those who projected increased employment levels cited expectations for strong sales growth and currently overworked staff as the primary reasons.\nA majority of respondents continued to note labor shortages for low- and medium-skill workers, including positions for retail sales, commercial drivers, specialized IT, construction, and restaurant staff. Wages grew modestly since the previous survey, and most contacts reported higher starting wages for new hires. Wages were expected to increase at a similar pace moving forward.\nPrices\nInput and selling prices continued to rise in late October and November, with the pace of gains in input prices slightly exceeding the growth of selling prices on average. In the retail sector, however, both input and selling prices grew moderately, and additional gains were expected in the months ahead. Respondents in the transportation and restaurant sectors reported modest growth in selling and input prices since the previous survey period, and both were well above year-ago levels. Moderate gains were anticipated for input prices in the restaurant and transportation sector, while modest growth was expected for selling prices moving forward. Manufacturers continued to report modest price growth for finished products and moderately higher prices for raw materials. Raw material prices were projected to increase moderately in the months ahead, while prices for finished products were projected to rise modestly.\nConsumer Spending\nConsumer spending was fairly flat compared to the previous survey period, however contacts expected modest increases in the coming months driven by projected gains in the retail and auto sectors. Retail sales rose slightly and remained well above year-ago levels. Retail sales and inventory levels were anticipated to increase moderately in the next few months. Auto sales inched up compared to the previous survey period, and contacts expected both sales and inventories to rise modestly in the coming months. Respondents noted SUVs and trucks sold well, whereas sedans sold poorly. Restaurant sales continued to fall modestly, though they remained well above year-ago levels. Restaurant contacts anticipated sales to continue to decline slightly in the coming months. Tourism activity also fell modestly since the previous survey period.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand at a moderate pace, and other business contacts experienced modest-to-moderate sales growth. Factory activity grew at both durable and nondurable goods plants due primarily to increases in metals, aircraft, food, and plastics. The levels of production, shipments, and new orders increased modestly since the previous survey period, and each remained higher than year-ago levels. Manufacturers expected modest increases in capital expenditures in the coming months.\nOutside of manufacturing, firms in the wholesale trade and transportation sectors experienced moderate sales growth, and professional and high-tech firms reported modest sales growth. Transportation contacts expected modest growth in the coming months, whereas wholesale trade and professional and high-tech contacts projected strong growth. Wholesale trade and professional and high-tech firms anticipated capital expenditures to increase modestly moving forward, while transportation firms expected capital spending to rise slightly.\nReal Estate and Construction\nDistrict real estate activity was mixed as residential real estate activity edged down and commercial real estate activity rose. Residential home sales declined modestly since the previous survey period, while home prices and inventories continued to rise. Residential real estate contacts expected steady residential home sales and modest increases in selling prices and inventories in the months ahead. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Overall residential construction activity was flat since the previous survey period, and expectations were for no change moving forward. Activity in the commercial real estate sector increased slightly as sales and prices rose; absorption, construction underway, and completions were flat; and vacancy rates fell. Commercial real estate contacts expected slight growth in overall activity in the months ahead.\nBanking\nBankers reported steady overall loan demand compared to the previous survey period. Specifically, respondents reported a slight increase in demand for commercial real estate loans, while the demand for commercial and industrial loans, residential real estate, consumer installment, and agricultural loans fell. Bankers indicated loan quality improved slightly compared to a year ago and expected no change in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported a slight increase in deposit levels.\nEnergy\nEnergy activity expanded since the last survey period as production continued to grow, although expectations for future activity were mixed. The number of active oil rigs increased moderately, and the number of active gas rigs inched higher. Oil prices fell in November after rising earlier in the year. Expectations are for continued production growth for crude oil in addition to supply increases for natural gas. International geopolitical discussions surrounding waning OPEC production and U.S. sanctions on Saudi Arabia may affect District energy prices and production expectations moving forward.\nAgriculture\nFarm income and credit conditions in the Tenth District weakened slightly from the last reporting period. Corn, wheat and cattle prices rose slightly. However, weakness in hog and dairy markets, significantly lower soybean prices, and trade uncertainty weighed on the agricultural outlook in the District. Expectations for farm income were lowest in Missouri and Nebraska, which are more concentrated in soybean production than other states in the District. Alongside lower farm income, repayment rates declined slightly and demand for farm loans increased modestly. In addition, producers' working capital deteriorated moderately, and the share of farm borrowers planning to sell mid- to long-term assets increased from a year ago. Despite downward pressure from a weaker farm economy and modest increases in farm loan interest rates, farmland values decreased only slightly.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\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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"December 5, 2018\nSummary of Economic Activity\nFirst District economic activity in most sectors continued to expand at a moderate pace since the last report. Retailers reported moderate year-over-year sales growth, while Massachusetts restaurant sales rose modestly from a year earlier. Manufacturing firms saw revenues rise from a year ago, but at a somewhat disappointing pace. Most staffing firms reported modest to moderate year-over-year revenue growth, with some signs that the pace of growth slowed recently. Sales of single-family homes and condos declined from a year earlier in most New England reporting areas, while median sales prices continued to rise. Activity in commercial real estate markets remained mixed within the region, at a moderate level on average. Labor markets remained tight and wage increases continued at a moderate pace. Notwithstanding labor-related costs, upward pressure on prices was said to be very modest. Most contacts continued to report a positive outlook, although some cited increased uncertainty or risks.\nEmployment and Wages\nLabor markets continued to be tight, although many firms said they are able to hire as needed. Two-thirds of manufacturing contacts expected flat employment at their firm and one-third expected growth. Manufacturers did not report any unusual difficulty finding qualified employees although an industrial distributor said that it had become increasingly difficult to find technical salespeople. Retailers said they have not had problems filling open positions, except for jobs specializing in information technology. Massachusetts restaurants continued to note acute labor shortages and higher labor costs, citing the Commonwealth's recently implemented Employer Medical Assistance Contribution (EMAC) and scheduled hikes in the minimum wage. Staffing industry respondents reported that continued low unemployment made recruiting very challenging. Most staffing firms reported increases in bill and pay rates, ranging from low single-digit increases to 10 percent; one cited high-level IT jobs as a driving factor in increased bill rates.\nPrices\nPrice increases were said to be modest. Manufacturing firms did not report strong pricing pressure either from customers or suppliers. An industrial distributor said they expected tariffs to contribute 50 to 100 basis points to price increases for their products. Only one manufacturer complained about high transportation costs, in contrast with recent reports when many noted high costs. Two retail contacts noted that wholesale prices have risen only modestly and that food prices were down about 0.4 percent. Looking ahead to 2019, retailers expressed significant uncertainty about the impact that tariff increases will have on prices--beyond some point, they will pass the increases on to consumers. One retailer said they will not be the first mover on raising prices but will watch to see what their competitors do. Massachusetts restaurant menu prices were up 2.6 percent from a year ago.\nRetail and Tourism\nRetail contacts reported comparable-store year-over-year sales increases ranging from low single-digit to low double-digit percentages. All respondents remarked that consumer sentiment was strong and that they expected the fiscal year to end with low single-digit comparable-store revenue increases. Capital spending plans for 2019 were said to match or exceed investment in 2018.\nA contact in the Massachusetts restaurant industry reported that revenues were up about 2 percent year-over-year through September, but cautioned that this result was largely driven by newly opened units, as sales at existing locations ranged from flat to up or down 1 percent year-over-year. Anecdotally, restaurant sales were down year-over-year in October as \"people stayed home to watch the World Series.\" As noted earlier this year, the cost challenges confronting the restaurant industry are expected to thin out the ranks; very recently, two iconic Massachusetts restaurant chains have closed units, as have some high-end Boston-area restaurants.\nManufacturing and Related Services\nAll manufacturing contacts this cycle reported higher sales year-on-year. However, two-thirds of the six respondents said the pace of growth was a little disappointing. A furniture maker said sales growth had slowed relative to earlier in the year. Two semiconductor-related firms reported year-over-year sales growth had slowed to 12 percent and 10 percent; one attributed the slower growth to smartphones and the other to slowing demand for consumer devices more broadly. A defense contractor said they were having unusual difficulty with permits to sell to foreign customers. No contacts reported significant revisions to their capital expenditure plans.\nContacts were generally optimistic, even the ones with disappointing sales growth. One contact in industrial distribution said that there was industry chatter about a recession in the second half of 2019 but he saw no signs of that. A contact in the semiconductor industry said that people were concerned about the semiconductor industry cycle but continued to expect growth in 2019.\nStaffing Services\nNew England staffing firms reported mostly positive year-over-year revenue growth, notwithstanding low or negative quarter-over-quarter growth rates. All firms noted labor supply shortages, regardless of the job's industry, occupation, or placement type, while commenting on the high and healthy demand from clients. One company stated that they were hesitant to take on new clients because they could not fulfill orders from existing ones. Most respondents devoted additional resources to improve recruitment: hiring more employees, investing in technology and social media, building relationships with local community groups, and increasing advertising. A few firms noted concerns about potential increases in health care costs and local minimum wages. Overall, staffing firms expressed optimism and expected tight labor market conditions to continue into 2019.\nCommercial Real Estate\nCommercial real estate markets remained mixed across the First District, with moderate activity on average. Leasing activity held steady at a slow pace in Connecticut and picked up to a moderate pace in Rhode Island. In greater Portland, leasing demand remained strong, on average, despite having softened a bit in the industrial and retail markets. Boston-area contacts described office leasing activity as very robust. In both Boston and Providence, demand for industrial space--whether for lease or purchase--strengthened further. Following recent declines, office vacancy rates were described as historically low in Boston and very low in both Portland and Providence.\nConstruction activity was also mixed, with negligible activity in Connecticut, moderate activity in Rhode Island, and robust activity in the Portland and Boston areas. One Boston contact said that planned construction could yield a large quantity of new office space in the downtown area over the next five years, although rising construction costs--up some 15 percent in the past six months due to increases in both labor and materials costs--may crimp some projects. The outlook dimmed further in Connecticut and remained largely favorable elsewhere for the near term; some contacts cited increasing risks and uncertainty for late 2019.\nResidential Real Estate\nMost residential real estate markets in New England saw year-over-year sales declines in recent months. For single-family homes, closed sales decreased from September 2017 to September 2018 in Rhode Island, Massachusetts, Boston, and New Hampshire, while increasing slightly from October to October in Maine. Median sales prices increased over the year in all reporting areas. For condos, sales decreased in Massachusetts, Boston, and New Hampshire, stayed flat in Maine, and increased in Rhode Island. Condo prices increased in Boston and Maine but decreased slightly in Rhode Island, Massachusetts, and New Hampshire. Vermont experienced an over-the-year decrease in sales for single-family homes and condos combined.\nContacts cited lack of inventory, rising prices and interest rates, and market normalization as possible reasons behind the declining sales. A contact from Rhode Island noted that the cooling in housing suggested a more balanced and healthy market, \"buyers \u2026 will likely have more properties to choose from in the year ahead.\" A Massachusetts representative, by contrast, attributed the dwindling sales mainly to ongoing inventory shortages. Looking forward, residential real estate contacts across the region expressed optimistic views about the closing months of 2018.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"December 5, 2018\nSummary of Economic Activity\nReports from Sixth District business contacts described economic conditions as expanding at a moderate pace since the previous report. The majority of contacts are optimistic and expect the pace to continue for the remainder of the year. The labor market remained tight amid increasing reports of wage pressures. Firms continued to note rising nonlabor costs, and several contacts indicated having the ability to pass along the increases. Retailers, including automobile dealers, cited slightly higher sales over the reporting period. Reports from the hospitality sector were positive across most parts of the District. Contacts reported that residential real estate market activity was subdued, though commercial real estate activity remained robust. Manufacturers reported robust levels of new orders and production. Bankers cited that financial conditions were steady since the previous report.\nEmployment and Wages\nBroadly, employee retention efforts remained a dominant labor market theme among business contacts. Firms continued to engage in internal programs and marketing initiatives to promote culture, build loyalty, and create a positive environment for workers. Several business contacts, especially those searching for truck drivers, construction laborers, low-skill workers, and information technology professionals, continued to report that labor market tightening impeded their ability to grow. Contacts shared that driver shortages caused supply chain delays and negatively affected their ability to meet customers' demands. Employers encountered some tightening for other positions and business areas, however some contacts expressed a willingness to wait for the right person rather than pay more, since they do not believe that higher pay will guarantee a higher quality worker. Hurricane Michael reduced employment among firms in northwest Florida, and several businesses have not returned to pre-hurricane employment levels.\nOverall, employers shared that wage increases rose at either the same or an increased pace compared with the previous year, around 3-4 percent on average. A number of contacts mentioned that recent announcements from large national firms to increase starting wages for workers at the lower end of the pay scale have created broad pressures to raise pay for these workers across the region, particularly among hospitality and retail employers. Several contacts pointed out that overall compensation costs were expected to increase at a slightly faster pace in 2019.