Datasets:

khaihernlow

/

beige-books

like 0

National Summary

/beige-book-reports/2018/2018-09-su

"Beige Book: National Summary\nSeptember 12, 2018\nThis report was prepared at the Federal Reserve Bank of New York based on information collected on or before August 31, 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\nReports from the Federal Reserve Districts suggested that the economy expanded at a moderate pace through the end of August. Dallas reported relatively brisk growth, while Philadelphia, St. Louis, and Kansas City indicated somewhat below average growth. Consumer spending continued to grow at a modest pace since the last report, and tourism activity expanded, to varying degrees, across the nation. Manufacturing activity grew at a moderate rate in most Districts, though St. Louis described business as little changed and Richmond reported a decline in activity. Transportation activity expanded, with a few Districts characterizing growth as robust. Home construction activity was mixed but up modestly, on balance. However, home sales were somewhat softer, on balance--in some cases due to reduced demand, in others due more to low inventories. Commercial real estate construction was also mixed, while both sales and leasing activity expanded modestly. Lending activity grew throughout the nation. Some Districts noted weakness in agricultural conditions. Businesses generally remained optimistic about the near-term outlook, though most Districts noted concern and uncertainty about trade tensions--particularly though not only among manufacturers. A number of Districts noted that such concerns had prompted some businesses to scale back or postpone capital investment.\nEmployment and Wages\nLabor markets continued to be characterized as tight throughout the country, with most Districts reporting widespread shortages. While construction workers, truck drivers, engineers, and other high-skill workers remained in short supply, a number of Districts also noted shortages of lower-skill workers at restaurants, retailers, and other types of firms. Employment grew modestly or moderately across most of the nation, though Dallas noted robust job growth, while three Districts reported little change that partly reflected a dearth of applicants. Six of the twelve Districts cited instances in which labor shortages were constraining sales or delaying projects. Wage growth was mostly characterized as modest or moderate, though a number of Districts cited steep wage hikes for construction workers. Some Districts indicated that businesses were increasingly using benefits--such as vacation time, flexible schedules, and bonuses--to attract and retain workers, as well as putting more resources into training.\nPrices\nPrices of final goods and services continued to rise at a modest to moderate pace in most Districts, though there were some signs of a deceleration. All Districts noted fairly widespread input price pressures, particularly for construction materials and freight transportation. Tariffs were reported to be contributing to rising input costs, mainly for manufacturers. Businesses' input costs have generally been rising more rapidly than selling prices, though there have been increased efforts to pass along cost hikes to customers. A few Districts noted some increase in inflation expectations.\nHighlights by Federal Reserve District\nBoston\nFirms reported continued expansion of business activity. Retailers, manufacturers, and staffing firms cited year-over-year increases in revenues and sales. Labor markets remained tight amid little net hiring. Contacts reported only modest increases in prices, if any. Outlooks continued to be positive.\nNew York\nThe regional economy expanded at a moderate pace, and labor markets have remained tight. Input price in-creases have remained widespread, while firms' selling prices have decelerated somewhat. Housing markets have softened, on balance, while commercial real estate markets have firmed a bit.\nPhiladelphia\nEconomic activity continued to expand at a modest pace. With tight labor markets, wages grew moderately despite incremental job growth. On balance, contacts continued to observe modest price increases but expressed growing concern for future inflation. Notably, manufacturing slowed to a modest pace of growth, and nearly two-thirds of the manufacturers reported rising prices paid.\nCleveland\nThe District economy grew at a moderate pace. Labor markets tightened, and wage pressures were noted broadly. Cost pressures among manufacturers and construction firms continued, especially for metals, construction materials, and transportation. Stronger confidence in the economy boosted demand in nonfinancial services and the retail sector. Construction activity weakened.\nRichmond\nThe regional economy grew moderately in recent weeks. Port and transportation activity remained robust. Business travel and tourism was also strong throughout the Fifth District. Meanwhile, manufacturers gave mixed accounts as some firms were unable to pass along higher input prices. Labor demand strengthened, and employers continued to report difficulties finding qualified workers. Prices grew moderately, overall.\nAtlanta\nThe Sixth District economy expanded at a moderate pace. Labor markets remained tight, and wage pressures increased for some firms. Most nonlabor input costs were stable. Retail sales improved further. On balance, the pace of nonresidential construction was flat compared with year-earlier levels, while residential construction activity was up. Manufacturing activity continued to grow.\nChicago\nGrowth picked up to a moderate pace. Manufacturing production and employment grew moderately, consumer and business spending increased modestly, and construction and real estate activity was up slightly. Wages and prices rose modestly, and financial conditions improved slightly. Overall crop yields appeared set to forge a new record.\nSt. Louis\nEconomic conditions improved slightly. Labor market conditions remained tight, and wage growth was modest. Manufacturers facing higher input prices reported passing those costs along to their customers. Agriculture contacts estimated that the majority of the soybean crop has not yet been priced, leaving farmers exposed to current market conditions.\nMinneapolis\nNinth District economic activity expanded moderately. Employment grew strongly, despite continued labor constraints. Hiring demand was robust, and wage growth was moderate to strong. Price pressures increased moderately overall. Manufacturing activity increased, but contacts in manufacturing and agriculture remained concerned about negative impacts from trade restrictions. Summer tourism grew moderately overall.\nKansas City\nEconomic activity expanded modestly in late July and August, including gains in consumer spending, manufacturing, wholesale trade, transportation, high-tech, and professional services. Manufacturing contacts noted that recent trade developments had led to higher input prices and lower capital spending plans for some firms. Prolonged weaknesses in the agricultural sector were increasingly impacting farm borrower finances.\nDallas\nEconomic activity expanded at a solid pace. Manufacturing and service sectors sustained a healthy pace of growth, while activity in the housing and energy sectors was flat to down. Retail spending accelerated, as did loan demand. Wages and other input costs rose, but firms' ability to pass these increases on to customers was limited.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Conditions in the labor market tightened further, and price inflation increased moderately. Sales of retail goods picked up moderately, and activity in the consumer and business services sectors edged down slightly. Activity in the manufacturing sector expanded modestly. Activity in residential and commercial real estate markets was solid. Lending activity ticked up modestly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2018/2018-09-da

"September 12, 2018\nSummary of Economic Activity\nSolid expansion continued in the Eleventh District economy, although the pace eased slightly compared with the last report. Manufacturing output increased, and loan demand and retail spending accelerated. Broad-based expansion in the service sector continued. Home sales slowed, and drilling activity was flat. The ongoing drought dampened crop and grazing conditions. Employment increased, and widespread labor shortages continued to pressure wages. Price pressures stayed elevated largely due to increases in input costs. Although outlooks remained fairly optimistic, trade-related concerns have heightened uncertainty.\nEmployment and Wages\nJob growth continued to be widespread across sectors. Labor shortages persisted, covering a wide range of industries and skill sets, and several contacts said that a lack of qualified candidates was constraining growth. Poaching of skilled labor in midstream construction was reported, and a staffing firm said they had cancelled retainer contracts with some customers in order to recruit those firms' employees for active clients.\nWage pressures remained elevated, with more than 60 percent of firms saying they were increasing wages and/or benefits to recruit and retain employees. Upstream energy firms reported significant pressure to raise wages in the Permian Basin despite flattening of the rig count, and midstream and downstream energy companies also cited rising wage pressures, particularly for personnel with less than five years of experience. A transportation services firm was offering up to $15,000 in multi-year sign-on bonuses in some areas. Retailers noted difficulty filling lower-level positions, with several contacts reporting starting wages of $15-$16 per hour to remain competitive. Nearly 60 percent of firms said they were unable to pass higher labor costs to customers through price increases.\nPrices\nPrice pressures remained elevated in part due to tariffs, although they did ease slightly over the reporting period in manufacturing and retail. Price pressures were little changed in the service sector. Firms' ability to pass on higher costs to customers was limited, although a few did mention plans to raise prices in the near term. Fuel prices were flat over the reporting period. The price of West Texas Intermediate (WTI) crude oil remained in the high $60s; however, prices received by some producers were reportedly $10-$17 lower due to limited pipeline capacity.\nManufacturing\nRobust expansion continued in the manufacturing sector. Output growth strengthened for durables, led by a pickup in fabricated metals and in computer and electronic product manufacturing. Machinery production remained solid, while demand for primary metals and transportation equipment manufacturing was flat. Among nondurables, food and chemical production increased. The Gulf Coast refinery utilization rate climbed further to 99.4 percent in mid-August. Relatively low domestic feed costs and expectations of healthy global demand boosted refiners' and chemical producers' outlooks. Overall, outlooks among manufacturers remained positive, although tariffs have increased uncertainty in expectations.\nRetail Sales\nRetail sales accelerated during the reporting period. Online sales remained solid, and seasonal retailers noted a marked increase in activity. A clothing retailer said sales along the border were trailing other areas. Auto sales strengthened in August following weakness in July. While outlooks stayed positive, concern over tariffs and rising interest rates was noted.\nNonfinancial Services\nThe nonfinancial services sector expanded broadly, with revenue growth firming up among healthcare, real estate and leasing services, and administrative and support services firms. Staffing services firms said high levels of demand were sustained by broad-based growth across geographies and industries. Activity in the transportation services sector remained markedly strong, with rail traffic solid across nearly all business lines and continued robust growth in container volumes. Courier cargo volumes rose year over year. Airline passenger demand remained stable, and continued strength was expected in most markets. Revenue growth was moderate in the professional and business services and the leisure and hospitality sectors. Expectations regarding future business conditions stayed optimistic, although higher fuel prices, labor shortages, and uncertainty surrounding trade policies remained sources of concern.\nConstruction and Real Estate\nActivity in the housing market softened over the reporting period, with most contacts noting slower-than-expected new-home sales. Existing-home sales were flat but remained near recent highs. Apart from the seasonal slowing, contacts said the recent heat wave, rising interest rates, and lower creditworthiness of entry-level buyers were affecting overall sales. Buyers remained price sensitive, and builders' noted compressed margins at the higher price points, as well as discounting on speculative inventory homes in some locations. Contacts expressed trepidation about the impact of higher interest rates, rising building costs, and uncertainty surrounding trade and immigration policies on future sales, and some added that they expect starts to flatten out in the near term.\nA large number of new apartments continued to suppress rent growth in most major metros. Net absorption of office space moderated in Dallas-Fort Worth and remained weak in Houston in part due to the broader national trend among firms to move out of larger spaces into more efficient, smaller ones.\nFinancial Services\nLoan volumes and demand expanded at a faster pace. Growth remained broad based, with continued strength in commercial and residential real estate lending and a notable pickup in commercial and industrial loan volumes. Consumer loan growth slowed. Loan pricing rose further, albeit at a slower rate. The volume of core deposits expanded, and bankers noted an increase in the cost of funds and continued pressure to raise deposit rates. Contacts remained optimistic, although they cited flattening of the yield curve, tariffs, and regulatory compliance as top concerns.\nEnergy\nDrilling activity in the Eleventh District leveled off as pipeline capacity constraints put downward pressure on prices received by oil and gas operators in the Permian Basin relative to major oil benchmarks like WTI. The smaller independent companies are being hurt by the lower wellhead prices, which are near or below their breakeven levels; however, so far the discounts are not deep enough to shut in production. In contrast, margins have improved for oilfield services firms that were able to increase prices earlier in the year. Outlooks remained positive as additional pipeline capacity is expected to be operational in 2019.\nAgriculture\nLack of soil moisture continued to dampen agricultural conditions in Texas, with more than half the state experiencing drought. The corn and soybean crops were generally in fair to good condition, while pastures and the cotton and sorghum crops were mostly in fair to poor condition. Texas crop production this year is expected to be down 27-33 percent from 2017, depending on the crop, according to USDA estimates. There is also concern among the agricultural community about tariffs and trade wars. However, a potential bright spot for Texas agricultural producers is the high probability for an El Nino climate pattern this winter, which could mean cooler and wetter weather for the state.\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

/beige-book-reports/2018/2018-09-sl

"Beige Book Report: St Louis\nSeptember 12, 2018\nSummary of Economic Activity\nEconomic conditions have again improved slightly since our previous report. Firms indicated modest increases in employment despite continued difficulties finding workers. Wages and nonlabor costs increased modestly, and contacts reported modest growth in prices charged to consumers. Consumer spending activity improved slightly. Manufacturers reported no change in production but reported declines in capacity utilization and new orders. Residential real estate contacts noted that low inventories continue to limit sales. Construction activity increased modestly as contacts stated concerns over labor shortages and rising prices of building materials. District bankers reported little change in loan demand but expect an uptick in the fourth quarter. Agriculture conditions declined modestly, and local farmers expressed anxieties over low commodity prices. Overall, the outlook among contacts weakened slightly but remained optimistic. On net, 20 percent of contacts expect conditions for the rest of 2018 to be better relative to a year ago.\nEmployment and Wages\nEmployment has grown modestly since the previous report. On net, 25 percent of survey respondents indicated that employment was higher than a year ago. Contacts reported shortages of qualified job candidates across a variety of sectors, including construction, transportation, and healthcare. Organizations continued to undertake initiatives that attempt to address the current skills gap, such as firms forming partnerships with local high schools to prepare students for a technical career. Small business contacts highlighted the tight labor market as their main challenge, citing difficulties matching compensation and benefits that larger employers offer.\nWages have increased modestly since the previous report. On net, 40 percent of survey respondents indicated that wages were higher or slightly higher than a year ago, and 39 percent reported increases in labor costs. Contacts in construction and transportation reported that labor shortages have led to wage increases in those industries. Small business wages in St. Louis grew moderately.\nPrices\nPrices have continued to increase modestly since the previous report. On net, 32 percent of business contacts reported that prices charged to consumers increased relative to a year ago, about the same share as three months prior.\nNonlabor input costs also rose modestly. On net, 33 percent of survey respondents indicated that costs were higher than the same time last year. Multiple manufacturers reported facing elevated input prices linked to steel and aluminum tariffs as well as increased freight costs. Many of these contacts indicated they have passed or intend to pass along these costs to their customers.\nAgricultural food prices have shown slight to modest growth across the District since the previous report, yet remained depressed. The price movements of other commodities were mixed. Steel prices have declined slightly since mid-July but remain elevated compared with a year ago. Coal prices were unchanged.\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 Missouri, Arkansas, Tennessee, and Kentucky relative to a year ago. Retailers from northeast Arkansas reported year-to-date sales well above 2017 levels, and they expressed a positive outlook for the remainder of the year. Reports from auto dealers were mixed: Some contacts indicated that sales were higher than anticipated while others reported that sales failed to meet expectations. Multiple dealers noted that higher interest rates have posed a challenge to their business. Hospitality contacts in Missouri reported that sales exceeded expectations, and they continued to express a positive outlook for the coming months.\nManufacturing\nManufacturing activity has been mixed since our previous report. District contacts, on net, indicated that new orders and capacity utilization decreased in the third quarter relative to one year ago while production remained unchanged. However, survey-based indexes suggested that Arkansas and Missouri manufacturing activity continued to expand from June to July, and survey respondents expressed an optimistic outlook for the fourth quarter. Several companies reported new capital expenditure and facility expansion plans, including firms that manufacture auto parts, food and beverage products, and medical devices.\nNonfinancial Services\nActivity in the services sector has improved slightly since the previous report. On net, 37 percent of survey respondents indicated dollar sales in the current quarter increased relative to a year ago, and 32 percent expect next quarter's sales to be higher as well. The number of posted vacancies for nonfinancial services occupations in July increased moderately across Louisville, Memphis, and St. Louis. Transportation and logistics activity has slightly improved and firms expanded investment within the District. Local contacts continued to report a shortage of truck drivers. A Kentucky rail transporter voiced concerns that tariffs may reduce demand in the upcoming grain season.\nReal Estate and Construction\nResidential real estate activity has increased slightly since the previous report. Seasonally adjusted home sales for July were modestly above prior-month levels across the District's four largest MSAs. Local contacts indicated that inventory shortages continued to hinder sales, but they expect inventory levels to improve in the fourth quarter.\nResidential construction activity improved modestly. June permit activity within District MSAs was slightly higher relative to the previous month, and about 40 percent of survey respondents, on net, indicated that they expected residential construction to increase in the next quarter. Local contacts continued to report constraints caused by a shortage of skilled workers and rising prices of building materials.\nCommercial real estate activity has improved modestly since the previous report. Contacts noted increased demand for most property types compared with a year ago. They expect these trends to continue into the final quarter of 2018.\nCommercial construction activity improved slightly. Survey respondents indicated healthy demand for most property types. Contacts in Memphis and Little Rock noted that hotel construction activity remained robust.\nBanking and Finance\nBanking conditions in the District have remained stable since the previous report. Loan demand in each major lending category was little changed relative to year-ago levels, but bankers, on net, expect stronger demand in the fourth quarter. While overall delinquencies decreased only slightly on a year-over-year basis, credit card delinquencies declined dramatically. On the other hand, commercial and industrial loan delinquencies are expected to increase slightly next quarter. Lending standards for such loans rose sharply and are expected to continue tightening through the remainder of 2018. A large share of District bankers reported strong gains in banking sector employment, as well as new branch openings and expanded market areas served.\nAgriculture and Natural Resources\nDistrict agriculture conditions have deteriorated since the previous report. Compared with late June, the percentages of corn and soybeans rated fair or better declined moderately, while those for cotton and rice increased modestly. Relative to the previous year, however, the percentage of District rice rated fair or better was modestly higher, while corn and cotton was unchanged. The percent of soybeans rated fair or better was modestly below its August 2017 value. Farmers continued to express concerns over low agricultural commodity prices resulting from the trade dispute between China and the United States. Contacts in Missouri and Indiana indicated that farmers did not lock-in pre-tariff pricing for a majority of their soybean crop, leaving them exposed to current market conditions.\nNatural resource extraction conditions rose slightly from June to July, with seasonally adjusted coal production increasing 0.6 percent. July production was 4.1 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"

Atlanta

/beige-book-reports/2018/2018-09-at

"September 12, 2018\nSummary of Economic Activity\nSixth District business contacts indicated that economic activity expanded at a moderate pace since the previous report. On balance, the outlook among firms for the remainder of the year was positive, despite some uncertainty surrounding trade policy. Firms continued to cite hiring challenges, especially for low-skilled and hourly positions. Some businesses reported growing wage pressure. Rising nonlabor costs for select inputs such as transportation and steel were noted, as was an improved ability to pass through price increases. Retailers reported growth in sales, and automotive dealers indicated sales were up year-over-year. Tourism in the District was described as solid over the late summer months, on balance. Residential builders and brokers indicated modest growth compared with year-ago levels; however, diminished lot and land inventory constrained builders' ability to meet demand. Commercial real estate contacts reported strong demand. Manufacturers noted increases in new orders and production.\nEmployment and Wages\nBusiness contacts reported that labor market growth in select regions was being restrained by firms' inability to recruit staff, particularly among the low-skill/hourly workforce. In response, firms shared plans to move to locations with larger labor pools, to change/reduce personnel standards and requirements, or continue to pursue automation to replace workers.\nContacts continued to report that wage pressure was growing; however, increases greater than 2 to 3 percent remained targeted, rather than broad-based. In response, firms continued to approach compensation creatively (e.g., offer enhanced flexibility, use bonuses and other incentive pay, and offer profit sharing or other forms of temporary compensation that can be discontinued if necessary). Reports from some firms indicated that they were unable to pay the higher wages demanded by experienced job seekers. Instead, they shifted their focus on higher margin business lines or planned to \"wait it out\" and not to fill the positions.\nPrices\nBusinesses across the District continued to report some increases in nonlabor input costs, specifically relating to transportation and steel, noting slightly more ability to pass along these price increases than in the previous report. Anticipation of rising costs related to tariffs continued to contribute to vendor price increases for commodities. The Atlanta Fed's Business Inflation Expectations (BIE) survey showed year-over-year unit costs were up 2.0 percent in August. Survey respondents indicated they expect unit costs to rise 2.1 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retail contacts reported growth in sales volume since the last report. Solid tourism activity was cited as benefiting retailers and heavily influencing sales activity in some markets. Retailers expect continued positive momentum for the remainder of the year. Automobile dealers reported an increase in year-over-year sales volume.\nOn balance, District tourism and hospitality contacts reported a strong summer season compared to the same time last year. Summer was robust for Florida tourism activity as occupancy and average room rate surpassed expectations. However, August turned in some mixed results as West Coast beaches were negatively impacted by the \"red tide\" algae bloom. New Orleans reported a decrease in July occupancy while the average daily rate was up, year-over-year. Preliminary August occupancy reports for New Orleans were stronger than expected. The outlook for the fourth quarter is mixed; some markets expect softer tourism activity year-over-year while others expect growth.\nConstruction and Real Estate\nOn balance, reports from District residential real estate contacts indicated modest but ongoing growth. Many builders reported that construction activity was up from the year-ago level. The lack of lot and land availability remained a constraint on building activity. Several contacts stated that even if they had the developed land, construction labor market conditions would keep them from being able to meet current levels of housing demand. District builders expect home sales activity to hold steady over 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 activity at least matched the year-ago level, with the exception of retail construction, which was characterized as unchanged to down. Most contacts reported a healthy pipeline of activity, with backlogs greater than or equal to the previous year. Many contacts expressed concerns that uncertainty over increasing materials prices was making bidding and fulfilling projects more challenging. The outlook for nonresidential and multifamily construction among commercial contractors across the District remained positive, with the majority anticipating activity to match or exceed the current level.\nManufacturing\nManufacturing contacts reported strong overall business conditions from mid-July through August. Most firms cited increases in new orders and production. Supplier delivery times were said to be getting longer, while finished inventory levels remained elevated. Uncertainty regarding tariffs and trade policy continued to weigh heavily on manufacturers' sentiment as expectations for future production levels decreased from the previous period. Slightly less than one-third of contacts are expecting higher production over the next six months.\nTransportation\nDistrict transportation contacts noted increased activity during the reporting period. On a year-over-year basis, railroad traffic was up notably, primarily due to double-digit increases in shipments of grain, petroleum and petroleum products, pulp and paper products, and iron and steel scrap. District ports cited substantial growth in container traffic, breakbulk, and dry bulk freight. Air cargo contacts noted that domestic activity was up due to increased e-commerce shipments; international cargo from Latin America was described as robust, but exports to Europe had softened. Transportation contacts noted no significant disruptions in the movement of freight as a result of changes in trade policy.\nBanking and Finance\nEarnings continued to improve for financial institutions, driven by a stronger net interest margin. Asset growth continued to slow due to lower demand for credit amid higher interest rates and savings from tax reform. Credit quality remained strong among most financial institutions although underwriting standards loosened for some credit products, particularly residential mortgages. Transaction accounts still comprised the majority of financial institutions' funding, but borrowings were increasingly funding new loan growth.\nEnergy\nFuel refining capacity utilization continued at a record pace and crude production remained strong. Exports of petroleum products continued to rise. Contacts noted increasing activity offshore in the Gulf of Mexico, including lease purchases for exploration spots. Utilities power generation projects picked up, particularly involving maintenance on power facilities. Utilities sector contacts continued to cite increases in the share of power generation from natural gas. Some contacts expressed concern that tariffs on steel and aluminum may influence the viability of planned industrial construction and plant expansion projects in Louisiana.\nAgriculture\nAgriculture conditions across the District continued to be mixed. Drought conditions were little changed from the previous report; most of the District remained drought free although there were reports of abnormally dry conditions in much of Louisiana and in parts of Mississippi and Alabama. August production forecasts indicated year-over-year increases in rice, soybean, and cotton, while peanut production was down. Year-over-year prices paid to farmers in June were up for corn, cotton, rice, soybeans, broilers, and eggs, while beef prices were down. However, since the last report, weekly comparisons indicated lower commodity cash prices for some recently tariffed agriculture exports such as soybeans, and the USDA has announced a financial relief program for affected agriculture producers.\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