\nPrices\nNonlabor costs continued to rise, according to reports from businesses across the District. Similar to the previous report, some price increases were noted as being passed along with no significant protest. Some contacts reported rising trucking rates and expressed concern that continued price escalations related to tariffs could impact future demand. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 2.2 percent in October. Survey respondents indicated they expect unit costs to rise 2.3 percent over the next twelve months.\nConsumer Spending and Tourism\nSince the previous report, District retailers indicated that sales levels rose slightly. The outlook among retailers regarding the upcoming holiday season was optimistic with contacts expecting higher sales levels than last year. Automobile dealers noted a slight increase in the momentum of auto sales.\nDistrict tourism and hospitality contacts reported that domestic travel was strong while the pace of growth in group and convention travel softened since the last report. On balance, demand for hotel rooms in the District remained robust while room rates decreased. Contacts were optimistic about demand in 2019 although they anticipate the pace of growth to slow.\nConstruction and Real Estate\nOn balance, housing activity continued to grow, albeit at a measured pace. Year-over-year new home sales in many District markets were up slightly, and existing home sales either moderated or declined as interest rates rose and inventory levels remained low. Upward pressure on home prices persisted but at a moderate pace. New home construction throughout the District continued to lag behind housing demand and was concentrated in higher price points within prime/high demand submarkets. Homebuilders indicated that rising land, labor, and material costs continued to push new home prices higher.\nDistrict commercial real estate activity remained strong across most of the region during the reporting period. Vacancy rates continued to decline modestly, though contacts reported some slower-paced leasing dynamics at some suburban retail properties. Industrial leasing was especially robust and generally was greater than the heightened amount of new construction completions across the District. Multifamily occupancy rates rose as demand outpaced supply.\nManufacturing\nManufacturing contacts continued to report solid demand and healthy overall business conditions since the previous reporting period. New orders and production levels remained robust at most firms, with the exception of those along the Gulf Coast that were affected by Hurricane Michael. Supply delivery times were reported to be getting slightly shorter, while input prices continued to rise. Expectations for future production levels increased from the previous period, with almost half of contacts expecting higher production over the next six months.\nTransportation\nDistrict transportation contacts indicated that demand was generally consistent with the previous reporting period. Total rail traffic, including intermodal, was up marginally over year earlier levels. Trucking and logistics contacts reported continued growth in e-commerce shipments. District ports noted a strengthening in container activity related to inventory building for the peak buying season, along with increases in breakbulk, automotive, and heavy equipment cargo. While one District port in the path of Hurricane Michael experienced some operational disruptions, most transportation firms noted little to no negative impact on the movement of cargo due to the storm.\nBanking and Finance\nConditions at financial institutions were stable. Earnings improved, driven by higher interest rates that enhanced the net interest margin at most institutions. Credit quality generally remained positive, however some District institutions experienced an increase in bankcard delinquencies. Financial institutions continued to loosen underwriting standards due to slowing demand for credit and increased competition, particularly in the residential mortgage and the commercial lending portfolios.\nEnergy\nOverall, activity in the District's energy sector picked up since the previous reporting period. Oil and gas production continued to increase. Expenditures on power generation projects across the District continued to rise, largely attributed to increased industrial demand. Contacts reported several recently initiated, approved, or planned capital projects across the region to expand capacity among chemical producers and power plants, and to construct oil and gas storage terminals and pipelines for takeaway capacity to and from the Gulf Coast of Louisiana. Gulf of Mexico drilling rig shut-ins due to Hurricane Michael were described as minimal; contacts estimated the loss of crude oil production at approximately two million barrels or about $140 million.\nAgriculture\nAgriculture conditions across the District softened. In early October, Hurricane Michael caused significant wind and rain damage to agriculture production in the Florida panhandle, south Alabama, and south Georgia. Products affected included cotton, pecans, peanuts, fruit and specialty crops, timber, livestock, poultry, and greenhouse and nursery products. In spite of Hurricane Michael, cotton harvesting in Alabama and Georgia progressed close to their five-year averages, but with significant deterioration in conditions, especially in Georgia. The District's soybean and peanut harvests were ahead of their five-year averages. Year-over-year prices paid to farmers in September were up for corn, cotton, rice, and beef, while soybean, eggs, and broiler prices were down.\nFor more information about District economic conditions visit: www.frbatlanta.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"

San Francisco

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"Beige Book Report: San Francisco\nOctober 24, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of September through early October. Conditions in the labor market tightened noticeably, and wage pressures picked up. Price inflation increased moderately. Sales of retail goods picked up slightly, while activity in consumer and business services was solid. Activity in the manufacturing sector expanded moderately, and conditions in agriculture improved somewhat. Contacts reported that residential and commercial real estate market activity expanded at a strong pace. Lending activity picked up moderately.\nEmployment and Wages\nConditions in the labor market tightened noticeably, with contacts across the District experiencing continued hiring challenges due to labor shortages. Manufacturers in Oregon noted difficulty hiring entry-level production workers, and employment growth fell short of firms' expectations. Shortages of skilled loan officers limited hiring at several rural community banks. A contact in the California banking industry observed that an uptick in mergers resulted in a modest decline in employment as the banks involved resolved job redundancies. A major shipping and logistics business in Northern California reported strong employment growth due to recent and anticipated increases in demand for its services.\nWage growth picked up broadly. Contacts across the District noted continued upward compensation pressures for a variety of skilled occupations, including finance professionals, health-care providers, and business consultants. A contact in the retail industry raised starting wages in anticipation of intensifying labor shortages during the holiday season. A few contacts noted that some businesses increased benefits like vacation allowances and onetime bonuses rather than wages.\nPrices\nPrice inflation increased moderately over the reporting period. Several contacts noted a moderate pickup in price growth for metal inputs due mostly to the continued impact of tariffs. Rising energy costs resulted in pricing pressures for transportation services and petroleum-based inputs to construction and manufacturing. Final prices at quick service restaurants increased somewhat. A contact in the hospitality industry in Southern California reported that many hotels were passing along higher labor and input costs to guests in the form of one-off surcharges. Pricing pressures in the agriculture markets across the District were mixed, but flat on balance. Lumber prices continued to decline due to a softening in construction starts in some regions.\nRetail Trade and Services\nSales of retail goods picked up slightly over the reporting period. Demand at home improvement stores increased moderately, although the building materials segment exhibited modest weakness. E-commerce retail sales grew somewhat, reflecting gains in consumer confidence. A major quick service restaurant chain based in Washington reported that in-store traffic was down slightly.\nActivity in the consumer and business services sectors was solid. In Washington, demand for health-care services grew noticeably in urban areas, due in part to an increase in hiring at businesses with health benefits. A contact in the shipping and logistics industry noted an increase in demand for freight services, especially from small businesses. A contact in Southern California reported an uptick in demand for technology consulting services. Contacts in the hospitality industry noted that hotel bookings for leisure guests were solid, and discretionary on-site spending grew. However, business reservations declined somewhat on a year-over-year basis.\nManufacturing\nActivity in the manufacturing sector expanded moderately. Industry contacts reported that demand for construction equipment was solid, though producers were attentive to indications of a moderation in some real estate markets. Contacts in Northern California reported that sales of semiconductors were brisk, driven in part by strong global demand. Deliveries of commercial aircraft were essentially flat from the same period last year, while new orders grew noticeably.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector improved somewhat, with crop yields generally beating expectations. However, most contacts reported that trade policy changes started to have a tangible impact on activity. Yields and profits for growers in Central California continued to be satisfactory, but inventories of certain exported crops increased after delivery schedules were delayed due to trade policy uncertainty. Forward contracts for heavily exported crops declined. Wheat and fruit growers in Washington observed a slight tick down in demand, which some attributed to growing trade tensions. A contact in Oregon noted that sales of raw lumber to large building companies continued to decline at a gradual pace, while demand for processed wood products was solid.\nReal Estate and Construction\nActivity in real estate markets expanded at a strong pace. Overall, contacts reported that robust demand for housing outpaced the supply of homes, which continued to be constrained by shortages of labor and high material costs. In particular, inventory levels of more affordable homes remained low, while demand in this market segment picked up further, putting upward pressure on prices. Contacts noted that a further increase in mortgage rates had only a slight moderating impact on demand.\nCommercial real estate activity was robust. Construction activity was solid, especially for industrial and warehouse spaces. A contact in Southern California noted that rents and occupancy rates increased. In Oregon, commercial activity expanded in rural areas with lower land costs and rents. Demand for retail spaces at malls declined somewhat, resulting in lower occupancy rates.\nFinancial Institutions\nLending activity picked up moderately over the reporting period. Loan demand increased overall. Profitability and net interest margins improved noticeably as increases to lending rates outpaced those for deposit rates. Credit quality continued to be strong. Contacts at credit unions reported an increase in membership.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"October 24, 2018\nSummary of Economic Activity\nThe Ninth District economy grew moderately overall since the last report. Employment grew moderately, with strong hiring demand but tight labor supply. Wage and price pressures were both moderate. The District economy showed growth in manufacturing, real estate, residential construction, professional services, consumer spending, and tourism. But commercial construction and energy slowed, and agriculture remained weak.\nEmployment and Wages\nEmployment grew moderately since the last report despite continued labor constraints. Hiring demand was robust. Ad hoc surveys of human resources professionals in Minnesota and Montana, conducted by the Minneapolis Fed in mid-September, found that a large majority of respondents' firms were currently hiring; roughly 40 percent said their firms were hiring both to add headcount and to replace worker turnover. Data from state workforce centers showed that job postings were up 9 percent across Ninth District states. Job tracking by a Minnesota trade group also showed strong growth in STEM jobs in September compared with a year earlier. Seasonal hiring was also beginning, with several announcements of major hiring, including 1,700 workers across the Minneapolis-St. Paul metro for a transportation firm. However, tight labor supply restrained overall hiring. In Montana and Minnesota, the number of job openings at workforce centers in August outnumbered those seeking work by a roughly two-to-one margin. Over the most recent six-week period (through late September), initial unemployment claims in the District dropped by 10 percent over the comparable 2017 period, and continuing claims were 12 percent lower. However, an external survey of fourth quarter hiring expectations was notably softer, but still positive, for District states, and the percentage of employers expecting to increase staff levels fell virtually across the board compared with last quarter and last year.\nWage pressures were moderate since the last report. The aforementioned survey of human resources professionals found that 40 percent of Minnesota respondents reported wage growth of 3 percent or more at their firms over the past 12 months, while 25 percent of Montana firms responded similarly. Wage expectations in both states for the coming 12 months were slightly higher. A general business survey, conducted by the Minneapolis Fed in October, found that a strong majority of firms raised wages relative to a year earlier, and future increases were also expected. South Dakota retailers reported only modest wage increases despite reports of very tight labor. Two Minnesota sources also reported that higher wages have allowed some workers to cut back on hours worked.\nPrices\nPrice pressures increased moderately relative to the previous report. A Minneapolis Fed business survey indicated that firms had increased prices in the third quarter relative to a year ago; two-thirds planned price increases in the last quarter of 2018. In a separate survey, 60 percent of South Dakota retailers indicated that customer prices rose by less than 2 percent but that wholesale price increases were larger. Retail fuel prices in District states as of early October were moderately higher than a month earlier. Numerous manufacturers reported that rising prices for certain raw material inputs due to trade conflicts were partially passing through to final output prices. Prices received by farmers for corn, wheat, hay, and eggs increased in August compared with a year earlier; prices for soybeans, hogs, cattle, milk, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending grew moderately since the last report. Growing activity in the Bakken oil region was again spilling into higher retail sales in the region and state; North Dakota sales tax collections were 26 percent higher than anticipated in August. However, retailers in South Dakota reported sluggish late summer sales into September. Tourism activity also grew. A survey of Minnesota lodging properties described a \"strong\" summer, with about 50 percent of respondents seeing higher revenue compared with about 25 percent that saw lower revenue. Expectations for fourth quarter tourism were positive, but more modest. Minnesota hotel demand in August increased by 3 percent over a year earlier; occupancy rates were unchanged, but increases were seen in average daily rates and revenue per available room. However, a late-summer drop in national park visitors suggested some slowness in Montana and South Dakota, which hold a majority of the District's larger national parks. Visits to the District's northeastern region saw healthy increases.\nProfessional Services\nActivity in the professional services industry increased moderately since the last report. Several contacts in insurance and financial services indicated that demand was up moderately. A construction engineering firm was expanding in Minnesota and the Dakotas. Contacts in agricultural transportation reported that the year through September had been strong, but there was much more uncertainty heading into a new marketing year.\nConstruction and Real Estate\nCommercial construction activity contracted slightly since the last report. Industry data suggested that commercial construction was down in August across much of the District compared with a year earlier. Other industry data showed that both new projects and total active construction projects near the end of September were modestly lower than at this time last year. Commercial permitting in September was mixed among the District's larger markets. Residential construction activity was moderately higher. September single-family permitting was higher in a majority of District metros compared with a year earlier, and some locations continued to see strong multifamily permitting, including Rochester, Minn.\nCommercial real estate saw modest growth since the last report. In Minneapolis-St. Paul, demand for industrial space continued to show strength, with vacancy rates falling slightly from already low levels and despite significant new construction. Office vacancy rates and asking rents were generally stable there as well, while sales of office space have been trending upward and were expected to continue to rise in the fourth quarter. Despite a strong increase in new units, multifamily vacancy rates in Minneapolis-St. Paul remained low. Apartment occupancy rates were also strong in western North Dakota, thanks to increased activity in the Bakken oil region. Residential real estate activity fell. Closed sales in September were lower compared with a year earlier in many of the District's larger markets.\nManufacturing\nDistrict manufacturing activity increased slightly. An index of manufacturing conditions indicated increased activity in September compared with a month earlier in Minnesota and North Dakota; the index for South Dakota indicated flat activity. Numerous manufacturers across the District reported strong output demand and production so far this year, but their outlook for the remainder of this year and for next was flat due to rising input costs and uncertainty over trade policy. A producer of industrial and mechanical equipment said recent demand and production were up moderately. A solar panel plant opened in Minnesota, and a producer of composite structural members was expanding a plant.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak overall. Persistent rain in early fall delayed or slowed harvests in some areas. Very strong harvests were expected around the District, including potential record yields in some cases. However, commodity prices remained weak, and greater production was not expected to completely offset the negative impact of low prices on farm incomes. International demand for crops, particularly soybeans, has fallen dramatically, according to contacts. A producer of dry beans reported that a large regular annual order from European Union countries was cancelled due to tariffs. A substantial number of dairy operations have exited the business since the beginning of the year. District oil and gas exploration activity as of early October decreased slightly from the previous report. District iron ore mines were operating at capacity. Contacts in nonferrous mining described activity as up slightly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"October 24, 2018\nSummary of Economic Activity\nSince our previous report, the Fifth District economy expanded at a moderate rate. On balance, manufacturing activity expanded moderately; however, rising materials costs and some hurricane-related disruptions were reported. Imports increased and exports declined but some Fifth District ports sustained property damage due to Hurricane Florence. Trucking activity remained robust despite highway and service center closures in hurricane-affected areas. Tourism and business travel also fell due to Hurricane Florence, as many travelers canceled bookings and coastal areas were evacuated. Farm animals were killed and crops were damaged by Hurricane Florence and by rainy weather, in general. Residential and commercial real estate activity picked up modestly. At the same time, loan demand picked up. Meanwhile, demand for nonfinancial services rose at a moderate pace. Labor demand strengthened and job openings increased while wage increases remained temperate. In general, prices continued to grow at a moderate rate.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks, and employment agencies reported a pick-up in new job openings. Meanwhile, employers continued to report very tight labor markets and difficulties finding qualified workers. Staffing firms saw stronger demand, particularly for customer service representatives and human resource professionals. Additionally, firms reported a need for more construction workers, engineers, IT professionals, accounting and finance professionals, plant workers, mechanics, and truckers. Wage increases remained modest.\nPrices\nOverall, prices continued to grow moderately in recent weeks. According to our latest surveys, manufacturer's selling prices grew at a moderate rate while their input prices rose at a slightly faster rate. Specifically, contacts reported price increases for packaging materials, paper, steel, aluminum, resin, and concrete. Additionally, a food manufacturer saw higher prices for poultry and eggs. Service sector firms reported moderate price growth in prices paid and prices received. Shipping costs continued to increase, according to firms in both manufacturing and services sectors. Coal prices rose slightly in recent weeks while natural gas prices increased at a moderate rate.\nManufacturing\nFifth District manufacturing activity increased moderately in recent weeks. A North Carolina fabric producer reported robust demand, and a Virginia window manufacturer attributed strong sales to high consumer confidence. However, many manufacturers struggled with rising costs of raw materials, some of which was attributed to the recent tariffs. A Virginia display case manufacturer looked to import materials from countries other than China. Several firms reported negative impacts from Hurricane Florence, which included lost production time, reduced demand, and/or larger backlogs. One firm said they could make up the production deficit with overtime, but it was going to be more expensive.\nPorts and Transportation\nFifth District ports saw mixed conditions in recent weeks. Some ports suffered losses from Hurricane Florence in the form of closures, property damage, and storm preparation costs. Overall, imports remained strong while exports decreased modestly. Port contacts attributed some of the export decline to the recent tariffs on American goods and believed that imports remained strong because orders were placed early, in anticipation of tariff increases. Meanwhile, a South Carolina airport reported booming business, unaffected by storms or tariffs, as both passenger and cargo flights continued to grow.\nTrucking activity remained robust since our last report. Demand stayed strong and companies continued to turn down business because of a lack of drivers. One North Carolina trucking company invested in new service centers to help with business growth, but another worried about rising costs of equipment. District truckers did see some effects from Hurricane Florence, largely coming from highway and service center closures as well as additional costs associated with protecting equipment.\nRetail, Travel, and Tourism\nReports on tourism were mixed since our last report, as Hurricane Florence discouraged people from visiting parts of the Fifth District. In Charleston, South Carolina, hotel occupancy fell significantly, and many hotels and restaurants closed as employees evacuated the area. In Asheville, North Carolina, hotels faced high levels of cancellations and local attractions lost business because of the hurricane. However, tourism in areas not affected by Florence was healthy. For example, a West Virginia resort reported strong business growth and high bookings for the coming months.\nFifth District retailers reported modest activity in recent weeks. A South Carolina auto dealer reported a slight uptick in business despite a downturn in sales at other local dealerships. Many stores saw sales growth and expected it to continue through the end of the year. However, retailers also expressed concerns about rising costs, some of which were attributed to the recent tariffs, and their inability to pass the cost increase through to customers.\nReal Estate and Construction\nResidential real estate firms indicated modest growth, overall. Home sales rose modestly in recent weeks and buyer traffic was steady, although low levels of inventory persisted. District home prices increased slightly, while days on the market were generally unchanged at low levels. Meanwhile, residential construction reportedly picked up in the District of Columbia, Virginia, South Carolina, and Maryland. Builders reported strong backlogs, although speculative construction remained limited.\nCommercial real estate leasing rose modestly in recent weeks. District brokers reported increased demand for restaurant, grocery, and industrial space, while retail activity was stable to increasing. Office leasing varied across the District. A North Carolina broker stated that urban office space is in high demand, leading to new construction and conversions. Meanwhile, vacancy rates decreased slightly across all sub-markets, and contacts reported that limited inventory pushed rental rates up slightly. On the commercial sales side, brokers reported modest increases in prices and sales. Multifamily leasing remained healthy, although reports on construction activity varied across the District.\nBanking and Finance\nOverall, loan demand rose moderately in recent weeks. Residential mortgage demand was generally described as stable to increasing modestly. On the commercial side, real estate loan demand strengthened moderately. Business loan demand increased slightly, on balance, while automotive lending was reportedly flat. Bankers in Virginia and the District of Columbia reported increased C&I lending in recent weeks. A West Virginia banker saw higher than normal deposit growth and an uptick in loan demand in oil and gas areas of the state and a leveling off in demand elsewhere. Deposits grew moderately since our last report and contacts continued to report increased rate competition among banks. Credit quality remained stable at high levels.\nNonfinancial Services\nThe demand for nonfinancial services grew moderately in recent weeks. An accounting firm reported stronger demand, particularly from clients in the professional services, information, and manufacturing sectors. One firm attributed their increased business to a newly awarded federal contract while another firm saw more bid opportunities. Meanwhile, healthcare service providers continued to report strong business conditions.\nAgriculture and Natural Resources\nNatural gas production increased slightly in recent weeks while coal production was little changed. Farmers in North Carolina lost crops and livestock to flooding from Hurricane Florence. A farmer in South Carolina who was not directly affected by the hurricane, but had a lot of rain since, was at risk of losing some crops.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\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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"October 24, 2018\nSummary of Economic Activity\nAggregate business activity in the Third District continued at a modest pace of growth during the current Beige Book period. The labor market remains tight, which continues to constrain hiring at a modest pace and to apply upward wage pressures at a moderate rate. Price pressures remained modest, with a smaller percentage of firms reporting increases in prices paid and received for their own goods than during the prior period. Nonfinancial services maintained a moderate pace of growth, and manufacturers resumed a moderate pace after slowing last period. Most consumer sectors continued at a modest pace. Construction sectors noted slight growth, while residential real estate sales remained constrained by low inventories; commercial leasing maintained modest growth. The growth outlook over the next six months remained positive, with over half of all firms anticipating increases in general activity; however, key industrial supply firms noted concern that future demand may fall because of excessive inventory buildups by their customers.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Over 40 percent of the manufacturing firms reported an increase in net employment, and over 25 percent of the nonmanufacturing firms reported net increases in full-time staff. Also, the percentage of firms that reported decreases in average hours worked was lower than in the prior period.\nSeveral firms noted that their job levels would be higher if they could find and retain employees. One firm noted difficulty launching a third shift because of a lack of workers; another firm--already at full capacity--will add cobots (or collaborative robots) to increase throughput. Likewise, staffing firms continued to report demand for new placements but limitations because of a lack of qualified candidates and difficulty retaining employees.\nOn balance, wage growth continued at a moderate pace. Nearly half of the nonmanufacturing contacts reported increases in wage and benefit costs. Most large firms reported modest, steady wage hikes, while some smaller firms appear to be catching up with wage hikes in excess of 3 percent. Staffing firms reported that resistance to raising starting wages softened further among their clients after years of holding wages steady.\nPrices\nPrice increases remained modest for most firms, and the percentage of firms that reported increases was lower than in the prior period. Among nonmanufacturing firms, about one-fourth reported increases for prices paid and for prices received. Likewise, just one-fourth of the manufacturing firms reported increases in prices received for their own goods. For prices paid, less than half of the manufacturers noted increases--down from nearly two-thirds last period.\nOne firm noted significant pushback to its announced price hikes from a major retail customer. Other firms reported difficulty meeting the prices of foreign competitors who are not exposed to tariffs on the primary input commodities of their products.\nLooking ahead six months, manufacturing firms continued to anticipate higher prices, with just over half expecting increases in prices paid and slightly under half expecting increases in prices received for their own goods.\nManufacturing\nManufacturing activity resumed a more moderate pace of growth--after dropping almost to its nonrecession average during the prior period. On balance, the firms reported improvements primarily as an increase in new orders, while shipments remained about the same.\nThe makers of lumber products, paper products, chemicals, fabricated metal products, electronic machinery, and industrial machinery tended to note gains in new orders and shipments; the makers of primary metal products reported mixed results. Several key industrial suppliers believe their clients placed excessive orders to boost inventories in advance of tariffs and now expect that demand will be lower over the next six months to a year. The firms continued to note greater uncertainty owing to tariffs and the threat of tariffs.\nOn balance, manufacturing contacts continued to expect general activity to increase over the next six months, with half of the firms expecting future increases in new orders and shipments. The firms' outlook for future employment remained nearly the same, with just under 40 percent expecting increases. However, expectations of future capital expenditures fell further but remain above nonrecession averages.\nConsumer Spending\nNonauto retailers reported strong back-to-school sales during August and modest growth for convenience goods in September and early October. While retailers generally credited the growing economy and strong consumer confidence, the strong August sales also benefited by comparison to weak sales in August 2017.\nAccording to dealers, September year-over-year auto sales were up slightly in Pennsylvania and down modestly in New Jersey. Year-to-date sales remained very close to the high 2017 sales level. Dealers expressed ongoing concerns about rising interest rates and potential tariff impacts on new car prices.\nOn balance, tourism contacts continued to report modest growth. One contact reported very strong demand in the Poconos region despite bad weather and slightly higher gas prices--2017 was a record year, and 2018 has been even better thus far. Shore activity has been mixed, with Delaware contacts noting strong traffic but weaker spending patterns. Meanwhile, Atlantic City casinos posted strong gains again during the month of August.\nNonfinancial Services\nOn balance, service-sector firms continued to report moderate growth in general activity. However, the percentage of firms reporting increased sales edged back to 50 percent, and the percentage reporting increased new orders dropped to 33 percent. One large service-sector firm noted continued improvement in customer retention and on-time payments. Expectations of future growth broadened slightly, with two-thirds of the firms anticipating increased activity.\nFinancial Services\nFinancial firms continued to report modest growth in overall loan volumes on a year-over-year basis (excluding credit cards). During the current period, loan volumes grew at a slightly slower pace than during the same period last year. Volumes (reported without seasonal adjustments) grew moderately in mortgages, in autos, and in other consumer loans (not elsewhere classified). However, these gains were offset by slight declines in home equity lines and by modest declines in commercial real estate lending and in commercial and industrial lending.\nCredit card lending also grew at a modest pace on a year-over-year basis. During the current period, credit card lending was flat because of seasonal factors.\nBanking contacts continued to note rising competition for loans and bank deposits and noted concerns that credit standards were slipping. However, they cited no signs of credit quality deterioration.\nReal Estate and Construction\nOn balance, homebuilders reported a slight improvement in September following weak activity at the end of August. Contacts reported less optimism for growth in 2019. Inventories of existing for-sale homes continued to fall and to constrain sales. Although a few local markets saw year-over-year increases, sales appear to have declined modestly overall.