/beige-book-reports/2018/2018-09-ph

"September 12, 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. Likewise, employment sustained modest growth, but wages continued to grow moderately as the labor market remained tight. While manufacturers reported paying higher prices, other contacts reported no current shift in inflation trends, but many worried that tariffs would trigger future inflation. Nonfinancial services maintained a moderate pace of growth, but manufacturers reported a more modest pace than last period. Most consumer sectors continued at a modest pace. The construction and real estate sectors continued to issue mixed reports with declines in residential real estate sales and nonresidential construction, while contacts from new home construction and nonresidential leasing noted some growth. The growth outlook over the next six months remained positive, with over half of all firms anticipating increases in general activity.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Manufacturing and nonmanufacturing firms have reported ongoing net additions to staff since last period; more nonmanufacturers were hiring, but fewer manufacturing firms did so. Average hours worked rose further over the period for both manufacturing firms and nonmanufacturers.\nStaffing firms continued to report incremental growth in job orders but ongoing difficulty attracting and retaining employees. One firm noted that temp-to-hire orders had increased, giving clients a three- to four-month trial, while avoiding recruiting and onboarding costs. Recruiting challenges prompted one restaurant--that was staffing up to enter the downtown Philadelphia market--to experiment with a storefront table taking job applications.\nOn balance, wage growth continued at a moderate pace. Once again, over half of the nonmanufacturing contacts reported increases in wage and benefit costs. Staffing firms reported no dramatic changes in wage trends; even in labor markets with the District's lowest unemployment rates, wages were said to \"continue to inch up.\"\nPrices\nPrice increases remained modest for most firms but were stronger for prices faced by manufacturers. Among nonmanufacturing firms, less than one-third reported increases for prices paid and for prices received--somewhat lower than in the prior period. One-third of the manufacturing firms continued to report increases in prices received for their own goods; however, more manufacturers paid higher prices this period, with nearly two-thirds noting increases. Bankers and other contacts cited labor shortages, wage pressures, and tariffs as concerns for spurring inflation, but none reported evidence of current inflation.\nLooking ahead one year, firms' inflationary expectations for prices of their own goods and services have risen slightly from one quarter earlier, on balance; however, for manufacturing firms alone, inflationary expectations fell slightly. The firms reported higher expectations for overall consumer inflation.\nManufacturing\nManufacturing activity slowed to a modest pace of growth--nearer to nonrecession averages than the moderate pace of the prior period. About 35 percent of the firms reported an increase in shipments and new orders, while over 20 percent of the firms reported decreases.\nThe makers of lumber products, chemicals, primary metals, and fabricated metal products tended to note gains in new orders and shipments; the makers of electronic machinery and industrial machinery reported mixed results. Nearly two-thirds of the firms that offered general comments noted that price hikes and/or supply disruptions had already occurred or were anticipated because of tariffs and the threat of tariffs. For those firms already impacted, contacts often cited double-digit price increases; some typical responses were that tariffs \"have put us out of business\" on certain products and \"are a cloud on every facet of our business planning.\"\nOn balance, manufacturing contacts continued to expect general activity to increase over the next six months. The percentage of firms expecting future increases edged above 50 percent; however, the percentage of firms expecting decreases also edged upward. The firms' outlook for future employment and future capital expenditures remained nearly the same, with just under 40 percent expecting increases.\nConsumer Spending\nNonauto retailers continued to report modest sales growth in July and August, citing rising consumer demand and stable gas prices. Ongoing price sensitivity by consumers continued to be met by heavy promotional discounting. Retailers noted rising costs for land development and freight but no direct impacts from tariffs.\nAuto dealers in New Jersey and Pennsylvania reported year-over-year sales that had essentially matched levels from the summer of 2017. Likewise, year-to-date sales appear to be holding even with 2017's high levels. Dealers continued to worry about rising interest rates.\nTourism contacts continued to report modest growth overall. One analyst noted that there was a slowdown in travelers from China and that U.S. households have been funding travel from savings--a trend deemed unsustainable. A shore hotelier reported very high traffic but low spending rates at restaurants and shops. Two recent casino (re)openings appear to have lifted all Atlantic City casinos in June; however, July reports suggest the new entrants are primarily extracting market share. Internet and sports gambling has extended the New Jersey market a bit, even as neighboring states begin to compete on the same platforms.\nNonfinancial Services\nOn balance, service-sector firms continued to report moderate growth in general activity. The percentage of firms reporting increased sales rose over 50 percent, while the percentage reporting increased new orders fell but remained above 40 percent. One firm noted its \"best accounts receivable in the last decade.\" Expectations of future growth narrowed slightly, but still nearly two-thirds of the firms anticipated increased activity.\nFinancial Services\nFinancial firms continued to report modest growth in overall loan volumes (excluding credit cards)--a slightly slower pace than during the same period last year. Volumes grew moderately in mortgages and in other consumer loans (not elsewhere classified) and grew modestly in commercial real estate lending and in auto loans. However, these gains were offset by slight declines in home equity lines and in commercial and industrial lending. Compared with one year earlier, loans grew modestly and in all categories except for home equity lines.\nDuring the current period, credit card lending grew at a modest pace--comparable with the same period last year for this highly seasonal measure. Credit card lending has also grown modestly over the entire year.\nBanking contacts noted ongoing challenges from \"overly\" competitive loan terms and bank deposit rates but generally cited greater business optimism and growing loan demand. The bankers also reported no signs of credit quality deterioration.\nReal Estate and Construction\nOn balance, homebuilders reported slight growth in new contracts but little change in construction activity. Sales of existing homes continued to decline moderately compared with the same period last year. However, as the period progressed, sales began to rise a bit in a few markets, despite ongoing low inventories.\nOverall, rents continued to rise in the slowly growing nonresidential real estate market, especially for offices and industrial warehouses. Higher office rents have been driven, in part, by outside investors, then partially offset by concessions, while underlying demand continued to support new construction and rising rates for warehouses. On balance, nonresidential construction activity continued to slowly wane in most markets.\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

/beige-book-reports/2018/2018-09-ri

"September 12, 2018\nSummary of Economic Activity\nThe Fifth District economy expanded at a moderate rate since our previous Beige Book. Manufacturers gave mixed reports as some saw robust growth while others struggled with higher input prices that they were unable to pass along. District ports continued to report high volumes of imports and exports but expressed some concerns for the near future. Trucking remained strong and demand continued to exceed capacity, leading some firms to turn away business or to look toward increasing fleet size. Business travel and tourism was robust throughout the Fifth District. Meanwhile, retailers reported moderate growth, overall. Residential real estate conditions improved moderately as sales increased and home prices moved higher. Commercial real estate demand strengthened for industrial and retail space while office leasing demand varied by location. Loan demand rose modestly, overall, as short term interest rates ticked up. Demand for nonfinancial services grew moderately. Overall, labor demand strengthened and job openings increased as employers struggled to find qualified workers. Prices grew at a moderate rate, on balance.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks, and employment agencies reported growth in new job openings. Meanwhile, employers continued to report tight labor markets and difficulties finding qualified workers. Staffing firms indicated that job openings increased for customer service representatives, administrative assistants, medical professionals, and construction workers. Additionally, firms reported high demand for construction workers, electricians, engineers, pilots, logistics workers, accountants, IT professionals, auditors, financial analysts, marketing/sales managers, plant workers, mechanics, and truckers. Wage increases remained modest, overall.\nPrices\nOn balance, prices grew at a moderate rate since our previous report. According to our latest surveys, manufacturing input prices rose moderately and continued to outpace selling prices. Specifically, rising prices were noted for aluminum, lumber, chemicals, rayon, polyester fiber, paper, and fuel. Conversely, copper prices were reportedly down slightly. Meanwhile, service sector firms indicated that both their prices paid and prices received grew at a moderate rate. Firms across both manufacturing and service sectors saw higher shipping costs. Lastly, coal and crude oil prices increased in recent weeks while natural gas prices were stable.\nManufacturing\nFifth District manufacturers gave mixed reports in recent weeks. Many firms reported robust business and optimism, such as a Virginia window manufacturer who attributed the best business they have had in years to high consumer confidence. However, other firms gave more negative reports as they were unable to pass through to customers rising materials costs as a result of recent tariffs. A Maryland can manufacturer feared price increases would lead to permanent business losses as customers would look for alternative forms of packaging. Manufacturers also struggled as a result of the truck shortage, reporting rising shipping costs and delayed deliveries.\nPorts and Transportation\nDistrict ports have continued to report robust activity. One port saw record volumes of imports but a slight decrease in exports while another port reported strong growth in both imports and exports. A District airport reported seeing strong growth but was cautious about making capital expenditures over concerns that business might soften as a result of new tariffs. While some port contacts have not yet seen any effects from the tariffs, they expressed concerns, noting that the effects may be delayed since shipments are often planned well in advance. One port also anticipated losing some inland business soon as a result of trucking shortages.\nTrucking activity remained strong in recent weeks, and some companies continued to turn away business because they did not have enough trucks or drivers to meet demand. A Virginia executive reported trying to increase his fleet to meet demand, despite rising equipment costs, and believed that his competitive compensation would attract more drivers. In North Carolina, a company reported seeing their lowest-ever operating ratio as they are able to raise prices and be selective about what size shipments to handle.\nRetail, Travel, and Tourism\nTourism was robust in recent weeks. Hotels in the District of Columbia were able to increase rates because of strong business. Meanwhile, in North Carolina, healthy tourist activity boosted business for shops and restaurants. In South Carolina, increased business travel is keeping demand for hotels high, but the recent increase in supply kept prices from rising. Resorts in Virginia and West Virginia saw strong business despite setbacks from bad weather. Short-term rentals received a boost from workers on the Atlantic Coastal Pipeline.\nDistrict retailers reported moderate business conditions since our last report. A West Virginia sporting-goods retailer saw strong back-to-school business but suppressed profit margins as costs, particularly for shipping, increased. Meanwhile, a Virginia home goods store credited an uptick in business to strong tourism, and a high-end clothing store saw strong customer traffic and sales. Some retailers attributed higher input prices to recent tariffs and were hesitant to make long-term business decisions.\nReal Estate and Construction\nResidential real estate sales increased modestly, although agents reported a slight decline in buyer traffic. Inventory levels remained low across markets, and brokers stated that the lack of inventory was restricting home sales. However, most agents described the market as healthy and expected activity to remain steady in the coming months. Home prices rose modestly, while days on the market were generally unchanged at low levels. New home construction and sales increased modestly while speculative construction was limited. Builders continued to struggle to meet production timelines due to the lack of available and qualified roofers, framers, and siding crews. A broker in Virginia noted an increase in house flipping and remodels.\nCommercial real estate leasing activity rose modestly in recent weeks as brokers reported increased demand in the industrial and retail markets. Office leasing activity was mixed across the District. Brokers in South Carolina, West Virginia, and Virginia reported slower office leasing activity in recent weeks, while agents in North Carolina and the District of Columbia reported modest increases. Vacancy rates decreased slightly in some office markets and were unchanged in the retail and industrial markets. Rental rates for all sub-markets were stable to increasing modestly. On the commercial sales side, brokers reported modest increases in prices and sales. Industrial and retail construction increased modestly, but there were no reports of new office construction projects.\nBanking and Finance\nOverall, loan demand rose modestly in recent weeks. Reports on residential mortgage demand varied by location but was generally described as stable to increasing modestly. On the commercial side, real estate loan demand strengthened modestly in most locations, and remained particularly strong in the District of Columbia. Business loan demand improved slightly, on balance, and automotive lending was reportedly flat compared to the previous report. On balance, short term interest rates increased slightly in recent weeks as deposits grew modestly and competition among banks remained strong. Credit quality remained stable at strong levels.\nNonfinancial Services\nOverall, the demand for nonfinancial services continued to grow at a moderate rate in recent weeks. Firms in engineering, telecommunication, and healthcare services were particularly positive. A hospital reported strong earnings and higher Medicaid reimbursements. Meanwhile, a few professional services firms that rely on government spending reported stronger demand. On the downside, several contacts mentioned that labor constraints were holding back 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"

Cleveland

/beige-book-reports/2018/2018-09-cl

"September 12, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District grew moderately during the survey period. Demand was strong in many sectors, but hiring continued at about the same pace as in the previous survey period. Contacts reported ongoing shortages of qualified workers, and many firms stepped up their training programs to alleviate the shortage. Firms increased wages, bonuses, and incentives to reduce worker turnover, although the increases were in line with recent trends. Upward pressure on input costs was strong, notably for metals, construction materials, and transportation services. Final selling prices increased as manufacturers, builders, and transportation firms raised their prices to cover their increased input costs. Consumer demand, including for autos, was stable to slightly higher. Manufacturing capacity utilization rose to meet strong demand. Freight volumes trended higher. Construction activity weakened as rising prices took some steam out of demand.\nEmployment and Wages\nStaffing levels and wages rose moderately during the reporting period in a similar fashion to rises in recent survey periods. Hiring in professional services quickened thanks to stronger demand for technology services. Construction hiring was strong, as well, with firms' hiring entry-level, intermediate, and senior-level managers to accommodate the high volume of work. One nonresidential builder reported hiring slightly more-recently graduated engineers than in the year before. Hiring was weakest in banking, as some firms reduced expenses by trimming nonsales or non-customer-facing staff.\nContacts across many sectors often cited a shortage of quality labor as a constraint to hiring. A number of firms are boosting training efforts and considering alternatives to alleviate the shortage. One manufacturer reported trying an onsite training program to transition general laborers into more-skilled positions. A trucking contact reported implementing an apprenticeship program to attract younger workers. Overall wage pressures were in line with the moderate trends seen so far in 2018. A few transportation and manufacturing contacts reported that they were having to give off-cycle wage increases to retain workers. One auto dealer increased incentives and starting pay for midlevel technicians, while a retailer noted the contact's firm's new bonus program had helped keep turnover in check. One banker noted raising wages for more experienced professionals because these professionals were more mobile.\nPrices\nBoth input prices and final selling prices continued to rise and anecdotes suggest price pressures were similar to those of the previous two survey periods. Contacts reported strong upward pressure on nonlabor costs, especially for metals and transportation services. Price increases for plywood, lumber, and concrete were also noted. One construction contact remarked that suppliers would guarantee a price for a few days only. There was some concern that the impact of tariffs would soon filter through the supply chain in the form of higher prices of new transportation equipment, including trucks and trailers. Also, one retailer pointed out that the firm was beginning to see an increase in the firm's costs because of import tariffs.\nFinal selling prices trended higher. Construction firms aggressively raised their prices to pass along higher materials costs. The majority of transportation contacts raised their freight rates thanks to strong demand and limited capacity in the sector. More than half of manufacturing contacts raised their prices for a fourth consecutive reporting period. Service-sector industries reported relatively more modest price increases as firms attempted to cover rising worker compensation costs.\nConsumer Spending\nRetail demand improved moderately, continuing a nearly year-long trend, and contacts expected this positive trend to continue in the near term. Clothing retailers and auto dealers were most upbeat about their sales in the current reporting period. Auto dealers indicated that demand was improving thanks to strong consumer confidence, a tighter labor market, and stable financing conditions. They also reported that SUVs and light trucks continued to outsell passenger vehicles. Retailers with broad footprints noted that sales within the Fourth District were roughly in line with national demand. Profit margins were stable, and inventory levels were reported to be in good condition.\nManufacturing\nManufacturers reported stronger conditions and attributed the increased demand to a strong overall economy and pro-growth fiscal policy. One steel manufacturer noted that even though July is typically a soft month for new orders, demand remained strong this summer. Most manufacturers reported that capacity utilization had been within a normal range during the last two months, although some firms had increased their capacity utilization because of a backlog of orders. Some manufacturers were concerned about increased lead times due to rising freight costs and a scarcity of specialty metals. There were some reports that automotive manufacturing had slowed slightly, but other end markets such as industrial equipment, agricultural equipment, and construction remained strong.\nReal Estate and Construction\nDemand for new homes fell during the survey period, and homebuilders expected further decreases in the near future. The drop in sales was concentrated in higher-end homes; sales of lower-priced homes were steadier. Although homebuilders were able to pass along higher materials costs to preserve margins, they noted that rising home prices were a factor weighing on sales. Contacts reported stable first-time-homebuyer demand and stable financing conditions, along with an increase in the percentage of homeowners relative to renters.\nNonresidential builders reported that conditions moderated from the high levels seen in recent survey periods. Inquiries were down, especially for government and industrial projects. However, builders did not expect conditions to continue to worsen. Backlogs were still strong, and some builders were trying to expand their workforces to address their backlogs. Rising materials costs, especially of steel, lumber, conduit, and concrete, motivated nonresidential builders to raise their prices. However, while builders successfully passed through these cost increases, they believed the market was too tight to improve their profit margins.\nFinancial Services\nConditions in the financial services sector remained steady. During most of 2018, demand for credit had been strong, and in the current period, contacts mostly reported no change from this trend. Most contacts were optimistic about current economic conditions and expected the pipeline for loans to remain strong. Changes in core deposits were mixed. One contact indicated that wholesale customers continued to draw down balances instead of relying on credit. Another contact indicated that promotional increases in interest rates on deposits--especially certificates of deposit--bolstered deposit growth. Contacts are watching closely as interest rates rise, but they have not reported notable increases in delinquency rates or credit charge-offs.\nNonfinancial Services\nNonfinancial services firms reported strong demand thanks to generally favorable economic conditions. Business advisory firms and software developers reported strong activity. Contacts noted that in addition to tax savings and ongoing strong business confidence, their services were in demand because businesses were modernizing their IT infrastructures and attempting to automate their processes. Capital investments held steady. Transportation firms reported continued increases in freight volumes. Railroad contacts attributed some of their volume growth to ongoing capacity constraints in the trucking industry.\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/2018/2018-09-sf

"Beige Book Report: San Francisco\nSeptember 12, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of July through August. Conditions in the labor market tightened further, and wage pressures ticked up. Price inflation increased moderately. Sales of retail goods picked up moderately, while activity in consumer and business services edged down slightly. Activity in the manufacturing sector and conditions in agriculture improved modestly. Contacts reported that residential real estate market activity expanded at a solid pace, and activity in the commercial real estate sector was healthy. Lending activity ticked up modestly.\nEmployment and Wages\nConditions in the labor market tightened further, with contacts across a variety of sectors reporting labor shortages. A national clothing retailer based in Seattle reported that hiring at warehouse fulfillment centers was constrained by a lack of qualified job candidates. Truck drivers continued to be in short supply. Continued labor shortages in construction contributed to some project delays. A steel manufacturer in Oregon noted that hiring picked up modestly due to an increase in demand. A print media company in Eastern Washington reported minimal net changes in employment, with gains due to business growth offset by reductions due to automation.\nWage growth ticked up broadly, and some businesses increased benefits in response to more labor retention challenges. Contacts across the District noted upward compensation pressures for accountants, software engineers, and information technology professionals. In the Mountain West, small businesses moderately raised starting wages and benefit compensation to better compete with larger national employers. In order to retain employees and attract new hires, a few businesses increasingly offered flexible work arrangements.\nPrices\nPrice inflation increased moderately over the reporting period. On balance, pricing pressures for building materials continued to rise noticeably across the District. Contacts noted a moderate pickup in price growth for metal inputs and for finished steel. A contact in the electric utility industry of Southern California observed a jump in prices for metals used in the construction of electricity infrastructure. An industry contact in Oregon noted that the price of steel continued to increase, due in part to the implementation of tariffs and to unrelated declines in global competition. Higher fuel costs gave a slight boost to shipping and freight costs in various sectors. A few lumber producers in the Pacific Northwest reported a moderate decline in selling prices due to overproduction and a tick down in housing starts.\nRetail Trade and Services\nSales of retail goods picked up moderately over the reporting period. Major global retailers based in Oregon and Washington reported that consumer demand for apparel picked up, which reduced reliance on discount pricing to stimulate sales. These businesses also noted that inventory levels were sufficient to meet continued elevated demand. Contacts in the Mountain West reported that small retailers in particular saw a jump in sales, while auto sales in the region ticked down.\nOverall, activity in the consumer and business services sectors edged down slightly. A reduction in government reimbursements and an increase in labor and other input costs put downward pressure on health-care providers' bottom lines. Activity at transportation businesses continued to be slightly constrained due to shortages of truck drivers. Restaurant sales grew moderately in the Mountain West. In Hawaii, contacts reported that activity in the tourism industry expanded solidly, limited only by recent weather-related disruptions.\nManufacturing\nActivity in the manufacturing sector expanded modestly. Capacity utilization at steel producers increased slightly on a year-over-year basis due to solid domestic demand and reduced competition from overseas. A contact in Northern California noted modest sales growth in the semiconductor industry, with inventory and capacity utilization levels consistent with expectations for growth.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector improved modestly, though contacts noted a somewhat weakened outlook due to heightened trade tensions. In the Mountain West and California, crop yields were higher than expected due to better weather. Contacts in the Pacific Northwest reported that lumber production was solid, while demand for lumber for residential construction projects fell slightly. Lumber exporters in the Pacific Northwest noted a modest decline in demand from China after that country announced tariffs on American lumber. Profitability at pork and beef producers fell moderately on a year-over-year basis. With profit margins for many crops at only breakeven levels, agriculture contacts are keenly focused on the potential for prolonged trade-related disruptions.\nReal Estate and Construction\nActivity in real estate markets expanded at a solid pace. Low inventory levels in the residential market persisted due to labor shortages and rising overall material costs, which constrained otherwise robust construction activity. Contacts across the District noted that the low levels of inventory in tandem with brisk demand for housing resulted in continued upward pressures on home prices and rents. A contact in eastern Oregon observed that new buyers from regions with higher home prices drove a jump in demand. On balance, contacts did not observe a tangible impact on demand from the increase in mortgage rates.\nCommercial real estate activity was healthy. In line with the residential market, construction in the commercial market was limited only by labor shortages and rising material costs. In Oregon, leasing demand for retail and warehouse spaces picked up further, due in part to the growing cannabis industry. A contact in Southern California noted that commercial leasing rates jumped, spurring some additional construction starts.\nFinancial Institutions\nLending activity ticked up modestly over the reporting period. Loan demand increased overall, with consumer loan growth slightly outpacing commercial loan growth. Net interest margins remained solid, despite some recent narrowing due to rising deposit interest rates. Contacts reported strong credit quality and loan performance, though in the Mountain West, lenders remained attentive to decreasing profitability in segments of that region's agriculture industry.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2018/2018-09-ch

"September 12, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District picked up to a moderate pace in July and early August, 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 up slightly. Wages and prices rose modestly, and financial conditions improved slightly. Overall crop yields in the District appeared set to forge a new record.\nEmployment and Wages\nEmployment growth picked up to 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. Manufacturers continued to report that they had delayed or turned down projects because of difficulties in finding workers. There were also reports of firms forgoing layoffs to avoid the challenge of finding workers when demand picked up. A staffing firm that primarily supplies manufacturers with production workers reported no change in billable hours. Wage growth remained modest overall, with wage increases most likely to be reported for managerial, professional and technical, and production workers. Most firms reported rising benefits costs.\nPrices\nPrices rose modestly in July and early August, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices increased slightly overall. Auto dealers noted that the steel and aluminum tariffs had not yet boosted retail prices for light vehicles, but expected them to do so eventually. Producer prices 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 modestly, with gains in the furniture, appliances, hardware, apparel, and grocery sectors. Contacts in tourism also reported increased activity. New light vehicle sales, however, decreased slightly, while used light vehicle sales increased moderately.\nBusiness Spending\nBusiness spending increased modestly in July and early August. Retail contacts indicated that inventories were generally at comfortable levels, though some auto dealers reported that their inventories were too high. Most manufacturing contacts also said that stocks were at comfortable levels, though some indicated inventories were too low as a result of longer lead times for equipment and materials (particularly steel products). In addition, steel service center inventories remained 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. Some contacts indicated that they were delaying capital spending decisions until 2019 because of uncertainty over the outcome of international trade negotiations. Demand for energy from commercial and industrial users increased modestly, with the strongest growth coming from data centers and steel producers. Demand for transportation services increased moderately from an already high level. One contact noted that threats of new tariffs had led to spikes in freight traffic as businesses sought to move goods before the tariffs might take effect.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly over the reporting period. Residential construction was little changed, with growth in suburban single-family homebuilding offset by declines in other markets. Homebuilders reported that rising labor and materials costs were squeezing margins and leading them to focus on higher-margin higher-end homes in spite of strong demand for starter homes. Home sales were up slightly overall, though a contact in the Detroit area reported slower sales. Contacts across the District indicated that low inventories of starter homes continued to hold back sales. Nonresidential construction edged higher from an already solid level, with contacts highlighting growth in the industrial, health, and education sectors. Commercial real estate activity increased modestly with growth spread across most segments. That said, one contact indicated that he had started seeing deals fall through because of increases in construction costs. Commercial rents increased slightly, vacancy rates edged down, and sublease space edged up.\nManufacturing\nManufacturing production increased at a moderate rate in July and early August. Steel output increased moderately as end-user demand remained at a high level and imports declined. Demand for heavy machinery rose moderately, helped by growing demand from the construction and oil and gas sectors. Heavy truck demand continued to grow at a strong pace. Order books for specialty metals manufacturers increased modestly. Manufacturers of construction materials continued to report slow but steady increases in shipments, though there were concerns that the housing market is cooling. Auto production edged down, but remained at a solid level.\nBanking and Finance\nFinancial conditions improved slightly over the reporting period. Financial market participants reported little change in securities prices or volatility. Business loan demand increased modestly, with growing demand from both small and middle-market firms. Contacts noted that competition for customers was particularly strong in the small business segment. Loans were primarily for financing real estate, capital equipment, and M&A. Loan quality was little changed on balance. Consumer loan demand increased slightly, led by growth in auto and home loans. Consumer loan quality and lending standards were little changed.\nAgriculture\nOverall crop yields in the District appeared set to forge a new record as the result of widespread good weather. Contacts expected a record harvest for soybeans but not for corn, reflecting the shift in the composition of crops in this year's plantings. The anticipation of large supplies and uncertainty about trade policy led to lower corn and soybean prices. Wheat prices were higher though, because of tighter world supplies. Specialty crops were generally in good shape. Hog prices were down, as tariffs led to a drop in exports. Dairy farmers continued to struggle as milk prices remained low, while egg producers benefitted from modestly higher prices. Contacts throughout the District continued to express concerns about the impact of trade disputes and tariffs on the agricultural industry, in spite of the favorable news on NAFTA negotiations and the announcement of government assistance, which contacts largely viewed as inadequate.\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/2018/2018-09-bo

"September 12, 2018\nSummary of Economic Activity\nEconomic activity in the First District expanded at a moderate pace since the last report. Responding retailers, manufacturers, and staffing firms cited year-over-year increases in sales and revenues in recent weeks. In most reporting areas in the region, residential real estate markets saw increases in both closed sales and prices. Activity in commercial real estate markets was generally steady; contacts noted rising construction costs. Staffing firms as well as respondents in retail and manufacturing cited tight labor markets; wage pressures varied. Prices rose modestly if at all, despite increasing freight costs. Overall, the outlook continued to be positive.\nEmployment and Wages\nMost contacts said labor markets were tight; net hiring remained modest to nil while wage increases were mixed. Retail hiring continued at a modest pace; contacts reported wage pressures varied across the region. The labor shortage for restaurant workers continued to be very troublesome, particularly on the Cape: contacts cited not enough U.S. workers and not enough visas for seasonal foreign workers. Most manufacturing contacts have not increased headcount. They reported that locating engineers and skilled machinists remained difficult, but assembly line and administrative workers were not hard to find. Staffing firms cited increasing labor demand and decreasing labor supply across the board, a combination that continued to present challenges, especially for recruiting skilled workers. Some staffing firms noted increases in bill and pay rates, ranging from low single digits to 10 percent.\nPrices\nPrices were reported to be unchanged or up slightly. Retail contacts indicated that selling prices remained steady, on average; one prominent retailer noted that food prices were up somewhat, but its overall retail price level was flat because of lower prices in other categories. However, higher fuel prices and a scarcity of truckers continued to drive up freight costs; manufacturers also noted increased trucking costs. Five of nine manufacturing contacts reported that their selling prices had gone up, but increases were small.\nRetail and Tourism\nRetailers contacted in this round said that year-over-year comparable-store sales ranged from low to mid-single digit increases from a year earlier. Two firms reported overall sales increases in the double digits due to business expansion. Apparel sales were particularly strong, as were sales of electronics and seasonal items. Contacts expressed concern and uncertainty regarding tariffs, particularly for inputs and goods sourced from China, such as cotton, electronics, and furniture. Absent the tariff issue, expectations for sales were positive through the end of 2018.\nA contact in the Massachusetts restaurant industry reported that sales were up 4.6 percent in 2018 through June 30, based on meal tax receipts. Restaurant sales in July were up 7.1 percent year-over-year, a robust increase that was partly attributed to hot and humid weather and many rainy weekends; with this weather pattern continuing, sales through the end of August were expected to be strong as well. Menu prices were up about 2.6 percent year-over-year, driven by higher operating costs: wholesale food prices were up, as were costs associated with insurance, labor, and rent. The cost challenges confronting the restaurant industry were reportedly inducing caution about expansion.\nManufacturing and Related Services\nAll contacted manufacturers reported higher sales than in their last reports. Growth was consistent across geographies and industries. A semiconductor contact said that slowing smartphone expansion led the firm's growth to slow slightly, although it remains positive. A maker of motion-control equipment said that tariffs on steel and aluminum had led those metal producers to increase capital spending and demand for capital goods. By contrast, First District contacts cited no major revisions to their capital spending plans; they indicated that tax reform made investment somewhat more attractive but did not change the basic calculations.\nMost contacts noted the tariff issue but said that, so far, the effects have been small and they did not expect too much damage if they are expanded. A gun manufacturer said that they had locked in steel prices for two years prior to the tariffs. A contact in the motion-control industry said they expected to pass on any tariffs in the form of surcharges or price increases.\nManufacturing respondents' outlooks remained positive. Most had not revised their outlook recently, but a capital equipment manufacturer said they had raised their investor guidance at the end of July versus February.\nStaffing Services\nNew England staffing firms continued to grow over the summer; nearly all responding firms reported year-over-year revenue growth, ranging from the low single-digits to as much as about 20 percent. Some firms reported spending more to attract and retain talent, including the adoption of new technology and incentive programs. Demand for permanent workers is greater than for temporary workers, but supply issues are even more pronounced for temporary positions, making temp vacancies more difficult to fill. Some contacts stated that because the New England economy is faring better than the rest of the country, labor supply is even more challenging in New England than elsewhere.\nWhile they all expressed concern about labor supply, staffing contacts expressed optimism about upcoming quarters; they expect to finish the year strong.\nCommercial Real Estate\nCommercial real estate activity held roughly steady on balance in recent months, although rising construction costs and shortages of construction labor were seen as growing constraints. Office and warehouse leasing demand remained strong in Boston and Portland amid low vacancy rates, resulting in positive but slow net absorption and further upward pressure on rents. The Hartford area continued to experience weaker leasing activity than Boston or Portland, although conditions were seen as mostly stable and distribution space enjoyed decent demand.\nThe financing environment remained favorable for commercial real estate construction and investment in the First District, and recent loan deals were seen as safe in the sense of involving relatively low amounts of leverage. Construction was stable but mixed across areas and sectors; multifamily housing and hospitality continued to lead. Commercial real estate contacts said that construction costs had increased moderately-to-steeply in recent months, and the increases were attributed in part to rising materials costs--stemming partly from tariffs on imported goods--and in part to rising wages for scarce construction labor. The tight construction labor market also contributed to delays in project completions. Contacts maintained a mostly favorable outlook.\nResidential Real Estate\nResidential real estate markets in Boston and four First District states with available data showed brisk sales activity in the month of July; current data were unavailable for Connecticut and Vermont. For single family homes, closed sales increased in all reporting areas but Rhode Island. For condos, closed sales increased in all reporting areas except Maine. Rhode Island saw some improvements in inventory and supply. The Rhode Island contact noted, \"Last month marked the first time in nearly two years that the single-family home inventory climbed above 4,000. All indications are that the market may have reached the point at which supply and demand begin to become more balanced.\"\nMedian sales prices increased in most reporting areas, but not Rhode Island. Contacts expressed concern that a seller's market environment was distorting house prices. A Massachusetts contact said that some level of price correction would be healthy for the current market, to reduce buyer discouragement and seller concerns about finding a home to buy after they sell. A contact from New Hampshire also commented, \"Housing-price-bubble chatter has increased this summer. It is too early to predict a change, but the common markers that caused the last housing cool-down are present.\"\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"

Minneapolis

/beige-book-reports/2018/2018-09-mi

"September 12, 2018\nSummary of Economic Activity\nNinth District economic activity expanded moderately since the last report. Employment grew strongly, with robust hiring demand despite continued labor constraints. Wage growth was moderate to strong and price pressures were moderate since the previous report. The District economy showed growth in consumer spending, tourism, services, manufacturing, residential real estate, commercial real estate, mining, and tourism. Commercial and residential construction were mixed, while agriculture remained weak overall.\nEmployment and Wages\nEmployment grew strongly since the last report despite continued labor constraints. Hiring demand was robust. The number of July job postings at state workforce centers grew strongly across the District compared with a year earlier, with several states posting low double-digit growth. In Minnesota, the number of July openings in high-tech fields rose from a year earlier. Two separate July surveys reported solid hiring sentiment in the Dakotas and Minnesota. Staffing industry contacts reported growth in clients and total job orders. However, finding labor was much more difficult. Over the most recent six-week period (through mid-August), both initial and continuing unemployment claims fell by about 11 percent across District states. Staffing clients widely reported more unfilled job openings compared with the same period a year earlier. A contact with offices in Minnesota and Wisconsin said that there were \"not nearly enough candidates\" for available openings. A North Dakota contact said an \"overwhelming\" majority of staffing clients were optimistic about current business conditions: \"Companies are expanding or want to expand. Their challenge is finding enough workers.\" Even major layoffs had an offset. A financial call center in South Dakota announced layoffs of about 450 workers. But a Minnesota call center expected to hire 550 workers thanks to higher demand from travel and health care clients.\nWage growth was moderate to strong since the last report. An ad hoc survey of Minnesota staffing firms found average wage growth of 3 percent to 5 percent, with similar expectations for the coming year. A western Wisconsin contact said lower-paying positions were seeing catch-up wage increases, \"while the top (wage) stays in place.\" Increasing entry-level wages from $11 to $13 \"hasn't had much of an impact in recruiting, but moving to over $15 has.\" A North Dakota contact said wages for entry-level office jobs have risen from $12 to $14 over the past year, while those for entry-level forklift operators have gone from $14 to $16 or more. Due to high vacancies, salaries for high-tech positions in Minneapolis-St. Paul were seeing strong increases.\nPrices\nPrice pressures increased moderately relative to the previous report. Retail food and beverage prices accelerated modestly from a year ago, according to industry sources. Construction costs continued to increase briskly, due both to rising materials prices and high demand for subcontractors. Transportation logistics costs have increased substantially this year, according to contacts. A July survey of purchasing managers indicated elevated inflation expectations. Retail fuel prices as of late August were generally unchanged relative to the previous report. Prices received by farmers for wheat, hay, chickens, and eggs increased in July compared with a year earlier; prices for corn, soybeans, hogs, cattle, milk, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending rose moderately since the last report. Available sales and tax data showed higher summer receipts in Minnesota, South Dakota, and Wisconsin compared with a year earlier. A Minnesota consumer goods retailer reported strong financial results in its most recent quarter, and a Minnesota-based furniture retailer announced a major expansion of stores. The Minnesota lodging industry experienced a 2 percent increase in overall demand over last July. Total airline passenger traffic in Minneapolis-St. Paul in July was flat compared with a year earlier, but was solidly higher at other, smaller airports across the District.\nTourism saw moderate growth across District states. Traffic at the annual Sturgis Motorcycle Rally in August was 8 percent higher than a year earlier. However, July gaming receipts in South Dakota fell slightly. Extremely hot weather reportedly led to an attendance drop at the Montana State Fair, but total revenue was nonetheless strong. The summer music and festival season in Billings and Bozeman (Mont.) were reportedly very strong in terms of attendance and spending. The North Dakota State Fair fell just short of setting an all-time attendance record. Following two months of increased traffic, July traffic across the Mackinac Bridge leading to Michigan's Upper Peninsula was flat compared with a year earlier.\nServices\nActivity in the professional services industry increased moderately since the last report. An electronics distributor broke ground on a $300 million expansion. Demand for agricultural data analytics has increased this year as farmers seek to economize on input costs, according to a contact. Freight demand was up, particularly in trucking. Great Lakes cargo shipments increased 2.5 percent in July from a year earlier.\nConstruction and Real Estate\nCommercial construction was mixed since the last report. Industry data suggested that commercial construction was down steeply in July. However, spending in the heavy construction sector was higher as crews took advantage of dry summer weather. Commercial permitting in July--a signal of future activity--was also higher in many of the District's larger cities, including Minneapolis; Billings; and Bismarck, N.D. Residential construction was mixed. Limited data on August permitting suggested that activity increased compared with a year earlier, including in Minneapolis-St. Paul. However more extensive July permit data showed mostly flat-to-lower activity across the District. A Montana contact said market-rate apartments were seeing strong growth in larger markets, which was expected to continue into next year. Minneapolis-St. Paul saw a considerable increase in August multi-family units permitted compared with last year, following an equally notable decrease in July.\nCommercial real estate saw modest growth since the last report. Office vacancy and lease pricing were stable in Minneapolis-St. Paul. Industrial leasing in the region reportedly slowed compared with last year, due to lack of suitable space; industrial vacancy rates have tightened and space under construction has risen in response. However, closures continued among large retail stores, including two mall anchors in western Wisconsin. Residential real estate activity rose modestly. Closed sales were higher overall in Montana's larger cities compared with a year earlier; they also rose modestly in Sioux Falls, S.D. While July sales were flat in Minnesota, those across northern Wisconsin were the strongest in at least a dozen years, and sales also rose in the western area of the state. Low inventories of homes saw some improvement, increasing by 4 percent in both Minneapolis-St. Paul and Sioux Falls.\nManufacturing\nDistrict manufacturing activity increased moderately. An index of manufacturing conditions indicated increased activity in July compared with a month earlier in Minnesota and the Dakotas. A solar panel producer was preparing to re-open a shuttered plant in Minnesota. An HVAC manufacturer and a producer of radiators for heavy equipment announced expansions at existing facilities. Contacts from across the sector continued to report negative impacts from trade restrictions.\nAgriculture, Energy, and Natural Resources\nThe District agricultural sector was weak overall. Growing conditions in much of the District were good this summer, with producers in some areas expecting record yields. However, low commodity prices continued to drag on farm finances and contacts remained concerned about trade conflicts. District oil and gas exploration activity as of late August decreased slightly from the previous report. Coal production in Montana increased from a year earlier. District iron ore mines were operating at capacity, with work underway to bring an idled facility back online; iron ore shipments on the Great Lakes were up 7 percent in July from a year earlier.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2018/2018-07-ph

"July 18, 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. Employment also continued at a modest pace; but with hiring constrained by a tightening labor market, wage increases have become more widespread and accelerated to a moderate pace. Despite rising labor costs, most contacts are not yet concerned that inflation will exceed its current modest pace. While manufacturing activity and nonfinancial services maintained a moderate pace of growth, most retail sectors continued at a modest pace, at best. Meanwhile, the construction and real estate sectors tended to be flat or declining. In particular, nonresidential construction activity has begun to decline from its previously high levels and represented the only sector with a significant shift in activity this period. The growth outlook over the next six months remained positive, with over half of all firms anticipating increases in general activity.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Manufacturing and nonmanufacturing firms reported ongoing net additions to staff; moreover, hiring has broadened among nonmanufacturers since last period. Average hours worked rose over the period for manufacturing firms and nonmanufacturers.\nStaffing firms reported ongoing demand for workers, but a scarcity of candidates, plus difficulty hiring and retaining employees. As the job market tightens, wages have risen, and employers have converted more full-time temporary workers to permanent employees than is normal. However, according to one contact, many temp orders continued to be for part-time work.\nOn balance, wage growth appears to have accelerated to a moderate pace and was more widespread. Over half of the nonmanufacturing contacts reported increases in wage and benefit costs. Several banking contacts also noted rising wages, especially for lower-wage jobs.\nPrices\nAccording to most contacts, price increases remained modest. Among nonmanufacturing firms, a little over one-third reported increases for prices paid, and about one-third reported increases for prices received--somewhat higher than in the prior period. Reports of price increases remained widespread among manufacturing firms this period, with half noting higher prices paid and one-third indicating higher prices received for their own goods. Banking contacts expressed little concern over the path of inflation.\nOne service firm noted that it had been slowly raising wages and was now starting to push prices up to meet the added expense. However, one homebuilder reported no ability to raise prices despite facing rising costs for many building materials.\nLooking ahead six months, manufacturing firms continued to anticipate higher prices, with two-thirds expecting increases in prices paid and over half expecting increases in prices received for their own goods.\nManufacturing\nManufacturing activity maintained a moderate pace of growth. About 40 percent of the firms reported an increase in shipments and new orders; however, this percentage was closer to 50 percent for new orders during the prior period.\nThe makers of chemical products, paper products, fabricated metal products, and electronic equipment tended to note gains in new orders and shipments; the makers of lumber products, primary metals, and industrial machinery reported mixed results. One machinery manufacturer noted that the effects of the steel tariffs have been chaotic to its supply chain--disrupting planned orders, increasing prices, and prompting some panic buying.\nOn balance, manufacturing contacts continued to expect general activity to increase over the next six months; the percentage of firms expecting future increases remained just below 50 percent. About 40 percent of the firms expected increases in future employment and future capital expenditures, which represented an improved outlook for capital expenditures since the prior period, but a lower expectation for employment.\nConsumer Spending\nContacts for nonauto retail sales continued to report modest sales growth in May and June--aided by favorable weather and steady gas prices. Retailers were generally more optimistic than in recent periods due in part to the corporate tax rate reduction; operators of brick-and-mortar stores were further cheered by the recent Supreme Court decision to allow states to tax online sales.\nAuto dealers in New Jersey and Pennsylvania reported year-over-year sales that were flat to up slightly in May and June. Year-to-date sales appear to be holding even with 2017's high levels. However, dealers noted greater downside risk than normal for the second half of this year, including disruptions from tariffs, volatile markets, and rising interest rates.\nTourism contacts continued to report modest growth overall. As temperatures climbed past 100 degrees in Philadelphia, expectations rose that more city residents would escape to the shore and the mountains in July and August. Atlantic City's casino revenues fell on a year-over-year basis in May, yet two large casinos reopened in late June.\nNonfinancial Services\nOn balance, service-sector firms continued to report moderate growth in general activity. Nearly half of the firms contacted reported increases in sales and new orders. One large firm reported that growth has been better than it was in 2017--which had been stagnant--and the firm continues to see no problems with payment collections from its clients. Expectations of future growth became more widespread, with over two-thirds of the firms anticipating increased activity.\nFinancial Services\nFinancial firms reported modest growth in overall loan volumes (excluding credit cards)--a somewhat faster pace than last period. Volumes grew moderately in mortgages and in commercial and industrial lending and grew slightly in commercial real estate lending. However, these gains were offset by slight declines in home equity lines, auto loans, and in other consumer loans (not elsewhere classified). Compared with one year earlier, loans grew modestly, and in all categories except for home equity lines.\nDuring the current period, credit card lending grew at a moderate pace--slow by comparison to the same period last year for this highly seasonal measure. Over the year, credit card lending has grown modestly.\nBanking contacts continued to note competitive pressure to raise deposit rates but flagged few concerns about credit standards and no issues with credit quality. Bankers remained generally confident about future economic prospects.\nReal Estate and Construction\nHomebuilders reported no change in sales and construction activity. In most major Third District markets, sales of existing homes continued to be down moderately compared with the same period last year. According to brokers, inventories remain at very low levels throughout the District.\nOverall, nonresidential real estate contacts reported no change in the modest growth in leasing activity. However, as several major projects reach or near completion in Philadelphia, there has been a slow and steady decline in labor hours from previously high levels of construction activity.\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"