\nOverall, rents remained strong in the slowly growing nonresidential real estate market, especially for offices and industrial warehouses. One firm reports that demand for industrial space continues to outstrip supply in southern New Jersey and the Lehigh Valley. Meanwhile, in Trenton, NJ, and Carlisle, PA, the local labor markets are struggling to supply sufficient labor to meet demand. Commercial contractors noted an uptick in labor hours for August and September, but large projects are winding down, and nonresidential construction activity is expected to wane over the next year.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"October 24, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District grew modestly during the survey period and firms reported customer demand was stable. Reports suggest that hiring continued at about the same moderate pace as in recent months. Contacts reported ongoing shortages of both the quantity and quality of available labor and firms increased wages modestly to reduce worker turnover. Upward pressure on input costs was strong, notably for metals, construction materials, and fuel. Final selling prices increased as manufacturers, builders, and transportation firms raised their prices to cover their increased input costs. Manufacturing capacity utilization rose to keep up with strong demand. Freight demand plateaued at a high level and firms are increasingly feeling the pinch from limited trucking capacity. Retail demand, excluding autos, was flat. Nonresidential construction activity picked back up after a lull during the prior period.\nEmployment and Wages\nDistrict employers reported hiring activity that was broad-based across sectors and momentum that was similar to that in recent survey periods. Contacts generally reported business conditions that were favorable and stable as supporting their overall demand for workers. However, worker shortages, in terms of both quantity and quality, were noted across many sectors. One retailer remarked that the firm's headcount was unintentionally lower because it was losing warehouse workers faster than it can replace them. One trucking contact reported that it had 10 empty trucks because of its inability to find enough drivers with Class A commercial driver's licenses. Some manufacturers reported increases in overtime hours worked. In addition to limited labor supply, contacts noted that overall gains in staff levels were limited by high worker turnover.\nOverall wage trends were comparable to those of recent survey periods, with many contacts reporting wage increases that were slightly above the rate of inflation. In every industry, contacts noted that increased competition was requiring their firms to boost wages to retain workers. Yet a number of contacts speculated the raises were not likely sufficient to stem worker turnover. There were a few cases in which wage increases were much stronger than average. One retailer gave a 9 percent raise to new and current staff in the hope that the higher wage will reduce turnover. One construction contact reported taking a more targeted approach by giving 10 percent to 15 percent raises on a case-by-case basis; firm-wide, wages were raised by only about 2 percent. In professional services, contacts reported using bonuses and non-wage components to increase compensation.\nPrices\nUpward pressure on nonlabor input prices was strong, although prices rose for slightly fewer contacts than in the last report. Construction contacts reported increases in prices for LED lighting, concrete, steel, lumber, and copper. The majority of contacts attributed at least some of these increases to import tariffs. One trucking contact noted that prices for pallet jacks, tires, and packaging material were higher because of the tariffs. Only one construction contact noted that the diversion of materials for hurricane relief may have had an additional impact on prices. A few contacts remarked that the amount of time suppliers held their prices constant had diminished noticeably. In other sectors, higher fuel costs were reported.\nFinal selling prices rose with about the same momentum as in the prior period. Freight and construction firms were less aggressive in raising their prices than in the previous survey period. Construction contacts commented that they were raising their prices enough to maintain their margins. By contrast, one builder remarked his firm was holding prices and offering more incentives and giveaways. Nearly two-thirds of manufacturing contacts raised their prices this period. This was the fifth consecutive reporting period wherein more than half of manufacturing contacts reported raising their prices. Service-sector industries reported relatively more modest price increases as firms attempted to cover rising worker compensation costs.\nConsumer Spending\nRetail demand was flat during this period, breaking a nearly year-long trend of improving demand. Expectations for the near-term were mixed: retailers of nondurable goods expect demand to pick back up in advance of the holiday season, but auto retailers expect demand to remain flat. Auto retailers noted that new vehicle sales have declined slightly because of rising interest rates and increased unit prices. As a result, buyers have shifted somewhat toward used vehicles. Retailers with broad footprints noted that sales within the Fourth District were roughly in line with national retail sales. Retail profit margins were generally unchanged and inventory levels were reported to be good.\nManufacturing\nManufacturing demand remained strong, and contacts cited strong economic fundamentals as the cause. Industrial equipment manufacturers reported strong demand from the automotive, agriculture, and construction equipment industries. Some steel and heavy equipment manufacturers noted that demand was down slightly compared with demand two months earlier, but it was particularly strong in the early summer months as customers sped up purchases ahead of anticipated price increases. Several contacts reported increased capacity utilization to keep up with strong demand, while long lead times and tariff-related gaps in supply chains have caused mismatches in inventories. Contacts reported that they have increased their capital expenditures to keep up with customer demand and to fill supply chain gaps left by suppliers' capacity constraints.\nReal Estate and Construction\nHomebuilders reported that demand fell modestly, but they do not expect demand to fall further in the near future. Homebuilders point to a decrease in home affordability as the primary driver of this demand decrease. Lower-priced homes are selling better than more expensive homes. Builders are reducing the number of spec homes they are building. Real estate contacts reported an increase in homeowners relative to renters. These contacts also reported stable housing inventory and consistent demand from first-time homebuyers.\nNonresidential builders reported a pickup in demand after a lull during the prior period. Demand growth was driven by private spending; demand from the public side was still low. Builders note that backlogs are still high and pointing to strength in the broader economy, and they expect growth to continue in the near term. Nonresidential construction prices are rising as builders pass through increasing materials costs, especially for metals, but builders are not increasing their margins.\nFinancial Services\nBankers reported that overall conditions held steady during the last two months. Some contacts reported that demand for commercial and industrial loans softened as businesses shifted to cash earned in the strong economy while another noted increased activity in commercial real estate and in mergers and acquisitions. Mortgage demand and core deposits were a bit stronger than the previous survey period, but contacts noted that this strengthening may be a seasonal trend. Delinquency rates remained low; one contact reported that the delinquency rate was at a record low, suggesting that financial conditions are strong.\nNonfinancial Services\nNonfinancial services firms reported stronger demand as the macro economy continued its ascent. Business advisory and IT firms attributed the favorable business conditions to their clients enjoying tax savings, higher revenues, strong business confidence, and increased budgets for digital transformation. Contacts reported that plans for capital investments held steady. In the transportation sector, demand plateaued at a high level. Contacts reported that limited freight capacity continues to hamstring growth in the industry. One trucking contact noticed growing discontent among members along the food supply chain, from grain producers all the way to restaurants, about the limited availability of trucks to transport their goods. This contact also noted that these firms were all planning to pass rising transportation costs through to their customers in a variety of ways.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\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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"October 24, 2018\nSummary of Economic Activity\nEconomic activity in most sectors expanded at a moderate to strong pace since August, although real estate markets showed mixed activity. Retailers reported robust sales increases, and travel and tourism enjoyed a strong summer season. Manufacturing firms posted moderate growth on balance, and IT firms showed results ranging from flat sales to double-digit growth. Residential real estate prices continued to rise in most First District states despite slower sales in some places. Commercial real estate activity was mixed across metro areas. Labor markets remained tight, and wage increases continued at a moderate pace. Price increases appeared more widespread and, in a few cases, reflected the impact of tariffs. Most contacts retained a positive outlook, although some perceived an increase in downside risks.\nEmployment and Wages\nMost contacts said that labor markets remained tight. On balance, headcounts increased only slightly, and wage increases accelerated somewhat but remained moderate. Retail hiring held steady, although some positions were hard to fill, and the restaurant industry on Cape Cod continued to experience binding labor shortages. All manufacturing contacts reported that they were hiring, but increases in employment were small, as contacts said that hiring and retaining qualified workers remained difficult. As a result, they were paying higher wages and salaries. At IT firms, employee headcounts and the labor turnover rate were stable, but the tight labor market spurred fresh wage increases at one firm. Several other IT firms said that wages had increased 3-4 percent since last year, mainly in order to cover cost-of-living increases. Commercial real estate contacts noted that construction wages continued to rise at a moderate-to-robust pace to attract scarce labor in that market.\nPrices\nPricing pressures intensified in response to a variety of factors, resulting in moderate price increases on average. At least one retailer expects tariffs on Chinese-sourced goods to add upward pressure on the prices charged by their suppliers, although the extent of any price increases remains uncertain, and another retailer reported being unaffected by tariffs. New car prices are also expected to increase significantly to cover the burden of recently implemented tariffs. All but one manufacturing contact reported charging higher prices, but a semiconductor firm indicated that increased competition was driving down the prices it could charge. Trucking costs--which increased 5 to 10 percent--continued to present a major problem, contributing to recent price increases by manufacturers. Also, three manufacturing firms faced higher input prices due to tariffs on Chinese goods and services that were not readily substitutable, and the firms expected to pass on (or had already passed on) to consumers at least some of the tariff burdens. Two IT firms imposed moderate price increases recently, while others held prices steady on balance. Hotel room rates on Cape Cod were up almost 5 percent from last summer, but some lowered prices as needed in response to price competition from online home rentals. Construction costs continued to climb at a brisk pace in response to increases in the costs of construction labor, land, and raw materials, and one contact expects the higher costs to get passed on to tenants and buyers.\nRetail and Tourism\nRetailers reported moderate to very strong year-over-year sales increases to September and expect sales to stay strong through year's end. A state automotive trade association reported that auto sales fell sharply in September compared with the summer months, but whether that decline marks the beginning of a trend remains to be seen. Still, dealers believe that sales might be crimped moving forward in response to rising price tags for new cars and higher consumer financing costs.\nTravel industry contacts reported that business remains strong. As of August, airline passenger traffic through Boston had increased 8 percent year-over-year. Port traffic in Boston increased this past summer as retailers accelerated imports to avoid tariffs that were slated for the fall. Hotel occupancy rates on Cape Cod were up about 5 percent from last year. The Cape's restaurant industry suffered ongoing, acute labor shortages, and these are seen as placing a restraint on industry growth moving forward.\nManufacturing and Related Services\nOf the five manufacturing firms contacted, four reported sales that were either moderately or strongly higher year-on-year, and one reported slightly lower year-on-year sales despite improved performance more recently. One manufacturer's growth was held back by difficulties in finding qualified workers and by delays obtaining capital equipment. As noted above, three firms faced cost increases associated with tariffs, but so far experienced no major impacts on sales. One firm also was subject to retaliatory tariffs on its exports to China, but thus far has suffered no decline in sales to that country. Capital expenditure plans were unchanged from August. Four contacts retained a positive outlook, while another expects a recession in the second half of 2019.\nInformation Technology Services\nSoftware and IT firms in the First District experienced further robust growth on balance in recent months, either on par with or somewhat faster than what was reported in August. Year-over-year revenue growth rates ranged from the high single digits to the low double digits, with one exception involving flat revenues. Recent performance was boosted by increasing demand for new, cloud-based products. A contact that recently raised its prices noted that no customer turnover had resulted from that move so far. Overall, contacts were optimistic about the state of the industry and the economy in the coming quarters.\nCommercial Real Estate\nCommercial real estate activity was mixed across the First District. Leasing activity remained strong in the Boston area, but reportedly slowed somewhat in both the Hartford and Providence areas. A Hartford contact attributed the weaker activity to slow economic growth in Connecticut. Office vacancy rates were described as very low for both Boston and Providence, reflecting positive net absorption that occurred in the past six months in both metro areas. Sales activity was described as stable. Construction activity held steady in the Boston area and was described as very limited in Connecticut. Borrowers for some construction projects in the Boston area have reportedly had to request higher loan amounts in order to cover higher-than-expected construction costs. The outlook dimmed in greater Hartford, but remained cautiously optimistic elsewhere. Contacts continued to see downside risks, however, in the form of rising construction costs and rising long-term interest rates.\nResidential Real Estate\nResidential real estate markets were somewhat mixed. This report covers year-over-year performance through August 2018 for all areas except Connecticut, which failed to provide data due to an ongoing technical issue. Vermont statistics represent combined performance for single-family homes and condos. For single-family homes, closed sales increased in Boston, Maine and New Hampshire, decreased moderately in Rhode Island, and were down slightly in Massachusetts. Pending single-family sales were up by robust margins in New Hampshire and Massachusetts, down sharply in Rhode Island, and posted either small (Boston) or moderate (Maine) decreases elsewhere. For condos, closed sales increased or stayed roughly flat in all reporting areas, while pending sales were mixed. Vermont saw a moderate decrease in closed sales for the combination of condos and single-family homes, but its pending sales were up sharply. Single-family home prices increased in all areas by slim to robust margins, while condo prices increased in all areas except Rhode Island, which saw a moderate decline on that score. A Rhode Island contact noted that home inventories increased (from a year earlier) for the second straight month, following an extended period of inventory declines. Elsewhere, however, inventories continued to decline. Despite recent fluctuations in sales activity, contacts expressed optimism for the coming months. They cited the holiday season and tax cuts as possible reasons to expect an increase in sales before the end of the year.