Atlanta

/beige-book-reports/2018/2018-07-at

"July 18, 2018\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 a number of contacts' sentiment declined due to uncertainty related to the impact of tariffs and tariff rhetoric, the overall outlook among businesses remains positive as most expect an increase in activity for the second half of the year. District firms continued to report difficulties filling positions with quality labor. On balance, wage growth remained steady. Businesses continued to report an increase in select non-labor input costs. District merchants noted sales activity increased since the previous reporting period and sales of light trucks and small SUVs improved from a year ago. The tourism sector experienced solid activity throughout most of the District. Real estate contacts noted that new home sales were up slightly and existing home sales were flat to slightly down compared to a year earlier. Overall, the housing market experienced modest price appreciation. Commercial real estate contacts indicated that activity was solid. Manufacturers reported growth in new orders and increasing production levels.\nEmployment and Wages\nBroadly, business contacts across the District cited low availability of quality labor as a growing challenge. Contacts noted that this was a problem often not solved by increasing pay but by focusing on developing and training internal staff. Although firms in particular geographies struggled to fill certain positions, overall, most continued to add to headcounts. Some contacts cited persistent challenges with turnover; as a result, they were increasingly investing resources in retention efforts.\nThe intensity of wage adjustments remained mixed across the region. On average, three percent annual increases were the norm; however, a growing number of firms noted that when they were not able to meet demand with existing staff, wage increases were around five to ten percent (or greater) as an effort to attract and retain workers. Business contacts continued to report using benefits, bonuses, incentives, and other forms of compensation that are temporary or can be withdrawn if necessary.\nPrices\nDistrict firms reported some increases in non-labor input costs, particularly for steel, aluminum, and transportation, with limited accounts of an ability to pass along these increases. Expectations of rising costs related to tariffs continued to contribute 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 June. Looking ahead, survey respondents indicated that they expect unit costs to rise 2.1 percent over the next twelve months.\nConsumer Spending and Tourism\nOn balance, District retailers reported an increase in sales levels compared to the last report. Discount stores and on-line sales continued to be a leading competitive driver in the industry. Vehicle dealers reported an uptick in the level of sales of light trucks and small SUVs for the month of May compared to the same time period last year.\nTourism activity for the summer season across the District was described as healthy. The hotel market in south Florida continued to experience strong demand. While this was on par with expectations, there were some opportunities for growth based on higher-than-expected demand in weekend leisure and group bookings. Contacts in New Orleans reported an uptick in the number of conventions being held in the city over the summer. Year-to-date Mississippi casino gaming revenue increased compared to the same time period last year.\nConstruction and Real Estate\nOn balance, reports from District residential real estate contacts indicated modest but ongoing growth. Many builders reported that construction activity was up from the year-ago level. The majority of builders noted that buyer traffic was up with sales slightly higher, while several brokers indicated there was no change in buyer traffic relative to the year-earlier level and that sales were flat to down slightly. Reports on inventory levels were mixed and most brokers and builders reported home price gains. District brokers and builders expect that home sales activity over the next three months will primarily hold steady.\nMany District commercial real estate contacts noted continued strong demand. Contacts cited that vacancy rates have been steady or falling and the rate of concessions had been steady over the last 90 days. The majority of commercial contractors indicated that, on balance, the pace of nonresidential construction activity at least matched the year-ago level, with the exception of multifamily construction which was characterized as unchanged to down. Most contacts reported a healthy pipeline of activity, with backlogs greater than or equal to the previous year. The outlook for nonresidential and multifamily construction among commercial construction contacts across the District remained positive, with the majority anticipating activity to match or exceed the current level.\nManufacturing\nThe majority of District manufacturing contacts described overall business activity as solid during the reporting period. Firms indicated that growth in new orders was strong and that production levels were increasing. Purchasing managers reported that supply delivery times were getting notably longer and finished inventory levels were rising. Relative to the previous reporting period, expectations for future production were less upbeat, with about one-third of contacts expecting higher production over the next six months.\nTransportation\nTransportation activity was largely unchanged since the previous report. District port contacts continued to note significant year-over-year increases in containerized shipments, and bulk and breakbulk cargoes; automobile and equipment freight also rose. Trucking companies noted an increase in activity from year earlier levels; demand for freight services was high, which was attributed to an improved economy and increased e-commerce shipments. Trucking capacity remained tight due to a lack of skilled truck drivers. Contacts at District railroads noted that total traffic year-to-date was flat to slightly down as compared with the same period last year, but intermodal activity saw a modest uptick. Most transportation contacts expect higher levels of activity over the second half of the year.\nBanking and Finance\nDistrict financial institutions' earnings normalized following a quarter when earnings were negatively impacted by tax reform. Asset growth slowed as higher interest rates impacted some loan demand, especially for real estate products. Asset quality metrics at financial institutions were strong. Transaction accounts remained a significant portion of the deposit base and provided the majority of funding, but borrowings were steadily rising as asset growth recently started to outpace deposit growth. Financial institutions in urban markets note a greater level of deposit pressure in contrast to more rural markets where deposits are stable.\nEnergy\nOverall, District energy sector activity continued to pick up. Industrial projects were reported across the District. Onshore shale drilling activity remained strong. Although offshore exploration and production remained subdued, there was a slight uptick in activity over the reporting period. Production and exports of refined chemical products and crude oil continued to grow as refineries increased capacity. Contacts from the utilities sector noted that the industrial segment still outpaced residential and commercial growth.\nAgriculture\nAgriculture conditions across the District were mixed. Significant rain improved drought conditions in Alabama, Florida, and Georgia; however, there were abnormally dry conditions reported mostly in Louisiana and to a lesser degree in Mississippi and Tennessee. There were also some areas that experienced above-normal temperatures and locally heavy rains, resulting in some crop stress. June's forecast for Florida's orange crop was unchanged from May, but down significantly from last season's production. On a year-over-year basis, prices paid to farmers in April were up for corn, rice, soybeans, broilers, and eggs and down for cotton and beef.\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

/beige-book-reports/2018/2018-07-ny

"Beige Book Report: New York\nJuly 18, 2018\nSummary of Economic Activity\nEconomic activity in the Second District has continued to expand at a moderate pace since the last report. The labor market has remained tight, while wage growth has mostly stayed steady. Input price increases have remained fairly widespread, and consumer price inflation continued to run a bit higher than earlier this year. Activity in the manufacturing and distribution industries grew at a fairly brisk pace, while growth in most service industries has been more subdued. Consumer spending has been steady to up slightly in recent weeks, with tourism remaining fairly robust. Housing markets have been somewhat stronger, on balance, while commercial real estate markets have generally softened. 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. Businesses reported particular trouble filling senior positions and finding technically skilled workers, especially in IT. One business contact observed that almost all job-seekers are already employed. A New York City employment agency noted that clients have had difficulty adjusting to a city law prohibiting prospective employers from asking about salary history or using it as a guide to compensating new hires.\nHiring activity has been steady overall but mixed by industry. Business contacts in manufacturing, wholesale, retail, and finance reported a pickup in hiring activity, while those engaged in information and professional & business services noted some pullback in hiring. Contacts in the transportation industry noted further shrinkage in their workforce. Separately, a payroll service firm observed that job growth at small businesses has slowed somewhat recently. A major utility firm remarked that devoting more resources to vocational training and building relationships with local high schools and colleges, has made it easier for them to fill job openings.\nWage growth has generally remained steady overall but somewhat more brisk than last year. Wages were reported to be flat in the education & health and transportation sectors but rising in other sectors. The most widespread gains were reported in retail & wholesale trade and leisure & hospitality.\nPrices\nBusinesses reported ongoing widespread hikes in input prices. The most widespread increases were in retail & wholesale trade, education & health, and real estate. Manufacturers and leisure & hospitality firms noted some diminution in input price pressures since the prior report. Contacts in almost all sectors anticipated further increases in the months ahead.\nAs for selling prices, wholesalers continued to report widespread price hikes, and businesses in leisure & hospitality and real estate noted some acceleration. Prices for Broadway theater tickets rose fairly sharply in June and were up nearly 15 percent from a year earlier. Retail contacts noted somewhat less discounting than a year ago, resulting in a modest hike in effective selling prices. Similarly, auto dealers reported some increase in average used car prices and fewer incentive offers on new vehicles. Businesses in other industries reported that prices were mostly stable. Looking ahead, a sizable share of firms in leisure & hospitality, wholesale trade, and real estate said they anticipate price hikes.\nConsumer Spending\nRetail sales were steady to up slightly in May and June running roughly on plan. A major retail chain noted that sales were on plan and up modestly from a year earlier, with New York City stores continuing to post relatively strong results, in good part driven by tourism.\nNew vehicle sales in upstate New York were soft in May and June, continuing to run short of year-earlier levels. Sales of used cars have been more robust and continued to rise modestly. Vehicle inventories remained at or above desired levels. Dealers indicated that retail and wholesale credit conditions remained in good shape.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) edged up to a cyclical high in June, led by an historically positive assessment of the job market.\nManufacturing and Distribution\nBoth manufacturers and wholesale distributors indicated that activity continued to expand at a brisk pace since the last report. Transportation firms reported more subdued growth. Regarding the near-term business outlook, contacts in the wholesale and transportation sectors continued to express widespread optimism. Manufacturers remained optimistic, on balance, but have become less so than earlier in the year. A number of manufacturing contacts remarked that tariffs have raised their costs. Moreover, uncertainty about future trade policy was cited as a major concern, particularly in parts of upstate New York, where there is substantial trade with Canada.\nServices\nService-sector firms continued to report minimal to modest growth in activity. Contacts in professional & business services, education & health, and leisure & hospitality indicated modest growth, while those in the information industry continued to report flat activity. Looking ahead, leisure & hospitality businesses remained glum about near-term prospects, but contacts in the other service industries expressed fairly broad optimism.\nTourism has been fairly robust in recent weeks. New York City hotels reported a moderate pickup in both occupancy rates and revenues. Similarly, Broadway theaters reported a modest pickup in attendance and a marked pickup in revenues, which were up roughly 16 percent from a year earlier in May and June.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, somewhat stronger since the last report. Across much of the District, a limited supply of homes on the market has restrained sales activity and boosted prices. The market in the Buffalo metro area has been particularly robust, with strong demand and lean inventories driving up prices and producing many bidding wars. One exception to this trend has been the Manhattan co-op and condo market, where inventories have risen, sales activity has receded, and prices have been flat to modestly lower--partly attributed to some drop-off in investor purchases and foreign buyers. In and around New York City, the high end of the sales market continues to lag. One industry contact surmised that more limited deductibility of homeowner costs under the new tax law has been a factor in restraining demand.\nThe apartment rental market has been mixed. Effective rents are flat to down modestly across New York City, though demand for larger rental apartments has picked up recently--reportedly reflecting both rent reductions and a shift away from homeownership. In northern New Jersey, upstate New York, and the suburbs around New York City, however, demand has been robust and rents have continued to trend up moderately.\nCommercial real estate markets have been steady to softer. Office availability rates were steady to up slightly, and asking rents continued to drift down across downstate New York, though they have risen modestly across northern New Jersey and upstate New York. The market for retail space continued to slacken, except in upstate New York, where vacancy rates were steady and rents were up moderately from a year ago. The industrial market continued to strengthen in northern New Jersey but has stabilized elsewhere across the District.\nNew multi-family construction starts have been steady to somewhat weaker. Office construction has picked up slightly across upstate New York but has remained moribund across the rest of the District. New industrial development has slowed as well. While new construction--both residential and commercial--has been sluggish, ongoing construction activity has remained strong.\nBanking and Finance\nSmall to medium-sized banks in the District reported increased demand for consumer loans, residential mortgages, and commercial mortgages, but no change in demand for C&I loans and refinancing activity. Bankers reported tightening credit standards for commercial loans and mortgages. Banks noted an increase in the average deposit rate and narrowing loan spreads across all categories. Finally, banks reported lower delinquency rates for C&I loans but no change in delinquencies across all other 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"

Richmond

/beige-book-reports/2018/2018-07-ri

"July 18, 2018\nSummary of Economic Activity\nSince the previous Beige Book, the Fifth District economy has continued to expand at a moderate pace. Manufacturing activity remained strong although firms reported rising input prices and shipping delays. Trucking firms experienced robust growth and struggled to find drivers and keep up with demand. The volume of goods moving through District ports remained high. Travel and tourism were strong in recent weeks; however, some businesses were unable to provide services due to labor shortages. Retail and auto sales strengthened but firms continued to report concerns over increasing shipping delays and costs. Residential real estate activity increased modestly, and existing home sales continued to be restrained by low inventory levels. Commercial real estate improved modestly as demand picked up for industrial and restaurant leasing but slowed for retail space. Bank lending increased modestly, overall, especially for commercial loans. Nonfinancial services firms reported a moderate increase in demand. Hiring increased at a moderate rate as the job market remained tight. Price growth accelerated slightly but remained moderate, overall.\nEmployment and Wages\nLabor demand strengthened moderately in recent weeks, and employment agencies reported growth in new job openings across all the industry segments they service. Employers continued to report tight labor markets, while candidates increasingly receive multiple jobs offers. Firms reported difficulty filling positions for mechanics, construction workers, engineers, commercial lenders, treasury and risk managers, accountants, IT personnel, hospitality workers, and skilled trade positions. While wage increases remained modest across sectors, reports suggested that wage pressures increased further.\nPrices\nPrice growth accelerated slightly in recent weeks but remained moderate, overall. According to our most recent surveys, manufacturers' input prices increased sharply. In particular, prices for raw materials such as steel, aluminum, polyester, wool, acrylic, lumber, and caustic soda were on the rise. Manufacturers selling prices rose moderately, overall; however, several firms mentioned being unable to pass higher input costs through to consumers. On the whole, service sector firms indicated a moderate increase in prices paid that slightly outpaced growth of selling prices. Metallurgical and thermal coal prices picked up in recent weeks, as did crude oil prices.\nManufacturing\nManufacturing remained fairly strong. However, several manufacturers reported that while sales increased, profits dipped as price increases could not offset the rising costs of materials and transportation. Manufacturers also expressed concern about the potential adverse effects of rising trade tensions. For example, a District foam manufacturer reported growth in business but growing costs of raw materials resulting from tariffs. Additionally, a Maryland can manufacturer said he could not get the quality of steel needed domestically and anticipated losing business to foreign competitors who are not faced with steel tariffs.\nPorts and Transportation\nPort activity was strong and continued to grow in recent weeks. While export volumes fluctuated, imports continued to increase throughout the District, with ports seeing robust year-over-year growth. An executive from one port reported cutting back on volumes to allow for easier flow during the port's expansion. One port saw growth in auto exports as demand for used cars increased in oil-rich countries. In recent months, a District airport quadrupled the number of weekly flights to Europe to accommodate demand for cargo transportation. In addition, its domestic business continued to grow, owing largely to increasing e-commerce shipments.\nTrucking firms continued to see strong growth and record-setting months. A Virginia freight hauler increased its fleet while other companies around the District said they would expand more if they could hire more drivers. Meanwhile, a North Carolina company built new distribution centers to increase capacity. As trucking firms again struggled to meet demand, they were able to increase rates. Demand remained strong for nearly every type of cargo, although a company in North Carolina reported particularly strong growth in retail goods.\nRetail, Travel, and Tourism\nTourism remained robust in the District since our last report. National parks saw large increases in the number of visitors, and some restaurants experienced record business. Rental properties in North Carolina began to offer shorter stays in order to compete with other short-term rentals. Meanwhile, a few North Carolina hotels reported that occupancy rates remained high despite an unprecedented supply of rooms as more hotels opened. Several firms struggled to find employees; a Virginia resort was unable to open pools for the summer because of a lack of lifeguards, and a large hotel reservation center in South Carolina closed because of a labor shortage.\nDistrict retailers experienced strong sales in recent weeks. A Virginia auto dealer reported a noticeable uptick in business, and a North Carolina auto dealer attributed high sales growth to manufacturer incentives. A Maryland hardware store saw growing business, even as competition increased, and worked to improve its online presence with more sophisticated pricing technology. A West Virginia material handling equipment retailer reported that strong demand for goods was leading to shrinking inventory, a concern echoed by retailers around the District. Retailers also expressed concerns over trucking shortages, which are causing long lead times and higher shipping expenses.\nReal Estate and Construction\nResidential real estate firms indicated modest growth, overall. Home sales rose modestly in recent weeks, although low levels of inventory persisted and buyer traffic slowed. District agents said that new listings continued to sell quickly. Meanwhile, residential construction activity reportedly picked up in southern Maryland, and demand for new homes strengthened in the Carolinas. However, builders continued to report that new home production timelines were behind schedule as there were not enough workers and available lots to keep up with the increased demand.\nCommercial real estate leasing and sales rose modestly in recent weeks. District brokers reported increased demand for industrial space and a pickup in restaurant leasing, while retail activity slowed slightly. New commercial office construction was soft, despite reports of some build-to-suit projects. Agents said that office and retail landlords were offering fewer incentives and concessions had tightened. Vacancy rates remained low across sub-markets, and a few brokers noted a lack of available product. Commercial rental rates were generally reportedly as stable to increasing modestly. Multifamily leasing remained healthy, overall.\nBanking and Finance\nOn the whole, loan volumes increased modestly since our previous report. Residential mortgage demand grew at a modest pace; however, the low inventory of homes for sale continued to restrain mortgage loan growth. A banker in Virginia stated that business was particularly strong for new home construction and home equity lines to fund remodeling and refurbishing of existing homes. Commercial lending activity rose moderately in recent weeks. Loan growth was broadly based as bankers noted increased demand for agriculture, commercial, industrial, small business, commercial real estate development, and multifamily construction loans. Deposits rose moderately, on balance. Bankers said that competition for deposits had strengthened considerably and that interest rates moved higher. Credit quality remained strong while credit standards were generally unchanged.\nNonfinancial Services\nSince our previous report, the demand for nonfinancial services increased moderately, on balance. Specifically, demand picked up for telecommunication, administrative and support, technology, education, health, and legal services. A law firm said that some of the new business was due to the implementation of the EU's General Data Protection Regulation law that went into effect in May. Meanwhile, a defense contractor reported strong growth in recent months and was optimistic about the near future based on the recently approved federal budget.\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

/beige-book-reports/2018/2018-07-su

"Beige Book: National Summary\nJuly 18, 2018\nThis report was prepared at the Federal Reserve Bank of Boston based on information collected on or before July 9, 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 continued to expand across the United States, with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The outliers were the Dallas District, which reported strong growth driven in part by the energy sector, and the St. Louis District where growth was described as slight. Manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions that they attributed to the new trade policies. All Districts reported that labor markets were tight and many said that the inability to find workers constrained growth. Consumer spending was up in all Districts with particular strength in Dallas and Richmond. Contacts reported higher input prices and shrinking margins. Six Districts specifically mentioned trucking capacity as an issue and attributed it to a shortage of commercial drivers. Contacts in several Districts reported slow growth in existing home sales but were not overly concerned about rising interest rates. Commercial real estate was largely unchanged.\nEmployment and Wages\nEmployment continued to rise at a modest to moderate pace in most Districts. Labor markets were described as tight, with most Districts reporting firms had difficulty finding qualified labor. Shortages were cited across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, IT professionals, and truck drivers; some Districts indicated labor shortages were constraining growth. Districts noted firms were adding work hours, strengthening retention efforts, partnering with local schools, and converting temporary workers to permanent, as well as raising compensation to attract and retain employees. On balance, wage increases were modest to moderate, with some differences across sectors; a couple of Districts cited a pickup in the pace of wage growth.\nPrices\nPrices increased in all Districts at a pace that was modest to moderate on average; reports showed upticks in inflation in several Districts. The prices of key inputs rose further, including fuel, construction materials, freight, and metals; a few Districts described these input price pressures as elevated or strong. Tariffs contributed to the increases for metals and lumber. However, the extent of pass-through from input to consumer prices remained slight to moderate. Movements in agricultural commodities prices were mixed across products and Districts. Pricing pressures are expected to intensify further moving forward in some Districts, while in others the outlook is for stable price increases at a modest to moderate pace.\nHighlights by Federal Reserve District\nBoston\nBusiness activity continued to expand at a moderate pace, with contacted manufacturers, retailers, hotels, and software and IT firms reporting year-over-year increases in revenues. Some contacts saw higher prices and lower margins. Contacts reported difficulty hiring in skilled occupations.\nNew York\nThe regional economy continued to expand at a moderate pace, and labor markets have remained tight. Input price increases have remained fairly widespread, and selling prices continued to increase moderately. Housing markets have continued to firm, on balance, while commercial real estate markets have softened a bit.\nPhiladelphia\nEconomic activity continued to expand at a modest pace. With tightening labor markets, job growth also remained modest, but wages are now rising moderately. On balance, contacts continued to observe modest price increases with few concerns for future inflation. Notably, nonresidential construction activity has begun to decline from its prior high levels.\nCleveland\nThe District economy grew moderately. Labor markets tightened, with wage pressures noted broadly. Rising fuel and metals costs are pressuring manufacturers, construction firms, and transportation companies. Stronger confidence in the economy boosted demand in nonfinancial services and the retail sector. Construction activity remained strong.\nRichmond\nThe regional economy grew at a moderate rate. Manufacturing and retail sales strengthened, but firms in both sectors faced transportation constraints and rising input costs. Trucking firms saw record demand, which was partially unmet due to the driver shortage. Port activity remained strong. Labor demand increased moderately, and some firms reported shortages. Price growth accelerated slightly but remained moderate, overall.\nAtlanta\nEconomic activity modestly expanded since the previous report. The labor market remained tight. Reports of wage growth were mixed. Some commodity input prices continued to increase. Consumer spending improved since the last report. Nonresidential construction increased; however, multifamily construction showed signs of slowing. Manufacturing activity grew.\nChicago\nGrowth in economic activity slowed to a modest pace. Manufacturing production increased moderately, while employment, consumer spending, business spending, and construction and real estate activity grew modestly. Wages and prices increased modestly, and financial conditions improved modestly. The outlook for agriculture income dimmed some.\nSt. Louis\nEconomic conditions improved slightly. Labor market conditions remained tight and wage growth was modest. Local contacts reported robust increases in shipping costs across all sectors due to higher fuel prices and driver shortages. Businesses' reports on the impact of tariffs have varied by industry.\nMinneapolis\nEconomic activity in the Ninth District grew moderately, led by strong growth in manufacturing. Hiring demand remained strong, but workers were harder to find. Wages grew moderately with some signs of stronger growth among union wages. Professional services firms saw growth across the board, and lodging demand appeared robust heading into the summer tourism season.\nKansas City\nEconomic activity expanded moderately since the previous survey, and growth was expected to continue in the months ahead. Most sectors expanded, including a slight pickup in energy activity, modestly higher consumer spending and business services, moderately stronger real estate activity, and continued robust gains in the manufacturing sector. Capital spending plans across the District were positive.\nDallas\nEconomic activity continued to grow at a solid pace. Manufacturing output rose, and broad-based expansion in the services and energy sectors continued. Retail spending rose while drought conditions became more widespread. Hiring remained solid despite a tight labor market, and wage and price pressures stayed elevated. Expectations regarding future business activity were optimistic, although uncertainty arising from U.S. trade policy weighed on outlooks.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Conditions in the labor market remained tight, and price inflation increased moderately. Sales of retail goods picked up slightly, and activity in the consumer and business services sectors edged down. Activity in the manufacturing sector and in residential and commercial real estate markets was solid. Lending activity ticked up moderately.\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/2018/2018-07-sf

"Beige Book Report: San Francisco\nJuly 18, 2018\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, and wage pressures picked up. Price inflation increased moderately. Sales of retail goods picked up slightly, while activity in consumer and business services edged down. Activity in the manufacturing sector remained solid, and conditions in the agriculture sector deteriorated modestly. Contacts reported that residential real estate market activity expanded at a solid pace, and activity in the commercial real estate sector was also solid. Lending activity ticked up moderately.\nEmployment and Wages\nTight labor market conditions persisted across all sectors, leading to a pickup in wage growth. Contacts continued to report challenges retaining workers. In the Mountain West, a few major national employers attracted low-skilled warehouse workers from smaller businesses that could not match their starting wages. Across the District, contacts observed higher starting salaries and increased bonuses to attract skilled financial service and information technology professionals. Demand for skilled lending officers increased moderately due to stronger loan growth over the reporting period. Shortages of plumbers, electricians, and other specialized workers drove wage pressures for these positions and led to construction project delays in some cases. A contact in Oregon's banking sector reported an uptick in lending to manufacturers for automation projects to stem increases in labor costs that have weakened profitability. Crop harvesting and processing businesses noted difficulties hiring for on-site managerial positions in rural areas. A contact in financial services in central California reported that employment levels fell slightly as the number of mergers and acquisitions in the region picked up, creating some job redundancies.\nPrices\nPrice inflation increased moderately over the reporting period. Recent oil price increases spurred price inflation in a variety of sectors. Pricing pressures strengthened for freight costs at lumber businesses in California and Oregon and for petroleum-based products like asphalt. Across the District, contacts noted a pickup in price growth for finished steel and for metal inputs to manufactured products. A few contacts in manufacturing attributed recent inflationary pressures for metal products and declines in the duration of price guarantees to the implementation of tariffs. Solid construction sector activity continued to exert upward pressure on prices for building materials. Contacts in California reported moderate price inflation for cherries, nuts, and raisins after yields fell due to poor growing conditions. A few contacts reported that grocery stores passed on increased food safety costs to consumers, increasing food prices somewhat. Excess capacity in power generation and low input costs continued to limit increases in electricity prices in Southern California. Generic drug prices continued to fall modestly due to a relaxation in regulation and heightened competition among the largest drug sellers.\nRetail Trade and Services\nSales of retail goods picked up slightly over the reporting period. Contacts in the Mountain West reported an overall increase in vehicle sales in the region, with truck sales lagging passenger car sales somewhat. Demand at consumer hardware and home improvement stores increased moderately. In the food and beverage industry, contacts reported flat sales at grocery stores.\nActivity in the consumer and business services sectors edged down. Sales at quick service restaurants were generally flat. In the Mountain West, the livestock health services sector saw growth slow moderately because of disruptions to the medication supply chain. Activity at transportation businesses was constrained slightly due to continued shortages of truck drivers. Growth in the pharmaceutical industry slowed modestly as continued deflationary pressures for generic drug prices negatively affected profitability at producers of branded drugs.\nManufacturing\nActivity in the manufacturing sector remained solid. A contact in the Mountain West noted that demand from the mining industry for equipment jumped, leading businesses to expand operations. Deliveries of commercial aircraft increased noticeably from the same period last year, while new orders grew moderately. A steel producer in Oregon observed that there was sufficient capacity to meet the continued elevated demand for their products.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated modestly. In California, yields for various crops fell because of weak precipitation levels in recent months. In the Mountain West, feedlot profits fell noticeably on a year-over-year basis, and profits at dairy and pork producers declined moderately. A pickup in global demand for raisins and nuts resulted in a slight increase in exports of these crops. Potato yields in Idaho were solid, and inventory levels improved from the same period last year.\nReal Estate and Construction\nActivity in real estate markets expanded at a solid pace. Construction in the residential market was strong, constrained only by the shortage of labor and rising material costs. Contacts across the District reported that home prices and residential rents picked up due to still-low inventory levels and strong demand. In the Mountain West, price growth was most evident at more affordable price points where inventory was especially low. A contact in the Seattle area noted that listing durations for single-family houses continued to trend downward due to brisk selling activity. A few contacts noted that rising borrowing costs might limit demand, although there was no tangible impact over the reporting period. Commercial real estate activity was also solid. In Oregon, construction starts for industrial and warehouse spaces picked up noticeably, as did leasing demand for these spaces. Contacts in Southern California reported that commercial rents and sales prices increased moderately.\nFinancial Institutions\nLending activity ticked up moderately over the reporting period. Loan demand increased overall, with contacts across the District reporting solid loan growth. Deposit growth picked up in the Mountain West. Contacts in California and Oregon observed strong asset quality and liquidity levels. A few contacts noted tighter lending standards for borrowers in the agriculture sector because of weakening profitability in segments of that industry.\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/2018/2018-07-sl

"Beige Book Report: St Louis\nJuly 18, 2018\nSummary of Economic Activity\nEconomic conditions in the District have improved slightly since our previous report. Firms reported modest increases in employment despite continued difficulties finding workers. Wages continued to increase modestly. Price pressures have increased modestly as freight costs have increased across all sectors. Reports from consumer spending contacts remained mixed. Manufacturers reported increases in production and new orders. Residential real estate activity improved modestly while construction activity picked up slightly. District bankers reported increased lending activity as commercial and industrial loan growth continued to be robust. Agriculture and natural resources conditions have been relatively unchanged since the previous report.\nEmployment and Wages\nEmployment has increased modestly since the previous report. Several manufacturing companies, including multiple steel producers, announced plans to expand and hire new employees. Furthermore, survey-based employment indexes indicated modest increases in June manufacturing employment across Missouri and Arkansas. To attract and retain employees, firms reported lowering hiring standards, offering more-generous non-wage benefits, and establishing training programs through partnerships with local schools and non-profit organizations. Contacts noted difficulties filling construction and trucking positions in particular.\nWages have increased modestly since the previous report. Contacts reported that the continued tight labor market has led to increased wages in the services sector, particularly for entry-level positions. Retail and food-service firms reported having to raise wages of existing employees to match the higher rates for new employees. One trucking company offered the largest one-time pay increase in its history. Wages paid by small business in the St. Louis metro area grew slightly.\nPrices\nPrice pressures have increased modestly in general since the previous report. Local contacts reported robust increases in shipping costs across all sectors due to higher fuel prices and driver shortages. Tariffs and trade restrictions have had a mixed effect on prices. U.S.-imposed tariffs have raised the prices of steel and aluminum, increasing input costs for several business contacts. Those contacts in construction lamented that rising prices pressured the industry before this tariff-induced inflation of metal costs. In contrast, proposed tariffs by China have led to an overall downturn in agricultural commodity prices, particularly the price of soybeans. These lower agricultural commodity prices have been passed on to food retailers, who reported that lower food prices have more than offset increased freight costs.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate mixed consumer spending activity. Real sales tax collections modestly increased in Arkansas relative to a year ago, but declined slightly in Missouri, Kentucky, and West Tennessee. The consumer outlook in West Tennessee has improved since the first quarter, and households, on net, expect to increase spending in the next few months relative to a year ago. Retailers in Tennessee indicated that year-to-date sales have been above last year's levels and expect this trend to continue through the rest of the year. In response to the recent Supreme Court ruling, internet-based retailers indicated that they will likely \"eat the cost\" from collecting sales tax in the medium term. However, they expect to pass the cost to consumers in the long run through the prices they charge for shipping and by changing eligibility for free shipping.\nReports from auto dealers were mixed: Memphis auto dealers reported an increase in sales year over year, while dealers in Louisville and Little Rock reported a decrease. Memphis and Little Rock auto dealers also indicated a shift in demand toward SUVs and crossovers. Hoteliers in Little Rock and Memphis reported strong and stable demand, and St. Louis hospitality contacts continued to express a positive outlook for the coming months.\nManufacturing\nManufacturing activity has increased at a moderate pace since our previous report. Overall manufacturing activity was stronger than one month earlier in both Arkansas and Missouri, and the pace of expansion increased in each. New orders and production also rose in both states. Several companies that manufacture motor vehicles and motor vehicle parts reported plans to expand facilities and increase production. Contacts in the paper packaging manufacturing industry reported running at nearly full capacity. Similarly, contacts in the recycled metal industry noted record volumes, and contacts in the mining equipment manufacturing industry reported experiencing backlogs. On the other hand, a manufacturer of plastic products for appliances indicated that sales were down. Several manufacturers noted increases in input prices, which they linked to tariffs.\nNonfinancial Services\nActivity in the service sector has improved slightly since the previous report. The number of posted vacancies for nonfinancial services occupations in May was generally unchanged in Louisville and Memphis relative to the prior month and increased moderately in St. Louis. Arkansas air passenger transit and river barge traffic volumes were somewhat lower compared with the previous year, while Louisville air passenger transit volume remained flat. Contacts noted that a continuing shortage of commercial truck drivers has led to higher demand for railroad shipping.\nReal Estate and Construction\nResidential real estate activity has improved modestly since the previous report. Seasonally adjusted home sales were slightly higher in April. Inventory levels remained low, and contacts continued to report a shortage of homes in the market with newly listed homes selling quickly.\nResidential construction activity has improved slightly. Permit activity in May was flat relative to the prior month. A contact in Louisville reported seeing a robust level of new construction under way, and a contact in Little Rock noted that a healthy demand for single-family homes has led to new prospective developments. St. Louis builders expect 2018 permits to exceed the total from last year.\nCommercial real estate activity has been unchanged since the previous report. Contacts in Little Rock reported that the market is generally healthy across most property types but were apprehensive over how future interest rate increases may impact profits and cash flows.\nCommercial construction activity was flat. Some contacts in Little Rock expressed concerns that new hotel construction under way risks oversaturating the market. A Louisville contact reported continued robust multifamily construction.\nBanking and Finance\nBanking conditions in the District have improved at a moderate pace since the previous report. Outstanding loan volumes at small and mid-sized banks grew by 6 percent relative to year-ago levels in the second quarter, down from 7 percent in the first quarter and continuing the steady decline in the rate of loan growth since the end of 2016. Commercial and industrial lending remained strong, growing by 12 percent in year-over-year terms, double the national rate. In contrast, residential real estate lending grew slowly and lagged behind that of the nation for the second consecutive quarter. Bankers also continued to report sluggish deposit growth.\nAgriculture and Natural Resources\nAgriculture conditions weakened slightly from the previous reporting period, but improved slightly from the same time last year. The percentages of corn, cotton, and rice rated fair or better in June declined slightly relative to the prior month, while that of soybeans increased modestly. However, both the corn and soybeans percentages were higher than a year ago, the cotton percentage was little changed, and the rice percentage was down slightly. Estimated soybean acreage saw a substantial upward adjustment in Illinois relative to March planting intentions but was revised downward in Missouri.\nNatural resource extraction conditions were essentially unchanged from May to June, with seasonally adjusted coal production up 0.1 percent. However, June production was 6 percent below prior-year levels.\nFor more information about District economic conditions, visit: www.research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2018/2018-07-mi

"July 18, 2018\nSummary of Economic Activity\nThe Ninth District economy grew moderately overall since the last report. Employment grew modestly, with robust hiring demand continuing to be restrained by tight labor supply. Wage and price pressures were moderate since the previous report. The District economy showed growth in manufacturing, residential construction, commercial real estate, energy, and tourism. But consumer spending and commercial construction were mixed, residential real estate slowed, and agriculture remained weak.\nEmployment and Wages\nEmployment grew modestly since the last report. Hiring demand remained robust, but continued to be restrained by tight labor supply. May job openings in North Dakota and the Upper Peninsula of Michigan were both notably higher than a year earlier. A jobs database for Minneapolis-St. Paul showed that new postings for the second quarter were up significantly over the same period last year. An ad hoc poll of large firms in Minnesota found that roughly half were currently hiring to add to head count and expected that to continue over the coming year. A May survey of manufacturing firms showed strong hiring sentiment among respondents in Minnesota and the Dakotas. However, tight labor restricted firms' ability to find workers. May unemployment rates dropped across the District compared with the previous month and a year ago. District states saw a 13 percent decrease in initial unemployment claims during the most recent six-week period (though mid-June) compared with the same period last year. Continuing claims also dropped slightly. State workforce development offices widely reported relatively stable or higher job postings, but fewer job seekers. In Montana, May job postings with the state rose by 2 percent over a year earlier, while active job seekers fell by 21 percent. A Montana staffing firm reported that \"hiring demand and job orders are up, but [worker] candidates are down.\"\nWage pressure was moderate overall, though recent union contracts reflected larger increases. A Minneapolis Fed poll of South Dakota retailers found recent wage increases coalescing around 2 percent to 3 percent, with roughly similar expectations for the coming year. A poll of large Minnesota firms showed slightly stronger results. Four recent union construction contracts in Minnesota negotiated annual increases ranging from about 3 percent to 5 percent per year for three years. A new contract for union service workers at a Minnesota health care provider raised wages between 7 percent and 10 percent over three years; a contract for union utility workers in the Upper Peninsula awarded raises of 11 percent to 14 percent over three years.\nPrices\nPrice pressures increased moderately relative to the previous report. Manufacturing contacts reported that steep increases continued in aluminum and steel material input costs in reaction to tariff announcements. Construction materials costs continued to increase briskly. A June survey of purchasing managers indicated that inflation expectations were elevated, but decreased slightly from the previous month. Retail fuel prices as of late June were mixed across District states relative to the previous reporting period; Montana and the Dakotas saw prices increase slightly, while prices in Minnesota and Wisconsin fell. Prices received by farmers for corn, soybeans, wheat, hay, chickens, and eggs increased in May compared with a year earlier; prices for hogs, cattle, milk, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending was mixed since the last report. Official tax data suggested some slowing. For example, sales tax collections in May were 5 percent lower in Minnesota compared with a year earlier, while taxable sales were flat in South Dakota. A contact at a restaurant industry association described recent sales as generally up moderately.\nTourism activity increased moderately. A survey of Minnesota businesses revealed solid optimism for the summer tourism season, with significantly more respondents expecting higher revenues compared with those expecting lower revenues. Minnesota's hotel sector also had a very strong May, with demand increasing 7 percent over a year earlier. Said an industry contact, \"It looks like this will be a good summer for the state's hotel industry.\" Lodging and accommodation tax collections in Montana have been higher every month this year, including May, compared with 2017. Gaming receipts from casinos in Spearfish, S.D., were down about 4 percent during the spring months, but summer bookings at hotels and campgrounds in the region were up, according to local officials.\nServices\nActivity in the professional services industry increased moderately since the last report. Respondents to the Minneapolis Fed's annual services survey indicated growth in sales, profits, productivity, and employment over the past year, with expectations for more growth in the coming 12 months. In contrast, several architecture contacts said business had decreased recently.\nConstruction and Real Estate\nCommercial construction was mixed since the last report. An industry database showed that commercial and heavy construction spending in May rose overall compared with a year earlier, particularly in North Dakota and Minnesota, while South Dakota was flat. A contractor in southeastern Minnesota said current activity levels were \"much better\" compared with last year. However, another database of new and active projects across multiple states in the District showed that recent activity levels through mid-June were slightly lower than the same period a year earlier. The value of commercial permitting in May was also mixed among the District's larger cities. Residential construction rose modestly overall, though activity varied. Single-family permit values rose in Bismarck, N.D., Billings and Missoula, Mont., and the Minneapolis-St. Paul region; but permit values were flat in Rapid City and Sioux Falls, S.D., and lower in Fargo, N.D., and Rochester, Minn.\nCommercial real estate grew modestly since the last report. In Minneapolis-St. Paul, multifamily vacancy rates continued to be low despite strong delivery of new units to the market, though lease rates have been mostly steady. Despite the continued closure of large retail stores in Minneapolis-St. Paul, this space was being absorbed and \"keeping vacancies tight,\" according to an industry source. Residential real estate fell, with a few isolated exceptions. May home sales in Minnesota dropped 11 percent compared with a year earlier and also fell in western and northern regions of Wisconsin, and in Bismarck. Sioux Falls sales were flat, and Montana metro markets were mixed, with slower May sales in Great Falls and Helena, but higher sales in Bozeman and Missoula.\nManufacturing\nDistrict manufacturing activity increased briskly. An index of manufacturing conditions indicated increased activity in June compared with a month earlier in Minnesota and the Dakotas. Contacts from across the manufacturing sector reported very strong activity so far this year. A dealer of stamping and metal forming machinery said that the market for capital equipment was as busy as they'd ever seen. Producers of hydraulic equipment reported similarly strong demand, with some seeing double-digit growth this year.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable relative to the previous report. Despite a late start to the planting season, crop progress in District states as of late June was generally in line with five-year averages, and the majority of crops were rated in good or excellent condition. However, some areas of the Dakotas and Montana were experiencing dry or moderate drought conditions. Activity in the energy sector increased slightly. District oil and gas exploration activity as of late June was roughly unchanged from the previous report; oil and gas production as of April 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"

Boston

/beige-book-reports/2018/2018-07-bo

"July 18, 2018\nSummary of Economic Activity\nFirst District economic activity continued to expand at a moderate pace, with nearly all responding retailers, manufacturers, hospitality providers, and software and IT firms citing year-over-year increases in sales and revenues in recent weeks. Residential real estate markets saw price increases but fewer closed sales although contacts reported higher listings and expected higher sales in the future. Commercial real estate markets were generally expanding, although growth in retail was mixed. Hotels reported slower growth which they attributed to the expansion of on-line short term rentals. Contacts across a range of industries said trucking capacity continued to be a major issue. Overall, the outlook continued to be positive. Contacts expressed concerns about tariffs but none cited trade issues as affecting demand or hiring and capital expenditure plans.\nEmployment and Wages\nMany responding firms have done some hiring; most reported tight labor markets and modest increases in pay. Retail contacts reported that labor supply was tight and one contact said labor costs were up 10 percent over the previous year. All surveyed manufacturers were hiring or maintaining current levels of employment. Manufacturing contacts said the labor market was tight, but the exceptional difficulties were mostly in highly skilled areas like engineering. Labor shortages continued to be an issue in the hospitality industry, particularly in seasonal destinations like Cape Cod. Contacts in the software and information technology areas expressed concerns about restrictive immigration policies.\nPrices\nMost respondents reported modest increases in prices. Although contacts were concerned about the effect of tariffs, none of our contacts reported any material impact so far. Higher freight costs continued to be an issue across a wide array of industries, with the shortage of commercial truck drivers being cited as an important factor. Several manufacturing contacts said that they were only able to pass through a portion of the higher costs to customers. As a result, margins were declining. House prices continued to rise throughout the region.\nRetail and Tourism\nThe retailers consulted for this round reported recent comparable-store sales gains ranging from 3 percent to 10 percent year-over-year. One firm noted that higher freight costs contributed to higher overhead costs and that a shortage of workers led to a 10 percent increase in labor costs compared to a year ago. Despite these higher operating costs, the retail outlook for the rest of the year remains positive, provided that consumer sentiment does not abate.\nTwo travel industry sources reported that business was either flat or slightly down in late May, but appeared to have rebounded strongly in June. Both contacts reported that traditional lodging providers, such as hotels and bed-and-breakfast establishments, were encountering increased competition from online platforms offering short-term rentals. This shift in consumer preferences was expected to continue. Labor shortages continued to be a concern, and in places like the Outer Cape, the average hourly wage for some low-skilled hospitality workers was reportedly about $20 per hour. Through May, domestic travel to Boston is up 8.1 percent year-over-year, while international travel is up 7.1 percent year-over-year. The outlook is positive, but there was some concern that escalating trade tensions could put a damper on international tourism to the United States.\nManufacturing and Related Services\nOf nine firms we contacted this cycle, all but one reported higher sales. The one exception was a toy manufacturer and our contact said that the weakness was expected and attributable to the closure of a major toy retailer. While several contacts expressed concern about the effect of the trade war on sales, none reported any sales declines as a result. Four of our contacts said that costs were rising faster than sales revenue. Rising costs were attributed to raw material prices and a lack of trucking capacity. One contact in the container industry said that they had planned to increase output and hire additional workers but had not because of delays in the delivery of new capital equipment.\nSoftware and Information Technology Services\nSoftware and IT contacts in the First District continued to see activity expanding steadily. Revenue was up 3 percent to 10 percent year-over-year in the first half of the year. Several noted increases in margins, despite some seasonal sluggishness in demand. Contacts attributed growth in margins to internal productivity improvements. Firms across the sector expressed concern about acquiring and retaining talent in the tech industry. Further, contacts unanimously expressed anxiety about shocks to the broader economy, such as the potential for changes in trade, tariffs, immigration, war, and the stock market. Firms do not expect changes in headcounts or wages in the short-run, but some noted upcoming and potential capital investments. Overall, contacts felt positive about their progress thus far and optimistic about the rest of the year.\nCommercial Real Estate\nCommercial real estate market conditions were described as stable or improving in recent weeks. Although mixed across locations and property types, activity levels on balance were moderate to robust. Boston area contacts described the city's office market as strong by historical standards, with low and falling vacancy rates, robust rents that increased slightly, and record-high sales prices for select buildings. Industrial leasing activity in the Boston area was seen as stable, although one contact reported that sales demand for warehouse space near Boston surged on the expectation of rising tenant demand. In Providence office leasing activity was steady at a moderate pace amid falling vacancy rates and rising rents, but industrial leasing activity was hampered by that market's 1 percent vacancy rate. Construction activity across multiple property types maintained a strong pace in Boston and Providence, and increased further in the Portland area, but remained scant in the Hartford area. Contacts expect stable or improving commercial real estate activity moving forward, although most cited downside risks, such as rising interest rates, trade wars, and local labor shortages.\nResidential Real Estate\nEntering the summer, the residential real estate market in the First District continued to display a sellers' market environment, highlighting high demand and increasing prices. Closed sales were down in all reporting areas but pending sales increased. Contacts cited insufficient inventory as the reason for the drop in sales but remained optimistic about the outlook on the heels of strong buyer demand and increasing new listings. A representative from Rhode Island noted that \"Competition is fierce and buyers are finding themselves in a race to the finish line. Inventory is so tight that properties are being sold as soon as they go on the market, often in multiple bid situations.\" Median sales price increased in all areas but Vermont. Contacts expressed concerns about the rapid price appreciation as many potential buyers were priced out of the market. Contacts said that borrowers, despite high prices and changes to the tax code, were still willing and able to finance purchases.\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"