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"October 24, 2018\nSummary of Economic Activity\nReports from Sixth District business contacts indicated that economic activity expanded at a moderate pace from mid-August through September, and most expect the pace to continue through the last quarter of the year. The labor market remained tight, and reports of wage pressures increased. Firms continued to note increasing nonlabor costs and a growing number of contacts reported the ability to pass along those increases. Retailers, including automobile dealers, cited slightly higher sales since the previous report. Tourism activity exceeded expectations. Contacts reported that residential real estate market activity expanded at a modest pace, and commercial real estate activity was robust. Manufacturing activity was solid with purchasing managers noting increased new orders and production since the previous report. Bankers cited that activity was healthy, on balance.\nEmployment and Wages\nWhile business contacts across the District reported increasing staffing levels, firms continued to cite that tightening labor markets, particularly among low-skill/hourly jobs, were restraining business activity. Constraints to growth were especially acute in construction, transportation, and manufacturing; while some contacts in food services also indicated turning down new business, reducing shifts, or occasional fast food store closures. Contrastingly, contacts continued to note that technological advances in agricultural, financial, and manufacturing processes had reduced the number of workers needed.\nA growing number of firms over the reporting period experienced an uptick in merit increases for workers; several contacts reported average merit raises in the 3 to 3.5 percent range. Many continued to mention that rising labor costs were a challenge, leading some firms to expand their geographical search for workers, relocate operations to lower cost labor markets, outsource work domestically and/or abroad, or \"wait it out\" by not filling certain positions.\nPrices\nFirms across the District continued to report rising nonlabor input costs, with some ability to pass along price increases. As noted in the previous report, anticipation of rising costs related to tariffs contributed to vendor price increases for commodities. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 2.0 percent in September. Survey respondents indicated they expect unit costs to rise 2.2 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retailers reported a slight increase in sales levels since the last report. Some contacts noted that tourist related retail sales were stronger than expected over the last two months. Automotive dealers reported an uptick in the level of sales of small SUVs and light trucks in September compared to a year ago.\nTourism and hospitality contacts in the District reported higher than expected tourism activity since the previous report. Hotel occupancy and average daily rates were higher than expected in tourist destination cities in Florida, Georgia, and Louisiana. Year-to-date Mississippi casino gaming revenue increased compared to the same time period last year. District contacts remain optimistic about activity in the fourth quarter.\nConstruction and Real Estate\nOn balance, reports from District residential real estate contacts indicated decelerating, but still positive, growth. Many builders reported that construction activity was up from the year-ago level. Lot and land availability remain constraints on building activity, but contacts noted that land costs have plateaued. Contacts characterized buyer traffic as steady, but with a low rate of conversion to sales. District builders expect home sales activity to remain at current levels for the next few months.\nMany District commercial real estate contacts noted continued strong demand. The majority of commercial contractors indicated that, on balance, the pace of nonresidential construction at least matched the year-ago level. Most contacts reported a healthy pipeline of activity. Industrial contacts noted that backlogs were steady rather than growing and retail contacts described activity as stable. Contacts expressed concern that material price uncertainty presents an ongoing challenge to bidding and fulfilling projects. The outlook for nonresidential and multifamily construction across the District remained positive though uncertain, with the majority of contacts anticipating activity to match or exceed the current level.\nManufacturing\nManufacturing firms reported that overall business activity was solid since the previous report. Most contacts indicated that new orders and production levels were increasing at a healthy pace. Purchasing managers cited extended delivery times for supply orders and continued upward pressure on input prices. Expectations for future production levels increased slightly from the previous period, with a little more than one-third of contacts expecting higher production over the next six months.\nTransportation\nOn balance, transportation activity across the District was little changed since the previous report. District ports continued to report considerable growth in freight. District railroads noted year-over-year increases in total traffic, led by substantial increases in the volumes of petroleum and petroleum products, pulp and paper products, aggregates and metallic ores; these increases were partially offset by declines in non-metallic minerals (including phosphates) and coke. Year to date, total railroad activity was up slightly over last year. Freight forwarders reported significant capital investments in facilities, aircrafts, and fleets as capacity constraints mounted due to steady increases in domestic and international volume. While noting some challenges, transportation contacts indicated no significant disruptions in the movement of freight as a result of changes in trade policy.\nBanking and Finance\nConditions at financial institutions remained healthy. Earnings continued to grow as higher interest rates drove improvement in net interest margins. Credit quality metrics remained positive with charge-offs and nonaccruals still at historic lows. However, financial institutions were reportedly starting to loosen underwriting standards due to slowing demand for credit and increased competition. Contacts indicated that financial institutions were relying more on borrowings and noncore deposits to fund asset growth. In addition, competition for core deposits was fueling an increase in mergers and acquisitions.\nEnergy\nOnshore crude oil and natural gas production continued to accelerate, spurring exports of both products from Gulf Coast terminals. Refinery utilization rates remained high and stable from the previous reporting period. Utilities contacts reported that while residential and commercial demand for power was flat to slightly down, industrial demand was strong. Regarding recently imposed tariffs, many energy contacts shared that their businesses had responded by reorganizing supply chains. Technological advancement in areas such as robotics and global monitoring of control centers and pipelines continued to enhance efficiencies for the District's energy sector. Contacts continued to point out that business growth was constrained by inadequate supply of truck drivers and highly specialized tradespeople.\nAgriculture\nAgriculture conditions across the District remained mixed. By late September, most of the District was drought-free. District corn, soybean, cotton, and peanut harvests were close to their five-year averages although by late September, significant rain in Tennessee resulted in some crop damage and delays in harvesting. Year-over-year prices paid to farmers in August were up for corn, cotton, rice, and eggs, while soybean, beef, and broiler prices were down. Contacts remained concerned about tariffs and trade conflicts although there was some optimism concerning the newly agreed upon United States-Mexico-Canada Agreement. Recent reports indicated cropland values in the District rose from 2017 to 2018 with the exception of Florida where cropland values were flat.\nFor more information about District economic conditions visit: www.frbatlanta.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"

Dallas

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"October 24, 2018\nSummary of Economic Activity\nSolid expansion continued in the Eleventh District economy. Manufacturing output increased robustly, although demand growth slowed from last period. Healthy growth continued in retail and nonfinancial services. Loan demand and volumes increased further, as did loan pricing. Home sales were flat to up over the past six weeks. Drilling activity was flat as limited pipeline and transportation capacity inhibited growth. Employment increased, and widespread labor shortages continued to pressure wages and even restrain business growth in some sectors. Price pressures stayed elevated, partly due to tariffs driving up input costs. Outlooks remained optimistic despite increased uncertainty stemming from trade disputes, rising interest rates, and labor constraints.\nEmployment and Wages\nWidespread job growth continued across sectors. However, labor markets remained very tight, with most contacts reporting difficulty hiring and several saying the lack of qualified candidates was impeding growth. While labor shortages spanned most sectors and all skill levels, contacts reported the greatest prevalence in mid-skilled positions such as blue collar workers in manufacturing, construction, and energy, as well as truck drivers. Shortages were also cited for low-skill workers in the food service industry and high-skill workers in utilities, telecommunications, and business and financial services. A few contacts noted labor poaching was a real issue, especially energy sector firms reaching out to workers in manufacturing and retail. A staffing services contact voiced concern over an extreme shortage of qualified bilingual candidates, particularly for areas like customer service, call centers, accounting, and business development.\nUpward wage pressure was generally pervasive and strong, according to contacts. Some businesses were implementing non-wage strategies to recruit and retain workers, such as giving sizeable signing bonuses, offering part-time and/or flexible work schedules, and keeping employees on the payroll during periods of slower business. Also, a staffing firm reported that employers were willing to accept candidates that met only 60 percent of the qualifications rather than the usual 80 percent.\nPrices\nPrice pressures remained elevated in part due to tariffs, particularly in manufacturing and retail. Among manufacturers, roughly 60 percent of contacts said the tariffs announced and/or implemented this year have resulted in increased input costs. The share was even higher among retailers, at 70 percent. Several contacts noted lower profit margins resulting from not being able to raise selling prices enough to offset the full cost hikes. Aside from tariffs, some services firms said they have raised their prices to offset wage increases. Construction contacts continued to report high and/or rising material costs. Oil and gas support services firms said input costs rose at a faster pace in the third quarter than in the second and at a faster pace than they were able to raise the prices they charge.\nManufacturing\nRobust output growth continued in the manufacturing sector, although there were some signs that the expansion was moderating somewhat. Demand growth slowed in September, particularly for nondurables manufacturing such as chemicals. Labor constraints were reported as a damping factor, as were tariffs. In a September survey conducted by the Dallas Fed, nearly half of the 110 Texas manufacturing executives responding said the net impact on their firm of the tariffs announced and/or implemented by the U.S. and other countries is negative, while 9 percent said the impact is positive. The most common tariff effects were increased uncertainty, rising costs, longer supplier delivery times, and reduced production. Even still, manufacturers reported positive business conditions overall, and outlooks remained optimistic.\nRetail Sales\nRetail sales at Texas stores continued to expand solidly during the reporting period, while companywide and online sales growth abated somewhat. Some contacts, particularly auto dealers, noted that tariffs are prompting uncertainty. A contact noted that an online retail competitor has driven some retailers to shift their business model to remain competitive, such as offering in-store pickups for online orders and price matching. Retail contacts were notably more optimistic in their outlooks than they have been all year.\nNonfinancial Services\nThe nonfinancial services sector continued to expand robustly, with revenue growth led by transportation services and administrative and support services. Revenue growth accelerated in professional, scientific, and technical services but remained lackluster in leisure and hospitality. Most staffing firms reported surging demand for their services over the reporting period, noting strength in all markets, both geographically and by industry. There was some concern about potential effects of rising interest rates, and roughly half of the 212 Texas general services firms responding to a recent Dallas Fed survey said tariffs were driving up uncertainty. However, outlooks were largely optimistic--even more so than during the last reporting cycle--and several contacts said they expect strong demand to keep up through yearend and into 2019.\nConstruction and Real Estate\nHome sales were flat to up over the past six weeks, with continued strength noted at lower price points. Home prices were flat, and builders said it remained difficult to pass through notably higher construction costs. Rising interest rates and building costs were among top concerns in the single-family housing market. Apartment demand exceeded expectations in most major metros in Texas during the third quarter, pushing up occupancy and rents slightly.\nFinancial Services\nLoan demand growth remained strong over the reporting period, while growth in actual loan volumes eased slightly. The deceleration was most pronounced for residential real estate and commercial/industrial loan volumes, while consumer loan volumes actually grew at a faster pace over the past six weeks. Loan pricing continued to rise as did banks' cost of funds. Deposit volumes expanded, albeit at a slower pace, with many contacts reporting an increase in competition for deposits. Contacts continued to be optimistic about future economic activity and loan demand, however uncertainty in tariff and trade negotiations and a flattening yield curve were cited as top concerns.\nEnergy\nDrilling activity in the Eleventh District was flat over the past six weeks as pipeline capacity constraints continued to put downward pressure on prices received by oil and gas operators in the Permian Basin. The lower prices and transportation constraints have restrained growth in rig counts and pushed down demand for some production-related oilfield services. Overall, outlooks remained positive as additional pipeline capacity is expected to be operational by late 2019 or 2020.\nAgriculture\nDrought conditions improved remarkably over the reporting period thanks to ample precipitation across much of the district. While increased soil moisture will be a boon to the winter wheat crop, the rain came too late to help the 2018 row crops for which yields are expected to be down notably from last year. In fact, wet fields have to some extent hampered the harvesting efforts underway and could potentially cause quality issues for cotton. On the livestock side, conditions remained favorable with rising cattle prices, lower feed costs, and strong demand for beef.\nFor more information about District economic conditions visit: 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"

New York