Cleveland

/beige-book-reports/2018/2018-07-cl

"July 18, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District grew moderately during the survey period. Demand was strong in many sectors, but hiring continued at about the same pace as in the previous survey period as a dearth of qualified workers constrained hiring. Wages rose moderately, and increases were in line with recent trends. Upward pressure on input costs was strong, notably for fuel and metals. Contacts widely attributed the cost increases to import tariffs. However, final selling prices rose only moderately. Firms raised their prices to cover, at least partially, their increased raw materials and transportation costs. Otherwise, businesses were cautious about raising their selling prices. Consumer demand, including for autos, was stable to slightly higher. Manufacturing capacity utilization rose to meet strong demand, but a number of producers remarked that they were struggling to keep up with orders. Freight volumes trended higher. Construction activity remained strong.\nEmployment and Wages\nDistrict businesses added workers at a pace that was moderate and similar to that of the previous survey period. Most firms reported strong customer demand and optimism about the economy's near-term prospects as supporting their hiring decisions. Very few firms reduced headcount, and a sizable share reported creating new positions. Hiring was strongest among construction firms thanks to high project volumes. Also, strong demand for technology services enabled professional services to add workers at a healthy clip. Contacts reported the dearth of qualified workers constrained hiring across an array of occupations. The problem was most often highlighted by manufacturing, construction, and transportation companies. One steel contact noted the company had significantly increased overtime hours to cope with the worker challenge. A nonresidential builder noticed that worker turnover was somewhat higher than normal. Despite tightness in the overall job market, wage pressures remained consistent with recent trends in the District. In general, employers raised wages moderately as part of cost-of-living increases or annual merit raises or to fulfill union contracts.\nPrices\nUpward pressure on input costs remained strong, especially for fuel and metals. Manufacturers and builders commented widely that import tariffs were lifting steel and aluminum prices. In some cases, manufacturers noted a rush to purchase metals in anticipation of additional price increases. To a lesser extent, construction contacts also noted lumber price increases. Aside from the manufacturing, construction, and transportation sectors, contacts noted moderate cost increases that were consistent with recent trends. Retailers pointed out that prices for cotton and raw food ingredients rose for their suppliers. Final selling prices rose moderately, with little change compared with those of the previous survey period. Overall, firms managed to raise their prices to compensate, at least partially, for rising raw materials and transportation costs. Aside from that, firms either held their prices or cautiously nudged them higher.\nConsumer Spending\nRetail demand improved moderately, extending a streak that started in the final months of 2017. In addition to a seasonal boost, food retailers and clothing retailers noted that continued strong consumer confidence lifted sales. A few contacts noted slight improvement in sales of discretionary items and higher quality products. Retail sales in the Fourth District were reported to be mostly in line with activity in the rest of the country. Inventories and profits were stable.\nAuto demand and vehicle financing conditions held steady. One auto dealer noted that leasing activity had weakened as manufacturers reduced their support. All contacts reported that sales of passenger vehicles lagged those of crossovers, SUVs, and trucks. One contact speculated that the market share for such vehicles would increase because of increased vehicle fuel economy, older customers' need for comfort, and a younger generation of customers starting families. Expectations for vehicle sales in the near-term were mixed. One dealer was concerned that price increases and higher interest rates could sap demand. Another dealer was optimistic that activity in the energy industry could lift sales in the region.\nManufacturing\nThe strong manufacturing demand seen earlier in the year showed no signs of letting up in the current survey period. Contacts mostly attributed the momentum to strong US economic growth that broadly supported demand in end markets. One pump and motor manufacturer noted increased demand from customers in primary metals manufacturing and extractive industries. An industrial metals producer cited strong demand from the construction sector. Some manufacturers noted that capacity utilization had risen to meet demand and that a few contacts mentioned they struggled to keep up with orders. Contacts remarked that concerns about future trade- and inflation-related price increases had prompted some customers to accelerate purchases. Most manufacturers expected that continued economic growth would lead to stronger customer demand in the near term. However, one auto-related manufacturer expected import tariffs to lead to weaker sales because of the consequent increase in prices.\nReal Estate and Construction\nDemand for new homes grew modestly in the current survey period. Homebuilders noted that rising interest rates and concern about rising materials prices motivated some customers to move their purchases forward. Contacts widely expected stable demand in the coming quarter. Real estate agents noted demand for Section 8 vouchers was stable. However, reports of first-time buyers' home demand were mixed. Sales of houses priced below $400,000 and those priced between $600,000 and $800,000 strengthened, according to some contacts. Financing conditions for homebuyers were mostly stable.\nNonresidential builders noted that the strong demand of recent periods continued in the current period and that backlogs ticked higher as firms struggled with labor constraints. Capital investment plans were mostly unchanged, although one commercial builder stated that the firm boosted spending to use drones for surveying to make up for the shortage of workers. Most contacts expected the current momentum in customer demand to continue in the near term. However, there was some concern that demand from industrial clients could weaken depending on the course taken by trade disputes.\nFinancial Services\nMost banking contacts reported that steady economic growth had kept loan demand stable. Deposits fell during the last two months because of seasonal changes following the tax-filing season. Some bankers noted that strong revenue growth combined with higher borrowing costs drove some customers to fund capital expenditures and expansions with cash rather than with credit. Most contacts reported that delinquency rates remained steady, although rising interest rates were cited as a risk to the outlook.\nNonfinancial Services\nNonfinancial services firms reported strong demand thanks to generally favorable economic conditions. Business advisory firms and software developers reported strong activity. In addition to tax savings and ongoing strong confidence, contacts remarked that their services were in demand because businesses were modernizing their IT infrastructures and attempting to understand the implications of worker scarcities. Capital investments held steady, although one financial consultant remarked that Chinese capital controls had caused an expected investment to fall through. Transportation firms reported continued increases in freight volumes. Railroad contacts attributed some of their volume growth to ongoing capacity constraints in the trucking industry. One trucking contact noted an increase in demand for home deliveries.\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

/beige-book-reports/2018/2018-07-da

"July 18, 2018\nSummary of Economic Activity\nExpansion in the Eleventh District economy continued at a solid pace. Manufacturing output increased, and loan demand and retail spending rose. Broad-based expansion in the energy and service sectors continued. Home sales rose modestly, while apartment markets softened slightly. The ongoing drought negatively affected crop and grazing conditions. Hiring remained strong, and widespread labor shortages continued putting pressure on wages. Price pressures stayed elevated largely due to increases in input costs, particularly steel and aluminum. Although outlooks remained fairly optimistic, tariffs and trade-related concerns were creating uncertainty.\nEmployment and Wages\nJob growth was solid and widespread across sectors, with most firms bullish in their expectations for long-run employment. Labor market tightness continued across a wide array of industries and skill sets, with several contacts saying difficulty finding workers was constraining growth to some extent. Oilfield services firms noted shortages of mechanics and truck drivers, and one contact said hiring and retaining workers in the bottom 20 percent of their payroll was a challenge. A staffing firm said they had partnered with a manufacturing company, where workers could attend a paid, six-week welding course and receive fulltime employment following successful completion. Nearly half of the firms responding to a set of special questions indicated that new technologies were not impacting employment levels, although 25 percent said it was changing the types of workers needed.\nWage pressures remained elevated, and firms expected to give employees a larger increase in wages this year compared with 2017. Several firms were employing multiple strategies to recruit and retain employees, such as intensifying recruiting, raising wages, offering on-the-job training and/or increasing variable pay/bonus.\nPrices\nPrice pressures remained elevated. Input costs increased among energy, manufacturing, and construction firms, in part due to rising freight costs and the new tariffs on steel, aluminum, and lumber. Auto dealers reported higher new vehicle prices and financing costs, and transportation service firms noted climbing fuel prices. Many other retailers and service firms also cited rising input and other costs such as health care. A number of contacts said they plan on increasing selling prices to offset higher costs. West Texas Intermediate oil prices rose to their highest levels since 2014 driven by falling inventories, rising geopolitical risks in the Middle East, U.S. policy on Iran, and other oil supply concerns.\nManufacturing\nExpansion in the manufacturing sector continued, although the overall pace of growth eased in June from the highs seen in May. Output growth was led by transportation equipment and food manufacturing. Growth in machinery production receded in June from May's elevated rates, while demand for fabricated and primary metals increased. Chemical production expanded further, and the Gulf Coast refinery utilization rate climbed up to 97.6 percent toward the end of June. Refiners and chemical producers reported optimistic outlooks, buoyed by relatively low domestic feed costs and expectations of healthy global demand for their products. Overall, outlooks among manufacturers remained positive, although contacts said that the new tariffs had heightened uncertainty in expectations for activity and prices.\nRetail Sales\nRetail sales rose sharply in May but growth slowed in June, with many retailers noting either flat or softening activity. Internet sales grew moderately over the reporting period. Auto sales were strong, but contacts reported increased pressure on margins in part due to rising financing costs among other expenses. Sales increased among durable goods wholesalers, while falling for nondurables. While outlooks overall remained positive, rising interest rates and the newly imposed tariffs were negatively impacting some retailers' expectations.\nNonfinancial Services\nGrowth in nonfinancial services activity was broad based across industries. Strong revenue growth among transportation services and finance and insurance firms boosted service sector activity. Rail traffic remained close to record levels, with shipments increasing broadly across business lines. Air cargo volumes expanded as well, in part due to a pickup in international shipments. Airline passenger demand was stable, and leisure and hospitality contacts saw a pickup in activity. Revenue growth in the professional and business services sector was solid, with staffing services firms noting persistently high demand, driven by widespread increases in activity across geographies and sectors. Expectations regarding future business conditions remained optimistic, although higher fuel prices, rising costs, labor shortages, and uncertainty surrounding trade policies were sources of concern among contacts.\nConstruction and Real Estate\nHome sales edged up over the reporting period, with year-to-date sales on or ahead of plan for most builders. Buyers remained price sensitive, putting pressure on builders' margins. Contacts expressed trepidation about the impact of rising interest rates and uncertainty surrounding trade and immigration policies on future activity and/or costs. Nevertheless, outlooks remained positive.\nA large number of new apartments are putting pressure on rents, particularly in areas where there was a lot of availability. Rent growth in Dallas and Austin was modest and below its long run average, though occupancy was generally holding up well. A slowing pace of deliveries combined with a pickup in economic growth has boosted occupancy and rent growth in Houston. Investment activity remained solid despite the recent softening in overall performance.\nNet absorption in DFW's office market improved in the second quarter but remained modest compared with the highs seen last year. Office leasing activity was steady in San Antonio, but remained sluggish in Houston. Conditions in industrial markets were characterized as solid, and reports on demand for retail space mostly indicated flat but healthy levels of activity.\nFinancial Services\nLoan volumes and demand expanded over the reporting period. Growth remained broad based, with continued strength in commercial and residential real estate lending. Consumer loan volumes increased slightly, and commercial and industrial loan volumes grew at a slower pace than during the last reporting period. Loan pricing rose further, and credit standards remained unchanged or tightened moderately. The volume of deposits ticked up, and some contacts noted raising rates to compete for deposits. Outlooks remained optimistic, although regulatory compliance, difficulty expanding the existing deposit base, and potential inversion of the yield curve were concerns cited by banking contacts.\nEnergy\nEnergy sector activity expanded strongly. Demand for oilfield services rose further, and firms noted increased equipment utilization. Drilling activity ticked up in the District even as the U.S. rig count dipped. Expectations regarding future business conditions remained positive, supported by a favorable outlook for oil prices, but contacts expressed concern about steel tariffs, pipeline capacity constraints, and worker shortages.\nAgriculture\nDrought conditions became slightly less severe but more widespread over the reporting period. Texas farmers were concerned because the drought will likely suppress crop yields, and crop prices are lower due to trade restrictions and strong U.S. production prospects. Grazing conditions remained well below average, and cattle prices experienced a slightly higher-than-average seasonal decline over the last six weeks, despite strong export and domestic 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"

Chicago

/beige-book-reports/2018/2018-07-ch

"July 18, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District slowed to a modest pace in late May and June, though contacts expected it to pick up to a moderate pace over the next 6 to 12 months. Manufacturing production increased moderately, while employment, consumer spending, business spending, and construction and real estate activity grew modestly. Wages and prices increased modestly, and financial conditions improved modestly. The outlook for agricultural income dimmed some as prices for most commodities fell.\nEmployment and Wages\nEmployment growth slowed to a modest pace over the reporting period, and contacts expected gains to continue at that rate over the next 6 to 12 months. Hiring was focused on production and professional and technical workers, though there was also an increase in the number of firms seeking to hire sales workers. As they have for some time, contacts indicated that the labor market was tight and reported difficulties filling positions at all skill levels. Manufacturers continued to report that they had delayed or turned down projects because of difficulties in finding workers. A staffing firm that primarily supplies manufacturers with production workers reported no change in billable hours. Wage growth remained modest overall, with wage increases most likely to be reported for managerial, professional and technical, and production workers. Most firms reported rising benefits costs.\nPrices\nThe pace of price increases edged up in late May and June, but remained modest overall. Contacts expected prices to continue to rise modestly over the next 6 to 12 months. Retail prices increased slightly overall. Producer prices rose modestly, reflecting in part the pass-through of higher labor, materials, energy, and freight costs. Contacts in the agricultural sector noted heightened price volatility related to uncertainty over U.S. and foreign tariff policies.\nConsumer Spending\nConsumer spending increased modestly over the reporting period. Nonauto retail sales rose modestly, with gains in the grocery, hardware, home improvement, jewelry, and personal services segments and declines in the furniture and sporting goods segments. Light vehicle sales increased slightly and used vehicle sales rose moderately. A number of contacts indicated that vehicle sales for the first half of 2018 had exceeded expectations.\nBusiness Spending\nBusiness spending increased modestly in late May and June. Retail contacts indicated that inventories were generally at comfortable levels. Most manufacturing contacts did so as well, though a fabricated metals contact indicated that inventories were low because many of his firm's suppliers were capacity constrained. In addition, steel service center inventories remained 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. Contacts again indicated that lead times for purchasing new equipment were elevated. Demand for energy from commercial and industrial users increased modestly, and demand for transportation services increased moderately from an already high level.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly over the reporting period. Residential construction increased slightly, led by growth in suburban single-family homebuilding. Home sales were up modestly overall, though a contact in the Detroit area reported slower sales. Contacts across the District indicated that low inventories of starter homes continued to hold back sales. Home prices increased moderately overall and rents rose modestly. The pace of nonresidential construction was little changed. Commercial real estate activity increased modestly, led by growth in the industrial sector. One contact noted that demand for office space from technology firms was strong. Commercial rents increased modestly, vacancy rates declined modestly, and the availability of sublease space increased slightly.\nManufacturing\nManufacturing production increased at a moderate rate in late May and June. A number of contacts across manufacturing sectors reported operating at or near capacity. Steel production increased moderately in response to steady end-user demand and declining imports. One contact said that demand for domestic steel was the strongest it had been in 20 years. Demand for heavy machinery and heavy trucks continued to grow at a solid pace. Order books for specialty metals manufacturers increased modestly, helped by strong demand from the oil and gas sector. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction. Auto production increased modestly and remained at a solid level.\nBanking and Finance\nFinancial conditions improved modestly over the reporting period. Financial market participants reported little change in equities prices or volatility, but some increase in short-term interest rates. Business loan demand increased slightly, with growth predominantly coming from small businesses. Loans were primarily for financing real estate and capital equipment. One contact noted slightly higher balances on business lines of credit due to higher input costs for energy and metals. Loan quality and lending standards were little changed. Consumer loan demand also increased slightly, driven by increases in loans for autos and other durable goods and in mortgages. Consumer loan quality and lending standards were little changed. Contacts reported a high level of competition for both business and consumer loans.\nAgriculture\nThe outlook for agriculture income dimmed some over the reporting period as prices for most commodities fell. Crop farmers reported that in general, field conditions were excellent and better than last year. Both corn and soybean prices fell, reducing expected profits from the upcoming harvest. Livestock farmers continued to struggle overall, with some reports of asset sales by hog producers and closures of dairy operations. Contacts throughout the District expressed heightened concerns about the impact of trade disputes and tariffs on the agricultural industry.\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"

Kansas City

/beige-book-reports/2018/2018-07-kc

"Beige Book Report: Kansas City\nJuly 18, 2018\nSummary of Economic Activity\nEconomic activity in the Tenth District continued to increase at a moderate pace in late May and June, and expectations were for additional gains in the coming months. Consumer spending and business services activity rose modestly compared to the previous survey period, and residential and commercial real estate activity climbed moderately higher. Manufacturing activity continued to expand at a robust pace, and manufacturers and business services contacts anticipated stronger capital spending in the months ahead. Banking contacts reported increased loan demand, improved loan quality, and slightly lower deposit levels. Respondents in the energy sector reported a slight pickup in overall activity and expected strong levels of capital spending. Agricultural conditions weakened slightly as trade uncertainty and expectations of large supplies put downward pressure on crop prices. Employment increased modestly since the previous survey period, and a large share of contacts reported labor shortages. Wages, input prices, and selling prices moved moderately higher, and most contacts expected additional increases moving forward.\nEmployment and Wages\nDistrict employment and employee hours continued to increase at a modest pace in late May and June, and additional gains were anticipated in the months ahead. A majority of contacts in every sector noted rising levels of employment since the previous survey period, with the exception of those in the auto sales sector who noted a modest decline. In addition to rising employment levels, employee hours increased in the retail trade, wholesale trade, real estate, restaurant, tourism, manufacturing, and energy sectors. A high percentage of contacts in the District reported labor shortages for some skillsets, especially within the manufacturing sector. In particular, contacts noted difficulty finding retail sales staff, skilled IT workers, commercial drivers, and restaurant workers.\nWages increased moderately in most sectors, and firms expected a similar pace of growth in the months ahead.\nPrices\nInput and selling prices rose further since the previous survey period and were moderately higher than year-ago levels. Respondents expected further increases in the coming months. Contacts in the retail sector noted modestly higher input and selling prices compared to the previous survey period, and both were moderately higher than year-ago levels. In the restaurant sector, input prices rose modestly and selling prices picked up at a moderate pace. Input and selling prices in the transportation sector were moderately above year-ago levels. Construction supply contacts noted moderately higher prices, although the rate of growth was expected to slow slightly moving forward. Manufacturers reported a modest increase in the prices of finished products, and raw materials prices rose moderately. Manufacturers expected the pace of price increases to accelerate in the months ahead for both finished products and raw materials.\nConsumer Spending\nConsumer spending increased modestly compared to the previous survey period, and firms were optimistic that spending will continue to rise. Retail sales rose moderately since the previous survey period and remained above year-ago levels. Several retailers noted a pickup in sales for appliances, home improvement items, and lower-priced goods, while higher-priced products sold poorly. Retail contacts anticipated moderate increases in sales and modestly higher inventories moving forward. Auto sales rose modestly since the previous survey period but were slightly below year-ago levels. However, dealer contacts expected sales and inventories to rise in the months ahead. Restaurant sales edged up slightly compared to both the previous survey period and year-ago levels, and respondents expected modest sales growth in the next few months. District tourism activity expanded at a moderate pace compared to the previous survey period, although tourism sales were below year-ago levels. Tourism activity was anticipated to decline modestly in the next few months.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand robustly, and the majority of other business contacts reported modest sales increases. Factory activity grew at both durable and nondurable goods plants, especially for computer, electronics, and food products. Production, shipments, and new orders increased moderately, and activity remained higher than a year ago. Manufacturers' capital spending plans grew moderately, and manufacturers expressed strong optimism about future levels of activity.\nOutside of manufacturing, firms in the professional, high-tech, wholesale trade, and transportation sectors reported modest sales growth, and expectations were for a faster pace of growth in the months ahead. Transportation contacts anticipated a modest increase in capital spending in the coming months, while professional, high-tech, and wholesale trade firms expressed more robust plans for capital expenditures.\nReal Estate and Construction\nDistrict real estate activity rose at a moderate pace, and additional growth was expected in the months ahead. Contacts in the residential real estate sector noted moderately higher home sales, prices, and inventories compared to year-ago levels. Continued moderate growth was expected for home sales and prices, while inventories were projected to remain flat. Residential construction activity strengthened slightly in late May and June including stronger housing starts and sales of construction supplies. However, traffic of potential buyers declined modestly since last year. Residential construction contacts expected a slight pickup in activity in the months ahead. The commercial real estate sector grew at a moderate pace as absorption, completions, and sales rose while vacancy rates declined. Commercial real estate activity was projected to expand at a slightly faster pace moving forward.\nBanking\nBankers reported a moderate increase in overall loan demand in late May and June. Respondents reported a modest increase for commercial and industrial, commercial real estate, residential real estate, consumer installment, and agricultural loans. Bankers indicated loan quality improved modestly compared to a year ago and expected further improvement in the next six months. Credit standards remained largely unchanged in all major loan categories, and bankers reported a slight decrease in deposit levels.\nEnergy\nDistrict energy activity expanded slightly since the last survey period, while expectations for future activity continued to grow moderately. The number of active oil rigs increased modestly, and the number of active gas rigs remained unchanged. Most firms reported continued strong capital spending plans, although several businesses expressed concern about pipeline capacity. Despite persistent growth in global oil demand, contacts projected slightly lower oil prices which a number of firms attributed to the announcement of OPEC's production increases. Expectations for natural gas prices improved further.\nAgriculture\nThe Tenth District farm economy weakened slightly, and drought persisted in some regions. Trade uncertainty and expectations of larger supplies in 2018 put downward pressure on crop prices. Corn prices were slightly lower than a year ago following a sharp decline in June, while soybean prices declined even more rapidly and reached an eight-year low. Although prices for wheat remained steady and slightly higher than a year ago, revenues in Kansas and Oklahoma could remain strained as nearly half of winter wheat acreage was rated as poor or very poor due to dry conditions. Livestock prices were slightly lower than one year ago following modest declines in June. Hog prices, which continued to be supported by expectations of increased U.S. exports and relatively strong global demand, increased slightly in June but remained slightly below levels from one year ago.\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"

National Summary

/beige-book-reports/2018/2018-05-su

"Beige Book: National Summary\nMay 30, 2018\nThis report was prepared at the Federal Reserve Bank of Cleveland based on information collected on or before May 21, 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 moderately in late April and early May with few shifts in the pattern of growth. The Dallas District was an exception, where overall economic activity sped up to a solid pace. Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as \"strong.\" Fabricated metals, heavy industrial machinery, and electronics equipment were noted as areas of strength. Rising goods production led to higher freight volumes for transportation firms. By contrast, consumer spending was soft. Nonauto retail sales growth moderated somewhat and auto sales were flat, although there was considerable variation by District and vehicle type. In banking, demand for loans ticked higher and banks reported that increased competition had led to higher deposit rates. Delinquency rates were mostly stable at low levels. Homebuilding and home sales increased modestly, on net, and nonresidential construction continued at a moderate pace. Contacts noted some concern about the uncertainty of international trade policy. Still, outlooks for near term growth were generally upbeat.\nEmployment and Wages\nEmployment rose at a modest to moderate rate across most Districts. Again, the Dallas District was the exception, where solid and widespread employment growth was reported. Labor market conditions remained tight across the country, and contacts continued to report difficulty filling positions across skill levels. Shortages of qualified workers were reported in various specialized trades and occupations, including truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals. Many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages. In the aggregate, however, wage increases remained modest in most Districts. Contacts in some Districts expected similar employment and wage gains in the coming months.\nPrices\nPrices rose moderately in most Districts, while the remainder reported slight or modest increases. There were several reports of rising materials costs, notably for steel, aluminum, oil, oil derivatives, lumber, and cement. A few Districts noted that these reports of rising materials costs were becoming more common across contacts. Input cost increases, along with labor shortages in some sectors and strengthening demand, put upward pressure on prices in the transportation, construction, and manufacturing sectors. Some Districts also noted that their retail contacts were more able to pass along price increases to their customers than in the recent past.\nHighlights by Federal Reserve District\nBoston\nBusiness activity continued to expand at a moderate pace, with contacted manufacturers, retailers, and most staffing firms reporting year-over-year increases in revenues. While some firms said prices were increasing more than last year, others indicated no unusual pressure. Most hiring firms noted tight labor markets; some--including staffing firms--said wages were rising.\nNew York\nEconomic growth continued at a modest pace, while labor markets have tightened further. Input price pressures have broadened, and selling price increases have picked up somewhat. Housing markets have firmed slightly, while commercial real estate markets have softened.\nPhiladelphia\nEconomic activity continued to expand at a modest pace. Wage pressures were emerging in some tighter labor markets, but wage and price increases remained modest overall, as did job growth. Notably, nonfinancial services accelerated to a moderate pace, and auto sales appeared to reverse several periods of decline, posting a slight increase.\nCleveland\nThe District economy expanded at a moderate pace. Labor markets tightened, with wage pressures noted broadly. Rising commodities prices and transportation costs are pressuring goods producers. Stronger confidence in the economy boosted demand in manufacturing, banking, and nonfinancial services. Consumer demand increased modestly. Construction activity remained robust.\nRichmond\nThe regional economy expanded moderately. Robust demand and a shortage of drivers led some trucking firms to turn away business which, in turn, increased demand for rail services. Home sales were steady, while inventories remained limited. Labor demand continued to strengthen and supply remained tight across industries. Prices rose moderately, overall.\nAtlanta\nEconomic activity grew at a modest pace. Tightness continued in the labor market with firms noting increased efforts to attract and retain workers. Reports of wage growth were mixed. Overall retail sales rose and light truck sales were robust. Real estate activity improved slightly. Manufacturers noted increases in new orders and production. Loan growth remained firm.\nChicago\nGrowth in economic activity continued at a moderate pace. Manufacturing increased strongly, employment grew moderately, consumer and business spending rose modestly, and construction and real estate increased slightly. Wages and prices increased modestly and financial conditions improved modestly. The outlook for farm income brightened.\nSt. Louis\nEconomic conditions improved slightly. Wage growth was moderate. Some firms have begun relaxing drug-testing standards and restrictions on hiring felons to alleviate labor shortages. District bankers reported weaker demand for new loans and a decline in creditworthiness of loan applicants. Firms surveyed in mid-May were slightly less optimistic about the rest of 2018 as those surveyed in mid-February.\nMinneapolis\nNinth District economic activity increased moderately. While labor demand appeared robust, employment growth was restrained by a tight labor supply. Wage growth was moderate, while price pressures increased slightly, particularly at the wholesale level. District manufacturers were experiencing robust growth but also were experiencing supply-chain disruptions as a result of uncertainty over trade policy.\nKansas City\nOverall economic activity in the Tenth District increased moderately, with further growth expected in coming months. Manufacturing activity expanded at a rapid pace, while consumer spending, energy, and business services grew moderately. Agricultural conditions weakened but at a slower pace, while District employment and wages rose modestly.\nDallas\nEconomic activity grew at a solid pace, with an acceleration in manufacturing activity. Expansion in the services, energy, and real estate sectors continued at about the same pace. Retail spending was mixed and drought conditions persisted in parts of the District. Hiring remained solid despite a tight labor market, and wage and price pressures stayed elevated. Contacts expressed concern about trade uncertainty and rising interest rates, although outlooks overall remained positive.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods edged up, and activity in the consumer and business services sectors expanded slightly. Activity in the manufacturing sector was solid. Activity in residential real estate markets remained solid, and conditions in the commercial real estate sector picked up notably. Lending activity ticked up modestly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2018/2018-05-ph

"May 30, 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. Nonfinancial services appeared to accelerate to a moderate pace, and manufacturing activity continued to grow moderately. Meanwhile, nonauto retail sales, tourist activity, and nonresidential leasing markets continued at a modest pace. Contacts from new home construction and nonresidential construction reported no change in activity. Following several periods of decline, auto sales appeared to have increased slightly, while existing home sales continued to decline moderately. On balance, employment, wages, and prices continued to grow modestly. However, many contacts raised concerns about rising oil prices and prices for commodities linked to tariffs. The growth outlook over the next six months remained positive, with over half of all firms anticipating increases in general activity.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Manufacturing and nonmanufacturing firms reported ongoing net additions to staff; however, hiring has broadened among manufacturers and narrowed among nonmanufacturers since last period. Average hours worked rose over the period for manufacturing firms and nonmanufacturers.\nOn balance, wages also continued growing modestly, although reports have risen of firms losing skilled employees to competitors and struggling to attract and retain new qualified workers. Increasingly, firms are responding by adjusting their wage structures. The share of nonmanufacturing firms reporting increases remained greater than 40 percent. Banking contacts noted few signs of general wage inflation.\nStaffing firms continued to report steady demand for temporary workers and direct hires in several local labor markets, with increased wage pressures in the tightest markets. According to one contact, clients are hiring faster now compared with a few years ago when they were indecisive about whether to hire and whom.\nPrices\nWhile reports of rising prices are becoming more widespread, on balance, price increases remained modest. Among nonmanufacturing firms, one-third reported increases for prices paid, and less than one-fourth reported increases for prices received \u2013 about the same as the prior period. Reports of price increases were more widespread among manufacturing firms this period, with over half noting higher prices paid and over one-third indicating higher prices received for their own goods.\nBuilders continued to report rising prices, particularly for materials containing lumber, steel, and oil derivatives. Several manufacturers (and their bankers) cited rising prices for aluminum ingot, steel, and oil \u2013 some passed along the costs; however, margins shrank for others.\nLooking ahead one year, nonmanufacturing firms anticipated receiving significantly higher prices for their own goods and services \u2013 a moderate increase from one quarter earlier. Manufacturing firms expected even higher prices, reflecting a small increase from their expectations last quarter. Overall, firms also reported slightly higher expectations for annual consumer inflation.\nManufacturing\nOn balance, manufacturing activity maintained a moderate pace of growth. Nearly half of the firms reported an increase in new orders, and somewhat fewer reported an increase in shipments \u2013 just a slight drop from the prior period. Moreover, the percentage of firms that reported a decrease in new orders fell by half since last period.\nThe makers of lumber products, paper products, fabricated metal products, industrial machinery, and electronic equipment tended to note gains in new orders and shipments; the makers of chemicals and primary metals reported mixed results. One primary metal manufacturer felt that the current slowdown was due to \"customers waiting for clarity on the issue of steel tariffs.\"\nManufacturing contacts continued to expect general activity to increase over the next six months; however, the percentage of firms expecting future increases dropped below 50 percent. The percentage of firms expecting increases in future employment rose to nearly one-half, but for future capital expenditures, the percentage fell to less than one-third.\nConsumer Spending\nOn balance, nonauto retail sales continued to grow modestly. Mall retailers noted sales gains across nearly all categories. As gas prices neared $3 a gallon in parts of Pennsylvania, one contact noted concern but saw no negative impact on spending yet.\nPennsylvania auto dealers reported year-over-year gains in sales for April, while New Jersey reported declines. Dealers in both states noted that sales in early May appeared stronger; however, year-to-date sales are still a bit below last year's very high levels.\nTourism contacts continued to report modest growth overall. A Philadelphia analyst cited gains in hotel occupancy despite absorbing new supply. Shore contacts are generally optimistic for the summer season ahead. Atlantic City's casino revenues fell on a year-over-year basis in March and April.\nNonfinancial Services\nOn balance, service-sector firms reported moderate growth in general activity \u2013 an uptick from the modest pace of the prior Beige Book period. In particular, the percentage of firms reporting increases in sales rose, and the percentage reporting increases in new orders rose significantly. A contact from one large firm also noted that the delinquency rate on customers' accounts remained steady and very low. Expectations of future growth remained high, in fact, the percentage of firms anticipating increased activity rose over 60 percent.\nFinancial Services\nFinancial firms reported slight growth in overall loan volumes (excluding credit cards). Volumes grew moderately in mortgages and modestly in commercial and industrial lending. However, these gains were offset by slight declines in commercial real estate lending, home equity lines, and auto loans, and by a moderate decline in other consumer loans (not elsewhere classified). Compared with one year earlier, loans grew modestly, and in all categories except for home equity lines.\nDuring the current period, credit card lending began growing at a moderate pace \u2013 ending its long seasonal decline. However, credit card loan volumes have grown moderately when compared with the same period last year.\nBanking contacts continued to describe credit standards as unchanged, credit quality as sound, and consumer sentiment and business confidence as high and growing. Numerous bankers noted growing pressure to raise deposit rates, especially from municipal clients.\nReal Estate and Construction\nHomebuilders reported little overall change in sales and construction activity. A banking contact noted that a former local builder is now earning more by renovating existing homes and managing the rentals.\nSales of existing homes continued to fall moderately in most major Third District markets compared with the same period last year. Brokers continued to blame a lack of new listings for moderately priced homes.\nOverall, nonresidential real estate contacts reported no change in high levels of construction activity and in the modest growth in leasing activity. Construction of industrial warehouse space continued apace \u2013 \"a frenzy,\" according to one banking contact \u2013 faster than the labor supply, according to another banker.\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"

Chicago

/beige-book-reports/2018/2018-05-ch

"May 30, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District remained at a moderate pace in April and early May, and contacts expected growth to continue at that pace over the next 6 to 12 months. Manufacturing production increased strongly, employment grew moderately, consumer and business spending rose modestly, and construction and real estate activity increased slightly. Wages and prices increased modestly and financial conditions improved modestly. The outlook for farm income brightened, due largely to improvements in the crop sector.\nEmployment and Wages\nEmployment growth remained at a moderate pace over the reporting period, and contacts expected gains to continue at that rate over the next 6 to 12 months. Hiring was focused on production and on professional and technical workers. As they have for some time, contacts indicated that the labor market was tight and reported difficulties filling positions at all skill levels. There continued to be reports from manufacturing and construction firms that they had delayed or turned down projects because of difficulties in finding workers. There were also reports of firms choosing not to lay off workers during production lulls so that they would not have to find new workers when activity picked up again. Wage growth remained modest overall, though a number of contacts noted that wage pressures had intensified in recent months, and there were more reports of pay increases for production workers. Most firms reported rising benefits costs.\nPrices\nIn general, prices rose modestly in April and early May, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices were flat overall, though there were reports of price increases in the home improvement and the lawn and garden segments. One contact indicated that retail pricing was \"highly competitive.\" Producer prices rose modestly, reflecting in part the pass-through of higher labor, materials, and freight costs. Numerous contacts noted that freight costs had increased dramatically.\nConsumer Spending\nConsumer spending increased modestly over the reporting period. Nonauto retail sales rose slightly, with gains reported in the furniture, appliances, home improvement, and personal services segments. One contact noted an increase in purchases using credit, particularly for durable goods. Contacts were generally optimistic about the coming summer sales season. Light vehicle sales rose slightly. The sales mix of new light vehicles continued to shift toward light trucks, particularly toward crossover utility vehicles. Used vehicle sales increased modestly.\nBusiness Spending\nBusiness spending increased modestly in April and early May. Retail contacts indicated that inventories were generally at comfortable levels. Most manufacturing contacts did so as well, though some noted that strong demand had led to shortages of some of their products and others said that lead times from parts and materials suppliers had increased. 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. Dealers reported that sales of medium-duty trucks remained robust. Contacts again indicated that lead times for purchasing new equipment had increased. Demand for energy by commercial and industrial users increased modestly. Demand for transportation services increased moderately from an already high level.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly over the reporting period. Residential construction increased slightly, led by growth in suburban single-family homebuilding. Multiple contacts noted strong demand for single-family starter homes but stated that low inventories continued to hold back sales. Prices were up notably in this market segment. In contrast, demand and prices for higher-end homes changed little. Contacts also indicated that rising labor and materials costs were making it difficult for homebuilders to turn a profit. Nonresidential construction was little changed overall, though contacts again said they expected building to pick up in the coming months because vacancy rates were low, particularly in the industrial segment. Commercial real estate activity was flat but at a strong level. Commercial rents, vacancy rates, and the availability of sublease space were all unchanged.\nManufacturing\nGrowth in manufacturing production continued at a strong rate in April and early May. Steel production increased moderately, in response to steady end-user demand. Imports slowed after the steel and aluminum tariffs were enacted, and contacts noted ongoing uncertainty about whether there would be further changes in tariffs policy. Demand for heavy machinery increased strongly, reflecting both end-user demand and dealers rebuilding inventories. Demand for heavy trucks remained at a high level and one contact noted that heavy truck producers were running at close to full capacity. Order books for specialty metals manufacturers increased modestly. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction. Auto production increased modestly and remained at a solid level.\nBanking and Finance\nFinancial conditions improved modestly over the reporting period. Financial market participants reported little change in equities prices or volatility but some increase in interest rates. Business loan demand increased slightly, led by growth in small business lending. Loans were primarily for financing real estate and capital equipment. While competition remained strong, contacts reported little change in lending standards or loan quality. Consumer loan demand increased modestly, driven by increases in residential mortgage activity. Consumer loan quality and lending standards were little changed.\nAgriculture\nThe outlook for farm income for 2018 brightened again, with improvements concentrated in the crop sector. Nonetheless, several contacts expressed unease over the potential impact of international trade policies on the farming sector. After weather-related delays, corn and soybean planting proceeded quickly in Illinois and Indiana, to the point that it was running ahead of normal progress. However, Iowa and Wisconsin were somewhat behind their typical paces for planting. Corn prices rose during the reporting period, while soybean prices drifted down. Dry weather and the late spring hindered the development of pastures, which led to shortages of and higher prices for hay, cutting into margins for some livestock producers. Cattle and egg prices were down, but hog and dairy prices moved up. Dairy prices were still quite low, however, and there were reports of a bump up in operators exiting the sector.\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"

Dallas

/beige-book-reports/2018/2018-05-da

"May 30, 2018\nSummary of Economic Activity\nThe Eleventh District economy expanded at a solid pace over the past six weeks. Growth in manufacturing increased. Expansion in the energy and service sectors continued at about the same pace, while retail spending was mixed. Home sales continued to rise but apartment markets softened slightly. Hiring was solid across most sectors, and widespread labor shortages continued. Wage and price pressures remained elevated, and several contacts noted a sharp rise in the cost of steel and aluminum. Outlooks remained fairly optimistic, but tariffs and trade-related concerns were creating uncertainty.\nEmployment and Wages\nEmployment growth was solid and widespread across sectors. Labor market tightness continued across a wide range of industries and skill levels, with some contacts saying difficulty finding workers was constraining growth to some extent. One staffing services contact noted that some firms were rehiring former retired employees on a part-time basis to meet their staffing needs. In Houston, shortages of painters, tile setters, carpet layers (workers at the backend of the home construction cycle) were noted, a departure from earlier in the year when mostly sheet rock/drywall installers were in short supply. Up-stream energy firms said all skill levels were in short supply, but shortages were most acute for skilled workers.\nWage pressure remained elevated and picked up particularly among manufacturing firms. A large share of respondents noted increasing wages to recruit and retain employees. One contact reported offering large bonuses for trades, such as machinists and welders, who were willing to commit to stay for three years. A health care firm cited high vacancy rates for registered nurse positions.\nPrices\nPrice pressures remained elevated. Raw material prices and other input costs continued to climb, but several firms noted they had limited ability to pass on higher costs to customers. Input cost pressures increased among energy, manufacturing, and construction firms, in part due to the new tariffs on lumber, steel and aluminum. Upstream energy firms expressed concern about the new tariffs adversely affecting their operations and costs in the near term. One energy contact reported a sharp rise in rates of drilling rigs. Some auto dealers cited a higher-than-average increase in used-vehicle prices, and transportation service firms noted rising fuel costs. Gasoline and diesel prices rose, driven largely by higher crude oil prices, while the average price for natural gas dipped during the reporting period.\nManufacturing\nGrowth in the manufacturing sector strengthened after having slowed in the prior reporting period. Output growth rose, led by increases in primary metals, transportation equipment, machinery, and high tech manufacturing. Growth in food and nonmetallic mineral (stone, clay, cement and glass) production picked up. Demand for fabricated metals manufacturing increased, with one contact noting strength in oil and gas related activity. Chemical production expanded during the reporting period, and refinery utilization rates were up in April but dipped slightly in early May. Outlooks remained optimistic, although several contacts noted that the new tariffs were creating uncertainty in expectations. Refiners and petrochemical producers expressed negative views about the potential impact of tariffs and quotas on exports as well as new construction projects.\nRetail Sales\nRetail sales, including companywide internet sales, dipped in April but appear to have picked up in early May. Seasonal retailers attributed the decline in April sales to colder-than-normal weather. Reports on auto sales were mixed, with sales weakening slightly in San Antonio but increasing in Dallas and Houston. Sales growth among durable wholesalers was solid. Outlooks among retailers were positive on net.\nNonfinancial Services\nBroad-based expansion continued in the nonfinancial services sector. Transportation services was a particular bright spot. Rail traffic was near record levels, with the increase in shipments being broad based across business lines. Courier and sea cargo volumes expanded as well, with growth in the latter being boosted by marked increases in steel shipments as shippers rushed to bring them in before the new tariffs were implemented. Reports on airline passenger demand were mixed, but outlooks remained optimistic. Leisure and hospitality contacts said spring break activity was mixed, but Easter traffic was strong along the coastal area near Houston. Revenue at professional and technical service firms rose, and staffing services firms continued to note high levels of demand, driven by widespread increases in activity across geographies and sectors. Outlooks improved, although uncertainty surrounding trade policies and rising interest rates negatively impacted some firms' expectations.\nConstruction and Real Estate\nHome sales rose during the reporting period, with continued strength in sales at the low- to mid-price points. Year-to-date sales were generally on or ahead of plan for builders. Buyers remained price sensitive, and builders have been focused on housing affordability. One contact noted that in Houston, some builders were downsizing homes on large lots to bring the price point down. Contacts said several new deals are not being penciled in partly due to high and/or rising land, development, and other costs. Outlooks were positive, although margin compression, climbing material costs, and rising interest rates were a concern.\nAmple supply coupled with modest demand has slowed apartment rent growth in most major metros. In Houston, however, net absorption has been solid and overall rent growth has been strong as well. Some contacts noted a pickup in investment activity.\nOffice leasing activity and/or net absorption slowed in Dallas-Fort Worth and remained sluggish in Houston. Conditions in industrial markets were characterized as solid, while reports on retail space activity were mixed.\nFinancial Services\nLoan volumes and demand expanded at a faster pace compared with the previous reporting period. Strong growth was seen in commercial and industrial, and commercial and residential real estate lending. Consumer loan volumes increased modestly. Credit standards remained flat or ticked down, while loan pricing continued to increase. The volume of deposits increased at a slower pace than in the last report, and a few contacts noted increased competition for deposits. Banking contacts remained optimistic as they expect both loan demand and general business activity to improve.\nEnergy\nEnergy activity continued to expand moderately. Drilling and completion activity increased in the Eleventh District, particularly in the Permian Basin. Large firms are driving growth, and it remained difficult for small exploration and production companies to expand operations despite high oil prices. Outlooks remained positive, supported by favorable oil prices, although contacts said pipeline capacity, labor, and supply chain constraints may limit further increases in production growth.\nAgriculture\nDrought conditions continued to plague much of West Texas and Southern New Mexico, particularly in the Texas panhandle. Crop conditions for winter wheat were much poorer compared with last year due to the lack of soil moisture. Row crop planting continued and crops were in mostly fair to good condition, but there was concern among producers about the dry weather potentially causing below-average yields. Given the current level of prices, grain farmers need at least average yields to be profitable this year. Cotton farmers were a bit more optimistic due to higher prices over the last six weeks and because cotton yields generally hold up better than other crops during drought. Cattle prices rose, largely due to seasonal factors but also buoyed by very strong domestic and international demand.\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