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"Beige Book Report: New York\nOctober 24, 2018\nSummary of Economic Activity\nEconomic activity in the Second District has grown slightly since the last report. The labor market has remained very tight, and wage growth has remained moderate. Businesses reported increasingly widespread escalation in both input prices and selling prices, while prices of final goods and services have been steady or up modestly. Manufacturing and distribution activity continued to grow robustly, while growth has slowed in a number of service industries. Consumer spending was generally steady in recent weeks. Residential and commercial real estate markets have been mixed. Finally, banks reported some weakening in household loan demand and a modest pickup in delinquencies on home mortgages.\nEmployment and Wages\nThe labor market has remained very tight across the District. Employers continued to note difficulties finding qualified workers for various types of job openings. However, there have been scattered signs of softening in labor demand. One New York City based employment agency noted a lull in new postings in early October, and an upstate agency indicated some slowing in demand for contract workers.\nBusinesses in most industries report steady to modestly rising employment. In the finance, professional & business services, and manufacturing industries fewer contacts than last time indicated that they are adding workers. On the other hand, businesses in wholesale trade, leisure & hospitality, and education & health services noted some pickup in hiring activity. Retailers reported little change in staffing levels, and one large chain said they plan to hire roughly the same number of holiday-season workers as in 2017.\nWage pressures have remained fairly widespread. While businesses in most industries noted that wage growth has remained moderate thus far, a growing proportion reported that they plan to raise wages in the months ahead. A New York City employment agency noted a widening gap between salary expectations of job applicants and what employers are offering.\nPrices\nBusinesses reported increasingly widespread hikes in both input and selling prices. Input price pressures were reported across all industry sectors; they picked up in the wholesale trade, information, and real estate industries but receded slightly among manufacturers and retailers. Contacts in almost all sectors anticipated further increases in the months ahead--particularly those in wholesale trade and information.\nMore businesses than in recent months said they had raised selling prices--most notably in wholesale trade and leisure & hospitality. Retailers generally indicated that selling prices have been stable to up modestly. A sizable and rising proportion of contacts in wholesale trade and transportation said they planned to hike prices in the months ahead, while fewer leisure & hospitality firms said they would do so. A few contacts in manufacturing and distribution cited tariffs for driving up costs and inducing them to raise their prices.\nConsumer Spending\nRetail sales were mixed but, on balance, flat in September and early October. Non-auto retailers generally indicated that sales were flat or up modestly. One large retail chain noted that sales were running on plan and up slightly from year-earlier levels. New York City lagged the rest of the District slightly in the latest reporting period, partly reflecting weaker tourism. Retailers in upstate New York reported that sales picked up somewhat since the last report. Inventories were characterized as being at or a bit below optimal levels.\nNew vehicle sales weakened in September, according to dealers across upstate New York, and were down from a year earlier--partly attributed to reduced incentives. New vehicle inventories continued to run at or above desired levels. Sales of used vehicles have remained fairly elevated, though there were signs of slowing. Business at auto service departments has also slowed somewhat. Dealers continued to characterize retail and wholesale credit conditions as being in good shape.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) surged to a new cyclical high in September, based on the Conference Board's survey.\nManufacturing and Distribution\nManufacturers indicated that activity continued to expand briskly in recent weeks. Wholesalers reported a renewed pickup in growth in September, while transportation firms noted a pause in growth. Regarding the near-term business outlook, both wholesale distributors and manufacturers continued to express fairly widespread optimism, while transportation industry contacts have been more measured in their expectations. A number of contacts in these sectors expressed concern about tariffs.\nServices\nGrowth slowed noticeably in the latest reporting period. Contacts in professional & business services reported continued modest growth in activity, but businesses engaged in education & health services noted a pause in growth, while those in the leisure & hospitality and information industries noted a dip in activity. However, Broadway theaters reported continued growth in both attendance and revenues, both of which were running well ahead of comparable 2017 levels. Looking ahead, businesses in education & health services, professional & business services, and information industries continued to express optimism about the near-term outlook. Leisure & hospitality businesses said they expect business to be flat to up slightly.\nReal Estate and Construction\nHousing markets across the District have been mixed since the last report. In New York City, sales of existing co-ops and condos were down modestly, while sales of new units fell more sharply, albeit from elevated levels. In contrast, condo sales were said to be up noticeably in Westchester County. Single-family home sales were steady to down modestly in the suburbs around New York, including northern New Jersey. One contact ascribed some of this weakness to changes in federal tax law that limit deductibility of homeowner costs.\nThe inventory of homes on the market has risen throughout most of the District--particularly for smaller units in New York City. Still, current inventory levels remain quite low, particularly in upstate New York. Home price trends have been mixed, with values continuing to rise in upstate New York, Long Island, and northern New Jersey, but holding steady across New York City and its northern suburbs. Prices of new condos in New York City, as well as prices at the high end of the condo market more generally, have weakened noticeably.\nThe apartment rental market has been mixed. Manhattan's vacancy rate declined to its lowest level in a decade, reflecting a noticeable expansion in landlord concessions. Effective rents have trended down across New York City due to these increased concessions.\nCommercial real estate markets have been mixed but mostly steady. Office availability rates edged up in New York City, Long Island, and across much of upstate New York, while rents were little changed. In northern New Jersey, however, availability rates edged down, while rents were flat. Retail markets weakened across most of the District, with rents drifting down in New York City, Fairfield County, and across much of upstate New York. In contrast, industrial markets have continued to strengthen, with rents up 5-8 percent from a year earlier and availability rates mostly steady or declining.\nNew multi-family construction has tapered off somewhat across the District but a substantial volume of residential space is currently under construction--particularly in New York City. New office construction remains subdued. New industrial construction has remained sluggish across upstate New York, but it has strengthened in the New York City area.\nBanking and Finance\nSmall to medium-sized banks reported lower demand for consumer loans and residential mortgages, but steady demand for commercial mortgages and C&I loans. Banks reported tighter credit standards for commercial loans and mortgages but unchanged standards on household-sector loans. Loan spreads widened for residential and commercial mortgages. Finally, bankers reported a rise in delinquency rates for residential mortgages but unchanged rates for all other categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nOctober 24, 2018\nSummary of Economic Activity\nEconomic activity in the Tenth District increased at a moderate pace in September and early October. Consumer spending rose moderately, with contacts in the retail, auto, and tourism sectors noting higher sales than the previous survey period. Manufacturing activity continued to grow moderately, while contacts in the wholesale trade, transportation, and professional and high-tech sectors reported strong sales. Residential real estate sales continued to decline moderately, and expectations were for additional declines due in part to seasonal factors and higher interest rates. Commercial real estate activity expanded modestly. Energy activity accelerated, especially for oil, and additional gains were anticipated. Despite higher livestock prices, the outlook for District farm income remained subdued due to low crop prices. District employment was mixed across industries, and the majority of respondents reported labor shortages for both entry-level and skilled positions. Wage growth accelerated, and strong wage growth was anticipated in the coming months. Price gains also picked up, although growth in input prices generally outpaced that of selling prices.\nEmployment and Wages\nDistrict employment was mixed across industries since the previous survey, but contacts from most sectors reported rising employee hours. Contacts in the retail trade, wholesale trade, real estate, and energy sectors noted increasing employment levels, while those in the auto sales, restaurant, and tourism sectors reported a decline. Employee hours declined modestly in the health services and restaurant sectors, but were steady-to-increasing for all other reporting industries. Employment levels and employee hours were expected to rise modestly in the months ahead.\nThe majority of respondents noted labor shortages for both entry-level and skilled positions, including shortages for retail sales, kitchen staff, specialized IT, commercial drivers and skilled mechanics. Wage growth accelerated since the previous survey, with wages rising moderately in most sectors and strong growth anticipated in the coming months.\nPrices\nInput prices were moderately higher in September and early October, and selling prices rose modestly. In the retail sector, input and selling prices increased robustly compared to both the previous survey period and year-ago levels, and expectations were for similar gains in the months ahead. Restaurant contacts noted slight gains in selling and input prices since the previous survey period, but both were strongly above year-ago levels. Input prices rose strongly in the transportation sector, while selling prices increased modestly. Manufacturers reported modest price growth for finished products and moderately higher prices for raw materials. Most manufacturing contacts continued to note that recent trade developments had led to higher input prices. Respondents in the restaurant, transportation, and manufacturing sectors expected moderate growth in selling and input prices in the months ahead.\nConsumer Spending\nConsumer spending rose moderately, led by gains in retail sales, and contacts expected slight increases in the coming months. Retail sales expanded robustly compared to the previous survey period, and contacts anticipated sales to grow at a modest pace in the months ahead. Respondents noted household furniture sold well, while higher-priced items sold poorly. Auto sales continued to grow modestly, and contacts expected both sales and inventories to rise moderately in the coming months. Restaurant sales fell modestly compared to the previous survey period, but remained well above year-ago levels. Restaurant contacts anticipated sales to decline slightly in the next few months. Tourism sales increased slightly, however contacts projected a slight decline in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand at a moderate pace, and other business contacts experienced strong sales growth. Factory activity grew at durable goods plants due to increases in nonmetallic minerals, metals, and electronics, while nondurable plant activity slowed slightly. The level of production, shipments, and new orders increased slightly over the survey period, and each remained higher than year-ago levels. Manufacturers expected moderate increases in capital expenditures in the coming months. Many manufacturing respondents noted savings due to federal tax cuts, but a majority of respondents also noted negative impacts from tariffs, primarily due to higher input prices.\nOutside of manufacturing, firms in the wholesale trade, transportation, and professional and high-tech sectors reported strong sales with expectations for continued growth in the months ahead. Professional and high-tech firms anticipated capital expenditures to increase slightly moving forward, while wholesale trade firms expected capital spending to decrease slightly. Transportation contacts expected a modest increase in capital spending in the coming months, with some contacts attributing this increase to recent federal tax cuts.\nReal Estate and Construction\nOverall District real estate activity remained mixed as residential real estate activity declined modestly while commercial real estate activity rose modestly. Residential home sales continued to fall moderately, and selling prices and inventories of unsold homes grew modestly. Respondents expected additional decreases in residential sales moving forward, citing seasonal factors and rising interest rates. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential construction activity strengthened slightly since the previous survey period, and construction supply contacts expected sales to expand further in the months ahead. Activity in the commercial real estate sector continued to increase at a modest pace as sales, absorption, completions, and prices rose. However, a majority of respondents reported higher commercial vacancy rates for the first time since the end of 2016.\nBanking\nBankers reported a modest increase in overall loan demand in September and early October. Respondents reported a modest increase for commercial and industrial loans and a slight increase for commercial real estate and agricultural loans. Bankers indicated a slight decrease for consumer installment loans, while the volume of residential real estate loans remained steady. Loan quality improved modestly compared to a year ago, and respondents expected loan quality to improve slightly over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported a slight increase in deposit levels.\nEnergy\nDistrict energy activity accelerated since the last survey period, and contacts expected additional growth moving forward. The number of active oil rigs increased slightly, while the number of active gas rigs inched down. Oil prices rose, recovering somewhat after a slight dip last month. The majority of contacts have not been affected by price differentials between WTI Midland and Cushing, although some contacts noted a slight negative impact on oil production. Despite a glut of natural gas, contacts did not expect production to slow given the construction of additional pipelines which should increase future supply capacity. Increased U.S. exports of liquefied natural gas was viewed positively by a majority of respondents.\nAgriculture\nThe farm economy in the Tenth District remained weak as expectations of increased production contributed to a slight decline in corn and soybean prices since the previous reporting period. Corn and soybean production was expected to be strong in Nebraska, which could offset some adverse effects of low prices. Crop yields in Missouri, however, weakened considerably from a year ago and could further strain farm income. The price of wheat was down slightly from the previous reporting period, but remained higher than a year ago. In the livestock sector, the price of cattle increased slightly from the previous period, but remained lower than a year ago as inventories generally remained high. In contrast to the prices of other agricultural commodities in the District, hog prices increased sharply in September due to expectations of lower production and higher exports.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"October 24, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District slowed to a modest pace in late August and September, and contacts expected it to continue at that pace over the next 6 to 12 months. Manufacturing production and employment grew moderately, consumer and business spending increased modestly, and construction and real estate activity was flat. Wages and prices rose modestly and financial conditions were little changed. Greater-than-usual precipitation slowed the agricultural harvest and reduced the quantity and quality of crops.\nEmployment and Wages\nEmployment growth continued at a moderate pace over the reporting period, though contacts expected gains to slow to a modest rate over the next 6 to 12 months. Hiring was focused on production, sales, and professional and technical workers. As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels. Residential and commercial construction contacts said that a lack of workers was slowing the completion of projects: One contact reported a delay of 6 weeks because they couldn't find an elevator installer. Most contacts indicated that increased US and foreign tariffs had not affected their employment levels. Wage growth remained modest overall, with wage increases most likely for managerial, professional and technical, and administrative workers. In addition, numerous manufacturing contacts reported raising wages for entry-level production workers. Many firms reported rising benefits costs, though the number of firms reporting such increases declined from the previous reporting period.\nPrices\nPrices rose modestly in late August and September, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices increased slightly overall, though prices of groceries were flat. Retail contacts across numerous sectors indicated that they expected consumers to see the impact of US tariffs on imports by early 2019. Producer prices again rose moderately, reflecting in part the pass-through of higher labor, materials, energy, and freight costs.\nConsumer Spending\nConsumer spending increased modestly over the reporting period. Nonauto retail sales rose moderately, with gains in the furniture, appliances, hardware, electronics, apparel, hardware, lawn and garden, and hobby sectors, and slight declines in the grocery and jewelry sectors. Contacts in western Michigan reported rising hotel occupancy rates and airport traffic. Overall, respondents were pleased with back-to-school sales and expected good holiday season results as well. The rates of both new and used vehicles sales were unchanged on balance. Leasing activity slowed some.\nBusiness Spending\nBusiness spending increased modestly in late August and September. Retail contacts indicated that inventories were generally at comfortable levels. One contact noted that retailers were expecting good holiday sales and were building up inventories accordingly. Most manufacturing contacts also said stocks were at comfortable levels, though some indicated that inventories were too low as a result of longer lead times for materials. In addition, stocks at steel service centers remained well below historical norms. Capital spending increased modestly, and contacts expected growth to continue at that pace over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Most contacts indicated that higher US and foreign tariffs had not affected their capital spending schedules; among those who had reacted to tariffs, more said that they were slowing spending than increasing it. In addition, some contacts indicated that they were delaying capital spending decisions until the outcomes of trade negotiations were more clear. Demand for energy from commercial and industrial users increased modestly, with growth led by the manufacturing sector. Demand for transportation services remained at a strong level.\nConstruction and Real Estate\nConstruction and real estate activity was little changed on balance over the reporting period. Residential construction was flat, with growth in suburban single-family homebuilding offset by declines in other markets. Homebuilders reported that rising labor and materials costs continued to slow activity. Home sales declined slightly on balance. Contacts indicated that low inventories of starter homes continued to hold back sales, and there were some concerns that rising interest rates were also putting a damper on demand. Home prices and residential rents increased slightly. Nonresidential construction ticked higher, with contacts highlighting growth in the office-building sector. Nonresidential construction contacts also reported that rising labor and materials costs were slowing growth. Commercial real estate activity increased slightly on top of an already strong level, with reports of increased demand for for-sale industrial properties. Commercial rents ticked higher, and vacancy rates and the availability of sublease space edged lower.\nManufacturing\nManufacturing production increased at a moderate rate in late August and September. Steel output increased moderately, led by strong growth in demand from the energy sector. Steel imports continued to decline. Demand for heavy machinery rose moderately, with growth coming from the construction and energy sectors. Demand for heavy trucks increased slightly from an already strong level. Overall, order books for specialty metals manufacturers increased modestly; growth was spread across a wide variety of sectors, but was particularly strong from the oil and gas sector. Manufacturers of construction materials continued to report slow but steady increases in shipments. Auto production was flat, but remained at a solid level.\nBanking and Finance\nFinancial conditions were little changed over the reporting period, which was prior to the recent increase in volatility in the stock market. Financial market participants reported steady securities prices and volatility. Business loan demand was flat overall, though contacts reported higher demand from the manufacturing, healthcare, and warehousing sectors. Competition was particularly strong for small business loans. Loan quality and lending standards were little changed. Consumer loan demand was flat overall, though contacts reported a slight increase in demand for mortgage loans. Loan quality and lending standards edged up.\nAgriculture\nGreater-than-usual precipitation slowed the harvest and reduced the quantity and quality of crops, and expectations for net crop income fell accordingly. While expectations for yields were lower than in the prior reporting period, it was still likely that they would reach record levels. Contacts reported a notable drop in Chinese purchases of US soybeans following an increase in Chinese tariffs. Farmers also faced higher transportation costs due to rail issues, a shortage of truck drivers, and complications in shifting export destinations away from China. Contacts expected the record yields and weak export demand to push crop storage to abnormally high levels. Hog and dairy prices recovered some, boosted in part by US government purchases that were part of a program to compensate farmers for losses from higher foreign tariffs. Even so, dairy farmers continued to struggle. In addition, contacts viewed gains from the new US-Mexico-Canada Agreement as too small and too far in the future to help dairy farmers. Moreover, Canada and Mexico maintained their tariffs on agricultural goods (including pork and dairy) that they imposed in response to US steel and aluminum tariffs.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\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\nOctober 24, 2018\nSummary of Economic Activity\nEconomic conditions in the District have improved slightly since our previous report. Firms reported slight increases in employment and modest growth in wages. Price pressures have increased modestly primarily due to higher transportation costs. Reports from consumer spending contacts remained mixed. Manufacturers reported modest growth with increases in production and new orders. Residential real estate activity improved slightly while construction activity declined slightly. Commercial real estate markets were somewhat weaker than in previous reports. District bankers reported that loan volumes remain healthy but the rate of growth continues to slow. Agriculture and natural resources conditions have improved slightly since the previous report.\nEmployment and Wages\nEmployment has increased slightly since the previous report. Manufacturing employment grew modestly. Contacts in Arkansas reported slight growth while contacts in Missouri reported modest growth. Transportation employment also increased, as multiple distribution centers announced expansions. However, firms continued to report challenges attracting workers. Contacts in Memphis and Arkansas in particular noted difficulties filling high-wage, technical positions. Firms continued to use a variety of strategies, such as business partnerships and non-wage benefits, to recruit employees. One contact reported the launch of programs that teach foreign-born workers English to prepare them for jobs in the medical field and in manufacturing.\nWages have increased modestly since the previous report. Multiple contacts reported wage increases for entry-level workers. Furthermore, wages grew in manufacturing and trucking sectors and were generally flat in the hospitality sector. Wages for small business in St. Louis rose slightly.\nPrices\nPrice pressures have increased modestly since the previous report. Business contacts across the District reported moderate growth in fuel costs, contributing to rising trucking and transportation costs. A Louisville contact noted seeing an increase in rail prices. Coal prices in the region have increased moderately. Meanwhile, steel prices decreased slightly but remain elevated compared with a year ago.\nAgricultural commodity prices were mixed. Prices for cotton and rice have decreased slightly since the previous report while still remaining slightly above their price last year. Corn and soybean prices have increased slightly since the end of August. Wheat prices showed next to no change over the same time frame, but are up 25 percent from last year.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate mixed consumer spending activity. Real sales tax collections increased in Arkansas, Tennessee, and Kentucky relative to a year ago and decreased in Missouri. Louisville auto dealers reported that sales decreased year over year, and they indicate that higher interest rates may be affecting their business. Hospitality contacts in Missouri reported that sales were lower compared with the same time last year. They also expressed a pessimistic outlook for the remainder of 2018. Arkansas tourism sales tax revenue slightly increased year over year.\nManufacturing\nManufacturing activity has increased modestly since our previous report. Survey-based indexes indicate that Arkansas and Missouri manufacturing activity continued to expand from August to September but at a slower pace than in the prior month. New orders and production also increased in both states. Several firms across a variety of industries reported facility expansion and hiring plans, including manufacturers of paper products, automotive parts, and primary metals.\nNonfinancial Services\nActivity in the service sector has improved modestly since the previous report. The number of posted vacancies for nonfinancial services occupations increased in September in Louisville, Memphis, and St. Louis. The transportation sector continues to exhibit strong growth with higher demand for rail traffic and increased investment in delivery and fulfillment centers. However, growth is somewhat constrained by increased freight and fuel costs. The trucking industry's shortage in drivers is further compounded by limitations on driving hours for current drivers. Firms in the healthcare industry are reporting higher demand for services and increased investment in hospitals.\nReal Estate and Construction\nResidential real estate activity has improved slightly since the previous report. Seasonally adjusted home sales for August were mixed across the District's four largest MSAs but were relatively flat overall. Inventory levels remained low.\nResidential construction activity has declined slightly since the previous report. August permit activity decreased modestly across the District's MSAs. However, St. Louis builders reported an optimistic outlook for the rest of the year because of robust demand for single-family homes.\nCommercial real estate activity has declined slightly since the previous report. Louisville contacts reported decreased activity in office and retail property markets, and they noted that demand for office space has been relatively stagnant.\nCommercial construction activity has decreased slightly since the previous report. August multifamily permits were unchanged relative to the previous month in most of the District's MSAs. However, Louisville contacts reported a robust level of new construction underway for multifamily property types. They also indicated that there is a lack of new construction projects for warehouses.\nBanking and Finance\nBanking conditions in the District have improved moderately since the previous report. According to a survey of small and mid-sized banks, outstanding loan volumes grew by 6 percent in the third quarter relative to a year ago, which is a slight decrease from the growth rate reported in the prior quarter. District loan growth has now slowed in seven straight quarters but remains above the national rate. Commercial and industrial lending continued to be robust, growing by 11 percent from one year ago. In contrast, residential real estate lending remained slow and lagged behind that of the nation for the third consecutive quarter. Bankers continued to report slow growth in deposits growth.\nAgriculture and Natural Resources\nDistrict agriculture conditions improved slightly compared with previous reports. Production and yield forecasts increased from August to September for corn and soybeans. Expected production levels also improved for cotton and rice during the same period, but yield forecasts decreased. Relative to 2017, District corn, cotton, and soybean yields are expected to increase, but rice yields are projected to decline. Production levels of all four crops are expected to be greater than those from last year.\nNatural resource extraction conditions declined slightly from July to August, with seasonally adjusted coal production decreasing 0.6 percent. August coal production was 1.4 percent higher than a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nOctober 24, 2018\nThis report was prepared at the Federal Reserve Bank of Richmond based on information collected on or before October 15, 2018. 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\nEconomic activity expanded across the United States, with the majority of Federal Reserve Districts reporting modest to moderate growth. New York and St. Louis indicated slight growth, overall, while Dallas reported robust growth driven by strong manufacturing, retail, and nonfinancial services activity. On balance, manufacturers reported moderate output growth; however, several Districts indicated that firms faced rising materials and shipping costs, uncertainties over the trade environment, and/or difficulties finding qualified workers. Demand for transportation services remained strong. Labor shortages were broadly noted and were linked to wage increases and/or constrained growth. Reports on commercial and residential real estate were mixed, although several Districts saw rising home prices and low levels of inventory. Overall, consumer spending increased at a modest pace while consumer price growth ranged from modest to moderate. Travel and tourism generally picked up with a notable exception of North and South Carolina, where Hurricane Florence deterred tourism. Agricultural conditions were mixed as rainy weather helped some farmers but caused delays and crop damages for others, including the loss of crops and livestock due to Hurricane Florence.\nEmployment and Wages\nEmployment expanded modestly or moderately across most of the nation; San Francisco reported robust growth while three Districts reported little to no change. Employers throughout the country continued to report tight labor markets and difficulties finding qualified workers, including highly skilled engineers, finance and sales professionals, construction and manufacturing workers, IT professionals, and truck drivers. A couple of Districts reported that worker shortages were restraining growth in some sectors. Many firms reported high turnover rates and difficulties retaining employees. Some businesses implemented non-wage strategies to recruit and retain workers, such as giving signing bonuses, offering flexible work schedules, and increasing vacation allowances. Wage growth was mostly characterized as modest or moderate, though Dallas reported robust growth. Most businesses expected labor demand to increase modestly in the next six months, and looked for modest to moderate wage growth.\nPrices\nPrices continued to rise, growing at a modest to moderate pace in all Districts. Manufacturers reported raising prices of finished goods out of necessity as costs of raw materials such as metals rose, which they attributed to tariffs. Construction contract prices increased to cover rising costs of labor and materials. Retailers and wholesalers in some Districts raised selling prices as they continued to see increased costs in transportation and also worried about impending cost increases resulting from tariffs. Districts reported rising oil and fuel prices but gave mixed reports on movement of agricultural commodity prices.\nHighlights by Federal Reserve District\nBoston\nMost firms reported continued expansion. Most retailers, hoteliers, manufacturers, and IT firms saw year-over-year sales increases. Labor markets remained tight and wages increased at a moderate pace. Contacts reported moderately higher prices on average. Outlooks were cautiously optimistic.\nNew York\nActivity in the regional economy has grown slightly in the latest reporting period, while labor markets have remained very tight. Both input prices and selling prices have accelerated slightly. Residential and commercial real estate markets have been mixed.\nPhiladelphia\nEconomic activity continued to expand at a modest pace. Tight labor markets constrained hiring to a modest pace but maintained moderate wage pressures. Price increases remained modest. Notably, manufacturing resumed a moderate pace of growth. The growth outlook is generally positive despite some concerns that excessive inventories will reduce future demand.\nCleveland\nThe District economy grew modestly. Firms widely reported worker shortages and wage increases that were a little higher than the rate of inflation. Strong, upward pressures on fuel, building materials, and metals costs were noted. Nonfinancial services noted a pickup in activity, although retail and transportation lost momentum. Nonresidential construction activity improved slightly.\nRichmond\nThe regional economy grew moderately since our previous report. Overall, labor demand strengthened, wages rose modestly, and price growth remained moderate. However, firms across several sectors suffered from Hurricane Florence. The hurricane caused production disruptions for manufactures, port closures, reduced travel and tourism, and damages to crops and livestock.\nAtlanta\nThe economy expanded at a moderate pace. Labor markets remained tight, and reports of increasing merit percentages were more widespread. Nonlabor input costs continued to rise, on balance. Retail sales increased. The pace of residential construction grew modestly compared with year earlier levels, while nonresidential construction activity was up. Manufacturing activity remained strong.\nChicago\nGrowth was modest. Manufacturing production and employment grew moderately, consumer and business spending increased modestly, and construction and real estate activity was flat. Wages and prices rose modestly and financial conditions were little changed. Greater-than-usual precipitation slowed the agricultural harvest and reduced the quantity and quality of the crops.\nSt. Louis\nEconomic conditions in the District have improved slightly since our previous report. Reports from the manufacturing and services sectors were generally positive. The exception was the real estate sector, where reports were notably weaker that other sectors.\nMinneapolis\nEconomic activity grew moderately in the Ninth District. Hiring demand was strong, but was held back by tight labor markets. Wages and prices both experienced moderate pressure. Residential construction rose in September. Manufacturing activity grew, but the outlook was uncertain due to trade policy and rising input costs. Farm harvests were expected to be strong, but falling international demand was exacerbating low prices.\nKansas City\nEconomic activity expanded moderately in September and early October, led by strong sales in the retail, whole-sale trade, transportation, and professional and high-tech sectors. Input prices and wage growth accelerated since the previous survey, and strong wage gains were anticipated in the months ahead. Energy activity also picked up, due to stronger activity in the oil sector.\nDallas\nEconomic activity expanded at a solid pace. Healthy growth continued in manufacturing, retail and nonfinancial services. Loan demand increased further while home sales were flat. Capacity constraints restrained growth in the energy sector. Widespread labor shortages pushed up wages while tariffs drove up input costs. Hiring continued, and outlooks remained quite optimistic.\nSan Francisco\nEconomic activity continued to expand at a moderate pace. Conditions in the labor market tightened noticeably, and price inflation increased moderately. Sales of retail goods picked up slightly, and activity in the consumer and business services sectors was solid. Activity in the manufacturing sector expanded moderately. Activity in residential and commercial real estate markets was robust. Lending activity picked up moderately.\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\nSeptember 12, 2018\nSummary of Economic Activity\nEconomic activity in the Second District expanded at a moderate pace in the latest reporting period. The labor market has continued to be tight, while wage growth has remained steady. Widespread increases in input prices persisted, but there have been signs of a slight deceleration in selling prices. Manufacturing activity continued to grow briskly, while businesses in most service and distribution industries reported more modest growth. Consumer spending was generally steady in recent weeks. Housing markets have softened somewhat, on balance, while commercial real estate markets have firmed slightly. Finally, banks reported continued growth in loan demand and little change in delinquency rates.\nEmployment and Wages\nThe labor market has remained tight across the District. Employers continued to note trouble filling senior positions and finding technically skilled workers--particularly IT workers and engineers, as well as truck drivers and construction workers. One retail contact also noted difficulty in finding cashiers and sales associates. Some business contacts in upstate New York have faced challenges attracting skilled and specialized workers to rural areas and even smaller cities. A New York City employment agency noted that the labor market has remained tight, and anticipates brisk hiring to resume after Labor Day, following the usual summer lull.\nHiring activity has been steady overall but mixed by industry. Business contacts in manufacturing, wholesale trade, and finance continued to report fairly brisk hiring activity. In contrast, firms in retail trade, leisure & hospitality, and transportation indicated steady to slightly declining staffing levels, though they plan to add workers in the months ahead. A payroll service firm observed some further slowing in job growth at small businesses.\nBusinesses in most service industries indicated that wage pressures remain fairly widespread, though they have not intensified. A major New York State employer noted success in using non-wage benefits (e.g., vacation, flexible hours) to attract younger workers. Looking ahead, fewer businesses indicated planned wage increases than had been the case in recent months.\nPrices\nBusinesses continued to report widespread hikes in input prices--particularly in manufacturing, wholesale trade, and education & health. Contacts in almost all sectors anticipated further increases in the months ahead, with a sizable number of contacts indicating that tariffs were driving up costs, particularly in the manufacturing sector.\nAs for selling prices, however, fewer businesses than in recent months said they were raising their prices--particularly in the wholesale trade sector. One notable exception was in the education & health industry, where contacts noted some acceleration in prices received. Retailers generally indicated that selling prices have remained stable, with one contact noting widespread discounting on remaining summer merchandise. A number of wholesale trade and transportation contacts said they planned to hike prices in the months ahead.\nConsumer Spending\nRetail sales were mostly steady in July and August. While somewhat more retail contacts indicated declining than increasing sales, a major retail chain noted that sales rose and were above plan in both months, running 2-4 percent ahead of comparable 2017 levels. Sales at New York City stores slowed slightly, but were still up moderately from a year earlier. Retailers in upstate New York reported that sales were mostly soft in July but picked up in August.\nAuto dealers in upstate New York reported that new vehicle sales were fairly soft in July, running below year-ago levels, but showed signs of picking up in August. New vehicle inventories remained at or above desired levels. Meanwhile, sales of used vehicles strengthened further. Dealers generally characterized retail and wholesale credit conditions as being in good shape, though one contact reported some pullback toward the lower end of the retail credit market.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) retreated from a cyclical high, based on the Conference Board's survey, though the public's assessment of the job market climbed to new highs.\nManufacturing and Distribution\nManufacturers indicated that activity continued to expand at a brisk pace since the last report. Transportation firms reported modest growth, while wholesale distributors noted a typical seasonal slowdown in growth. Regarding the near-term business outlook, wholesale distributors and manufacturers expressed ongoing optimism, while transportation industry contacts have become less upbeat. A sizable number of contacts in these sectors noted that recent hikes in tariffs have raised their overall input costs, and some have expressed concern about the effects of changes in trade policy on various aspects of their business. One utility firm noted that tariffs on some construction materials may force them to scale back capital investment a bit.\nServices\nService-sector firms reported mixed results in the latest reporting period. Businesses in the education & health service sector noted a pickup in activity, whereas contacts in information and professional & business services indicated that activity continued to expand at a subdued pace. Businesses in leisure & hospitality reported a slight dip in activity, though tourism in New York showed continued strength, as both hotels and Broadway theaters reported brisk business. Looking ahead, leisure & hospitality businesses expressed growing optimism about the near-term outlook, and contacts in the service sector generally remained sanguine. Information industry contacts were noticeably less upbeat than in the prior report.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, softer since the last report. Home sales activity dropped off sharply in New York City--especially in Manhattan. Selling prices have remained mostly flat, though one real estate expert interpreted the drop-off in sales as suggesting a decline in underlying values and partly attributes this to the new federal tax law. In contrast, housing markets in parts of upstate New York have shown continued strength. One contact reported growing interest among homebuyers in neighborhoods of Buffalo and Niagara Falls previously considered less desirable. There was also said to be rising interest in renovating abandoned buildings in Albany, Troy, and Schenectady for both homeownership and mixed-use development. The inventory of unsold homes has remained very low across the District, though it has risen in New York City.\nThe apartment rental market has been mixed but generally steady. Rents have continued to drift down in Manhattan but have been steady to somewhat higher in Brooklyn and Queens. Vacancy rates have remained very low, as landlord concessions have remained widespread but not risen. Outside New York City, apartment rents have continued to trend up modestly, running 2-3 percent ahead of a year earlier.\nCommercial real estate markets have firmed slightly. Office availability rates declined modestly in northern New Jersey, Westchester, and Fairfield counties. Office markets were steady in Manhattan and upstate New York, but slackened modestly in Long Island. The market for industrial space continued to strengthen, particularly in northern New Jersey, where availability rates fell to multi-year lows and rents continued to climb, posting double-digit percentage gains from a year ago.\nNew multi-family construction starts reportedly slipped in recent weeks. New office construction has picked up slightly but remains subdued, while there has been very little new industrial construction. In all these categories, however, there continues to be a good deal of ongoing construction in progress.\nBanking and Finance\nFinancial services firms reported increasingly robust growth in activity but were somewhat less optimistic regarding the near-term outlook. Small to medium-sized banks reported higher demand for consumer loans and residential mortgages, but flat demand for commercial mortgages and C&I loans. Refinancing activity was reported to be steady. Bankers reported tighter credit standards for C&I loans, lower loan spreads across all categories, and widespread increases in average deposit rates. Delinquency rates fell across all loan categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/data-and-statistics/regional-data-center/index.html\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/2018/2018-09-kc

"Beige Book Report: Kansas City\nSeptember 12, 2018\nSummary of Economic Activity\nEconomic activity in the Tenth District increased modestly in late July and August, and growth was expected to continue in most sectors. Consumer spending increased slightly since the previous survey period, including gains in retail, auto, restaurant and tourism sales. Manufacturing activity expanded moderately, and respondents in transportation, wholesale trade, professional, and high-tech firms reported higher sales. Residential real estate conditions declined slightly, due in part to seasonal effects and higher interest rates, while commercial real estate activity rose modestly. Energy activity across the District held steady, although oil and gas production continued to rise. Agricultural conditions deteriorated further in the District, leading to stronger demand for farm loans and a slight worsening of loan repayment problems. Growth in employment and employee hours varied across sectors, and the majority of respondents continued to report labor shortages and higher wages. Input prices and selling prices rose in most sectors, and additional price gains were expected in the months ahead.\nEmployment and Wages\nGrowth in District employment and employee hours varied across sectors since the previous survey, although most respondents expected gains in the months ahead. Contacts in the retail trade, wholesale trade, transportation, restaurant and manufacturing sectors noted rising employment levels. However, respondents in auto sales, professional services, tourism, and health services reported a decline in both employment and employee hours. Employment and employee hours were expected to increase in the next few months in every sector except tourism.\nA majority of respondents reported labor shortages for low- and medium-skill workers, due primarily to a lack of qualified applicants. Contacts specifically noted difficulties filling commercial driving positions and most positions within the retail and food-services sectors. Wages rose modestly in most sectors, and moderate wage growth was expected in the coming months.\nPrices\nInput and selling prices rose in most sectors in late July and August, and additional increases were anticipated moving forward. Selling prices in the retail sector increased moderately compared to the previous survey period, while input prices rose robustly. Restaurant contacts reported a slight increase in both input and selling prices and anticipated a faster pace of price gains in the months ahead. Input prices in the transportation sector rose moderately, and selling prices edged up. Respondents in the transportation sector projected strong gains in input prices moving forward. After moderate gains earlier this year, prices in the construction sector held steady and remained moderately above year-ago levels. Manufacturers reported a slight increase in prices for both finished products and raw materials since the previous survey, and a large share of District manufacturing contacts reported that trade developments this year had led to higher input prices.\nConsumer Spending\nConsumer spending grew slightly compared to the previous survey period, with gains in retail, auto, restaurant and tourism sales. Retail sales and inventories edged up in late July and August and remained well above year-ago levels. Retail contacts anticipated overall activity to increase in the months ahead. Auto sales rose modestly compared to the previous survey period, and expectations were for strong growth moving forward. Auto contacts noted used vehicles and new sport utility vehicles sold well, although most other new vehicles sold poorly. Restaurant sales increased modestly compared to both the previous survey period and year-ago levels, and respondents anticipated growth to continue but at a slightly slower pace in the next few months. Tourism sales expanded at a slight pace but were expected to decrease modestly in the near term. Capital spending plans strengthened within all consumer spending sub-sectors with the exception of tourism.\nManufacturing and Other Business Activity\nManufacturing activity expanded at a moderate pace compared to the previous survey period, and the majority of other business contacts experienced slight-to-moderate sales growth. Factory activity grew moderately at both durable and nondurable plants. The level of production, shipments, and new orders also rose moderately over the survey period and remained higher than a year ago. Although manufacturers' capital expenditures continued to expand moderately, several contacts reported that recent trade developments had lowered capital spending plans.\nOutside of manufacturing, firms in the wholesale trade and transportation sectors noted moderate sales growth, whereas contacts in the professional and high-tech sector reported slight growth. A majority of business contacts anticipated moderate sales gains going forward. Transportation contacts expected a modest increase in capital spending in the coming months, while professional, high-tech, and wholesale trade firms projected moderate growth in capital expenditures.\nReal Estate and Construction\nDistrict real estate activity was mixed, with residential real estate activity declining slightly and commercial real estate activity rising modestly. Residential home sales fell moderately in late July and August and were similar to year-ago levels. Contacts expected further decreases in residential sales, citing seasonal factors and rising interest rates. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes, and home prices fell modestly. Residential construction activity rose slightly, and unsold home inventories experienced modest growth. Commercial real estate activity expanded at a modest pace as sales, absorption, completions, construction underway, and prices rose; vacancy rates decreased slightly. Expectations in the commercial real estate sector were for modest gains moving forward.\nBanking\nBankers reported a slight increase in overall loan demand in late July and August. Demand rose slightly for commercial and industrial loans and for commercial real estate loans. Respondents indicated a slight decrease for residential real estate and consumer installment loans, while agricultural loans held steady. Loan quality improved modestly compared to a year ago, and respondents expect loan quality to remain steady over the next six months. Credit standards remained largely unchanged in all major loan categories, and bankers reported a modest decrease in deposit levels.\nEnergy\nDistrict energy activity remained steady since the last survey period, and contacts expected gains in the months ahead. The number of active oil rigs was unchanged, while the number of active gas rigs moderated slightly. Oil and gas production continued to expand, and contacts expected solid production increases moving forward. Oil prices were slightly lower than the peak levels reached earlier in the summer, but remained higher than levels in recent years.\nAgriculture\nFarm income and credit conditions in the Tenth District weakened, and crop prices remained relatively steady following sharp declines in June and early July. The price of corn and soybeans increased modestly in late July, but declined in August to a level similar to the previous reporting period. With agricultural commodity prices generally lower than a year ago, District contacts reported a decrease in farm income in addition to stronger demand for farm loans. Loan repayment problems also worsened slightly throughout the District and were most significant in Nebraska, Colorado, Wyoming and New Mexico. District contacts reported that uncertainty surrounding trade was a primary concern, and the prolonged weaknesses in the agricultural economy were increasingly impacting farm borrower finances. Although interest rates on farm loans continued to increase alongside weakening agricultural credit conditions, farmland values declined only modestly.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"