/beige-book-reports/2018/2018-05-sf

"Beige Book Report: San Francisco\nMay 30, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of early April through mid-May. Conditions in the labor market remained tight, and wage pressures ticked up. Price inflation increased moderately. Sales of retail goods edged up, while activity in consumer and business services expanded slightly. Activity in the manufacturing sector expanded solidly, and conditions in the agriculture sector deteriorated somewhat. Contacts reported that residential real estate market activity remained solid, and activity in the commercial real estate sector picked up notably. Lending activity ticked up modestly.\nEmployment and Wages\nContacts continued to report tight labor market conditions across all sectors, leading to an uptick in wage pressures and to labor-retention challenges. Demand for workers in the restaurant industry increased markedly. Demand for construction labor continued to exceed supply, causing wages to rise moderately and wait times for project starts to increase. Across the District, contacts in banking and financial services noted persistent shortages of IT professionals, especially at companies or branches in rural areas. In response to shortages of skilled labor in banking services and manufacturing, contacts noted the growth of strategic training partnerships between these employers and colleges and trade schools to build a talent pipeline. A contact in the Pacific Northwest reported intensified labor shortages in the health-care sector, preventing service providers from meeting market demand. Employers in the business services and real estate development sectors increased compensation packages to compete with companies trying to poach well-trained employees. Employment in the utilities sector was broadly flat.\nPrices\nPrice inflation increased moderately over the reporting period. Recent oil price increases spurred price inflation in a variety of sectors. Food and beverage businesses passed along a jump in transportation costs to consumers. Persistently brisk activity in the construction sector continued to exert upward pressure on prices for building materials. Contacts observed modest price inflation for manufactured medical devices after input costs increased somewhat. Contacts in Oregon and the Mountain West observed rising retail gasoline prices. A contact in Southern California reported that increases in commercial rents for restaurants drove some inflation for customer prices. Semiconductor prices increased modestly. A contact in the California agriculture industry noted a slight pickup in inflation due to a weak outlook for yields after subpar rainfall levels. In Eastern Washington, the price of imported wholesale natural gas declined moderately, lowering heating costs in the area.\nRetail Trade and Services\nSales of retail goods edged up over the reporting period. Contacts reported solid sales at food and beverage companies. Sales activity in the pharmaceutical industry picked up due to intensifying competition that drove down market prices. Apparel sales increased marginally following recent declines, though consumer demand continued to shift to entertainment goods and services. The restaurant industry saw sales tick down further, as foot traffic remained at low levels.\nActivity in the consumer and business services sectors expanded slightly. Across the District, consolidation in health provider and payment services continued at a solid pace. Health insurance enrollment in the Mountain West grew modestly, causing revenues and earnings to edge up. Demand for legal services in Hawaii picked up slightly.\nManufacturing\nActivity in the manufacturing sector expanded solidly. Demand for steel and other manufactured inputs used in the production of heavy capital goods picked up noticeably, reflecting stronger industrial and consumer activity. Contacts in Northern California noted brisk semiconductor sales and the scope for demand to increase further. Deliveries of commercial aircraft over the first four months of the year increased modestly from the same period last year, while new orders grew significantly over the same period.\nAgriculture and Resource-Related Industries\nConditions in the agriculture sector deteriorated somewhat. Current inventories and yield expectations for a variety of crops fell because of lower-than-expected precipitation levels in much of the District over the past few months. Unusually warm weather in the Pacific Northwest generated softer demand for heating, putting downward pressure on natural gas prices in the region. The supply of electricity continued to outpace demand in California, leading excess capacity to rise in the state.\nReal Estate and Construction\nActivity in real estate markets continued to expand at a robust pace. Construction in the residential market remained solid, though the shortage of labor and intense price pressures for building materials continued to act as headwinds. Contacts in Eastern Washington reported that permitting for residential units was flat on a year-over-year basis, though at an elevated level. Listing durations for single family houses fell over the reporting period, indicating a pickup in selling activity across the District. A contact in Oregon noted that the inventory of new homes remained at a low level. Commercial real estate activity picked up notably. Contacts in Eastern Washington reported that plans for the construction of a major e-commerce distribution center were announced, resulting in an anticipatory uptick in demand for commercial space in the area. Contacts in the San Francisco Bay Area noted that office rents and occupancy rates rose moderately because of increased demand by technology companies.\nFinancial Institutions\nLending activity ticked up modestly over the reporting period. Loan demand increased overall, with contacts in the Mountain West and Central California reporting strong loan growth. In Oregon, demand for financing for various construction projects continued to increase. Deposit rates continued to edge up, resulting in a slight narrowing of net interest margins. Contacts noted a modest increase in the rate of mergers and acquisitions among small and medium-sized banks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2018/2018-05-ny

"Beige Book Report: New York\nMay 30, 2018\nSummary of Economic Activity\nEconomic activity in the Second District has continued to grow at a modest pace. The labor market has shown further signs of tightening, with some reports of accelerating wages. Input price increases have become increasingly widespread, and consumer price inflation appears to have picked up slightly. Growth has remained fairly brisk in the manufacturing sector and has picked up somewhat in the service industries. Consumer spending has been steady to stronger in April and early May, buoyed by increased tourism. Housing markets have firmed slightly, while commercial real estate markets have shown scattered signs of slackening. Finally, banks continued to report rising loan demand and no change in delinquency rates.\nEmployment and Wages\nHiring has picked up somewhat, as the labor market has continued to tighten. A major employment agency in upstate New York reported that workers in skilled trades and information technology are in particularly short supply. A New York City agency noted labor shortages across a broad array of occupations and industries, with reasonably qualified job candidates receiving multiple offers and getting snapped up quickly. Labor shortages in upstate New York were attributed, in part, to an aging workforce.\nBusiness contacts in finance and information continued to report fairly brisk hiring, while wholesalers and leisure & hospitality businesses noted moderate hiring. Firms in manufacturing, health & education, and professional & business services reported modest staffing increases, while retailers and transportation firms noted flat to declining employment. Looking ahead, contacts in finance and real estate planned to hire more briskly than those in other sectors.\nWage growth has remained modest across upstate New York but has picked up in and around New York City. While businesses in education & health services reported subdued wage increases, contacts across all other major service industries reported increasing wage pressures.\nPrices\nBusinesses in most industry sectors reported increasingly widespread hikes in input prices--particularly in manufacturing, wholesale trade, and leisure & hospitality. Contacts in almost all industry sectors anticipated further increases in the months ahead.\nWholesalers report widespread hikes in selling prices, while those in other sectors reported more moderate increases. Still, retailers in both upstate New York and the New York City area noted that they have been less aggressive in discounting merchandise in recent weeks, boosting effective sales prices. New York City hotels and Broadway theaters have reportedly raised prices somewhat in recent weeks, with Broadway theater ticket prices up more than 10 percent from a year earlier. Looking ahead, businesses generally said they planned moderate price increases.\nConsumer Spending\nRetail sales were steady to stronger across the District in April and May. Retailers reported a noticeable pickup in sales in New York City, part of which was attributed to increased tourism. One retail chain noted that sales moved ahead of plan in recent weeks. In contrast, retailers in upstate New York indicated that sales were little changed, despite fairly brisk customer traffic, and a few store closings were reported. Inventories were generally reported to be at satisfactory levels, and retailers were moderately optimistic about the near-term outlook.\nNew vehicle sales in upstate New York weakened in April and early May and fell well short of comparable 2017 levels. In contrast, sales of used cars picked up. Vehicle inventories were said to be at or somewhat above desired levels. Dealers continued to characterize retail and wholesale credit conditions as favorable.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) climbed in April, reaching its highest level in almost two decades.\nManufacturing and Distribution\nManufacturers reported continued solid growth in business since the last report. Transportation firms noted a modest pickup in activity, while wholesalers indicated a fairly brisk increase. Looking ahead, manufacturers remained generally optimistic about the near-term outlook, though less so than earlier in the year. Wholesalers and transportation firms remained fairly optimistic.\nServices\nReports from service-sector firms continued to indicate modest, if any, growth in activity. Contacts in professional & business services and leisure & hospitality reported modest growth, while those in the information sector reported activity was flat. Businesses in health & education services noted modest declines in activity, on balance. Looking ahead, professional & business service and information firms indicated that they were fairly optimistic about the near-term outlook.\nTourism in New York City has picked up further since the last report. Broadway theaters reported a pickup in both attendance and especially revenues, and retailers attributed some of a recent pickup in sales to increased tourism. New York City hotels noted an increase in occupancy rates and revenue per available room, even with a growing number of available hotel rooms.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, a bit firmer since the last report. Real estate activity in both the Buffalo and Rochester areas picked up noticeably, as strong demand, combined with lean inventories of homes on the market, have driven up prices and sparked increasingly widespread bidding wars. Low and declining inventories have also held down sales volume and driven up prices in downstate New York and southwestern Connecticut. Manhattan has been the exception: Inventories have been at moderate levels and edging up, and both sales activity and sales prices have declined modestly. Though its effect on the market is not yet clear, there is some concern about the new federal tax legislation reducing the deductibility of homeowner expenses.\nThe rental market has been mixed as well. Apartment rents have risen modestly across northern New Jersey, the Lower Hudson Valley, and upstate New York but have been flat across most of New York City, with record high landlord concessions. One exception has been The Bronx, where rents have risen fairly briskly. Throughout most of the region, the higher end of both the sales and rental market has continued to be relatively soft.\nCommercial real estate markets have slackened somewhat overall. Office rents edged down in New York City and Long Island, while availability rates edged up and leasing activity slowed. Office rents and availability rates have been mostly steady across upstate New York and northern New Jersey, though leasing activity has slowed slightly. The market for retail space has also continued to soften across much of the District, though it has been steady across upstate New York. The industrial market, which had grown increasingly tight over the past year, has leveled off across much of the District, though it has continued to strengthen in northern New Jersey. A real estate industry contact noted that high rents and diminishing availability of industrial and warehouse space in New York City's outer boroughs has driven many businesses to relocate to northern and central New Jersey.\nNew multi-family construction starts have been steady to down slightly across the District. New industrial development has slowed as well, and new office construction has virtually ground to a halt, except in northern New Jersey, though it has slowed there as well. In all these categories, however, there continues to be a substantial volume of space under construction.\nBanking and Finance\nSmall to medium-sized banks in the District reported higher demand for residential mortgages, commercial mortgages, and C&I loans, but unchanged demand for consumer loans and decreased refinancing activity. Banks reported tighter credit standards for consumer loans but unchanged standards across all other categories. Loan spreads narrowed for residential mortgages and C&I loans. Widespread increases were reported in average deposit rates. Finally, bankers reported unchanged delinquency rates 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"

Richmond

/beige-book-reports/2018/2018-05-ri

"May 30, 2018\nSummary of Economic Activity\nThe Fifth District economy expanded at a moderate pace in recent weeks. Manufacturing conditions improved moderately and port activity remained strong. Trucking demand remained robust, and driver shortages have led some trucking companies to turn some business away. As a result, some shippers turned to rail. Reports from retailers were mixed as furniture and equipment sales picked up but new car sales declined. Travel and tourism remained strong, despite some adverse weather limiting outdoor recreation. Residential real estate markets improved modestly as home sales were steady, while inventories remained limited. Commercial real estate leasing activity increased, particularly for retail and industrial space. Overall, loan demand grew modestly and competition for deposits intensified. Nonfinancial services firms reported a modest rise in demand. Natural gas and coal production picked up in recent weeks while agriculture reports were mixed. The demand for labor continued to strengthen while supply remained tight across industry sectors. Prices rose moderately; firms reported rising steel and aluminum prices and increasing transportation costs.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks, while supply remained tight across industry sectors. Employment agencies noted a slight decrease in job openings compared to the strong spring recruiting levels. Staffing firms reported increased demand for warehouse managers, customer service representatives, and medical and legal professionals. Meanwhile, business owners reported difficulty filling positions for carpenters, machinists, electricians, engineers, truck drivers, IT professionals, and construction workers. Wage increases remained modest across sectors, but a few firms reported increased wage pressures.\nPrices\nOn the whole, prices grew at a moderate rate since the previous Beige Book. According to our most recent surveys, manufacturers reported moderate growth in input prices while selling prices rose at a more modest pace. Manufacturers saw input prices rise for steel and aluminum, corrugated boxes, specialty chemicals, paint, and hardware. Additionally, rail and truck transportation prices moved higher. Homebuilders continued to report higher prices for raw materials and for land and lots. Service sector price growth remained modest, overall, but firms expected prices to rise at faster pace over the next six months. Metallurgical coal prices were little changed in recent weeks while thermal coal prices rose slightly.\nManufacturing\nManufacturing business conditions improved moderately. A cabinet manufacturer attributed an increase in demand to companies beginning to spend more after the tax cuts. A Virginia engine manufacturer said that high demand was causing the firm to produce as fast as it could get raw materials. Meanwhile, a West Virginia wood products manufacturer reported record business but thin profit margins because of high costs of lumber and rising trucking prices. Many manufacturers continued to express concerns about the negative impact that rising steel prices could have on their businesses, and a North Carolina door frame manufacturer anticipated a bad year because of high aluminum costs.\nPorts and Transportation\nActivity at District ports remained robust in recent weeks as contacts reported record volumes and expectations for continued strength. One port executive said that volumes remained strong despite some volatility in shipments resulting from delays at other east coast ports. Increasing shipments led one port to increase loading hours for trucks, but it still had to shift more of its volumes to rail as truck capacity dwindled. At least one port was investing in more terminals with the expectation that strong year-over-year volume increases will continue well into the future.\nTrucking remained strong in recent weeks as companies struggled to meet the high demand with a shortage of drivers. A Virginia trucking company said they were investing in better equipment in an effort to recruit drivers. Meanwhile, a North Carolina trucking company reported quadrupling rates for high-risk customers in order to ease demand but found that some customers were willing to pay the new rates. Higher shipping rates allowed trucking companies to increase profits despite rising labor costs. Many shippers had to turn to rail as trucking firms turned them away. A Virginia rail company reported seeing record profits so far this year but also struggled to keep up with demand.\nRetail, Travel, and Tourism\nRetailers reported mixed business conditions recently. A Virginia hardware store said that sales were volatile, which was largely weather-related, but a West Virginia equipment company reported record high sales. A Virginia furniture store saw strong business but struggled with high inventory. Several retailers expressed concerns about future profits because of rising steel and labor costs. Auto dealers in North Carolina and Virginia reported weakening sales, particularly in new cars, as high prices and rising interest rates reduced affordability.\nTravel and tourism activity remained strong, overall, in recent weeks despite some adverse weather conditions. For example, a Virginia resort reported strong bookings despite the weather but low participation in outdoor activities. Graduations brought business to many hotels and leisure travel picked up in Washington, D.C. In Charleston, South Carolina, hotels and restaurants saw stronger sales but were concerned about the number of new establishments scheduled to open in the next year. Despite reporting high revenue, a West Virginia adventure center expressed worries about low state tourism funding.\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 traffic was slightly lower. A Washington, D.C., agent saw more homes selling before being listed, and the median days on the market declined to just eight days. In other areas, average days on the market edged down further from existing low levels, while home prices continued to rise modestly. New home sales and construction slowed slightly as overburdened subcontractors were slowing down new home production. However, in most markets, new residential development picked up in recent weeks.\nCommercial real estate leasing rose moderately in recent weeks as brokers reported strong demand for retail and industrial space; however, reports on office demand were mixed. 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 warehouse and industrial building sites representing the majority of transactions. Commercial construction increased modestly in some regions. Multifamily leasing remained healthy in most markets.\nBanking and Finance\nSince our previous beige book, loan demand grew modestly. Overall, bankers said that consumer demand was increasing at a healthy rate; however, reports on demand for business and commercial loans were mixed. In the District on the whole, residential mortgage demand grew at a modest pace. Deposit rates increased, and contacts reported that competition for deposits had intensified. Credit quality remained strong while credit standards were generally unchanged. Interest rates rose slightly in recent weeks.\nNonfinancial Services\nOverall, the demand for nonfinancial services rose modestly in recent weeks. Demand strengthened for warehouse and storage leasing and for management and administrative support services. Creative services, such as marketing, also saw stronger activity. Meanwhile, demand softened for telecom services, health and social services, and for some professional and business services that rely on federal spending.\nAgriculture and Natural Resources\nNatural gas production rose moderately and pipeline construction picked up since our previous report. Coal production increased slightly as coal exporting was buoyed by supply disruptions in Australia. Agricultural reports were mixed as poultry demand rose but dairy farm activity declined.\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"

Atlanta

/beige-book-reports/2018/2018-05-at

"May 30, 2018\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 with most firms expecting modest growth to continue over the next three to six months. District firms still report difficulties finding candidates across a broad range of industries and skills, and reports of wage pressure varied widely based on geography and job type. Most nonlabor input cost pressures were subdued; however, there were reports of rising steel and aluminum prices as a result of the new tariffs. On balance, District merchants reported a slight increase in sales levels since the previous report, and auto dealers noted light trucks sales were solid. The tourism sector continued to note positive activity. According to residential real estate contacts, home sales were mixed and prices continued to modestly appreciate compared with a year ago. Builders reported that new home construction increased since the previous report. Commercial real estate contacts indicated that demand continued to improve. Manufacturing purchasing managers cited increases in new orders and production.\nEmployment and Wages\nBusiness contacts continued to report a tightening labor market across some geographies, industries, and skill sets. Finding and retaining hospitality workers, long-haul drivers, technicians, skilled craft laborers, distribution workers, nurses and other medical staff, and information technology professionals was especially difficult. Contacts also noted that geographic mobility was a major challenge, as workers' willingness to relocate for a position remained more challenging than in the past. Overall, contacts expressed that recruiting and retention efforts were much more aggressive and creative than they were a year ago. Firms also continued to boost training efforts and programs for existing employees and less experienced employees, to expand partnerships with workforce development entities and community colleges, and to broaden their geographical search for candidates.\nOn average, annual wage increases remained in the two to four percent range. The intensity of wage pressure varied greatly across the region. Firms reporting mild pressure typically responded by offering nondirect wage benefits, like increased vacation time, flexible scheduling, and marketing a positive culture to both existing and potential workers. In cases where wage pressures were described as \"acute,\" if firms were still not able to meet demand with their existing labor supply after implementing nonwage benefits, they typically raised wages, often considerably.\nPrices\nOverall, contacts reported that input costs were mostly flat with some reporting limited pricing power. However, most manufacturing contacts reported increases in input costs, particularly for steel, aluminum, and transportation. Some companies reported the ability to pass along these commodity input cost increases due to expectations of rising costs related to tariffs. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in May. Looking ahead, survey respondents indicated that they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nOn balance, District retail contacts reported a slight pick-up in sales levels since the last report. Retailers expect modest increases in spending over the summer months. Sales of light trucks continue to remain strong according to auto dealers.\nTourism and hospitality contacts across the District reported growth in the number of visitors and activity in April compared to a year ago. Expectations among most contacts are for a strong summer season in leisure and business travel.\nConstruction and Real Estate\nReports from District residential real estate contacts signaled modest but continued growth. Builders reported construction activity in May was slightly up compared to one year earlier. Builders indicated that home sales and traffic were flat to up slightly from the year-ago level; while broker reports were mixed. Most builders said inventory levels remained unchanged from one year ago; while brokers noted that inventory levels were down. The majority of builders and brokers continued to report home price increases in May. Southeast builders expect home sales to meet or exceed the year-ago level over the next three months; while brokers expect home sales activity to increase slightly over the same period. Many builders expect the pace of construction activity over the next three months to hold steady or increase slightly.\nMany District commercial real estate contacts noted improvements in demand that continued to result in rent growth and increased absorption, but cautioned that the rate of improvement varies by metropolitan area, submarket, and property type. The majority of commercial contractors indicated that the pace of nonresidential and multifamily construction activity matched the year-ago level. Most contacts reported a healthy pipeline of activity, with backlogs greater than or equal to the previous year. Commercial construction contacts' outlook for nonresidential and multifamily construction across the District remained positive, with the majority anticipating activity to match or exceed the current level.\nManufacturing\nDistrict manufacturers indicated that overall business activity remained strong over the reporting period. Contacts reported that sales levels and demand for new orders were solid, and production levels continued to increase. While there were scattered reports of firms decreasing or holding employment levels steady, most firms suggested they were adding to their payrolls. Expectations for future production levels decreased from the previous period, as a little less than half of contacts expected higher production over the next six months.\nTransportation\nMost District transportation firms cited increased activity from April through mid-May. At District ports, container volumes, along with roll-on/roll-off auto and machinery cargo, bulk and breakbulk cargoes, continued to grow. Railroads reported modest gains in intermodal traffic from year earlier levels. However, overall year-to-date rail volumes were down slightly, driven by declines in the movement of nonmetallic minerals (including phosphates), iron and steel scrap, waste and nonferrous scrap, and metallic ores. Freight forwarders and logistics firms noted strong demand for delivery services. Contacts cited concerns that steel and aluminum tariffs will raise overall costs and slow activity. However, while uncertainty over trade policy had not negatively impacted capital projects already underway, a number indicated that they have tapped the brakes on projects in the planning phases. Even so, the majority of contacts expect activity over the next 12 months to increase.\nBanking and Finance\nDistrict financial institutions continued to report solid loan growth. However, as interest rates increased, bankers expressed concerns about the impact on deposits and liquidity. Community bank contacts reported that they were experiencing deposit pressure as competitors begin to raise rates. Overall, growth in borrowing exceeded growth in deposits; however, the majority of loan growth was still being funded by nonmaturity deposits.\nEnergy\nEnergy sector contacts described overall industry activity as steady to up from the prior report. Onshore shale drilling activity continued to accelerate, though offshore exploration and production remained depressed. Contacts expect a record year of natural gas supply growth in 2018, which, along with growing crude supply, generated pipeline construction projects in order to increase capacity. Chemical refining companies experienced continued, steady demand. Exports of refined chemical products and crude oil continued to surge as many refineries increased capacity. Rising crude exports also reduced demand for storage needs, leading some firms to pull back from creating or constructing storage capacity. Contacts from the utilities sector noted that while industrial segment growth was up, behavioral trends among residential and commercial customers to reduce energy usage lowered electricity sales.\nAgriculture\nAgriculture conditions across the District were mixed. Drought conditions abated in parts of Alabama and Georgia but deteriorated slightly in south Florida. May's forecast for Florida's orange crops was down from April. On a year-over-year basis, prices paid to farmers in March were up for corn, rice, soybeans, broilers, and eggs, flat for beef, and down for cotton.\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"

Cleveland

/beige-book-reports/2018/2018-05-cl

"May 30, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District expanded at a moderate pace as customer demand held steady and confidence remained high. Hiring improved slightly, though it remained moderate. Contacts continue to report difficulty finding qualified candidates in a broad array of occupations. Employers are raising wages to attract talent, but the increments are moderate and in line with recent trends in the District. Rising commodity prices, especially for lumber and steel, are pressuring goods producers. Construction firms and transportation companies were generally successful at raising their selling prices. Also, retailers managed to increase their prices to cover higher fuel costs. Consumer demand, including for autos, was stable to slightly higher. Housing and commercial real estate markets remained strong, although builders are increasingly concerned about rising input costs. Manufacturing output trended higher.\nEmployment and Wages\nHiring in the District improved slightly, though the pace remained moderate. Contacts generally reported stable demand for their products and stronger confidence, which resulted in fewer firms reducing headcount. The majority of firms reported replacing staff or making seasonal adjustments. The nonresidential construction sector was a standout, as high project volumes motivated the majority of builders to add workers. Overall, contacts reported continued difficulty finding qualified candidates across a broad array of occupations. Nevertheless, no meaningful changes to wage pressures were noted. In general, employers are raising wages to stay competitive, but the increases are in line with recent trends in the District.\nPrices\nInput price increases gained momentum, especially for construction materials. Builders widely noted ongoing lumber cost increases. Also, the threat of tariffs was reported as having led to hikes in steel prices. To a lesser extent, cement price increases were also noted. As with builders, manufacturers observed similar upswings in metals prices and added rising transportation costs to their list of concerns. Overall, firms' ability to pass along input price increases to their customers did not change much from the previous survey period, although there were notable shifts within industries. Pricing power for banks fell sharply, which contacts attributed to heightened competition. However, an increasing share of construction contacts were able to pass along their increased costs, thanks to strong demand and higher backlogs. Retailers, who had been holding their prices steady for a long stretch of time, managed to raise their selling prices recently to cover higher fuel costs. Transportation companies across the board raised freight rates, as they have been doing in recent months, without pushback from customers.\nConsumer Spending\nConsumer demand increased modestly during the survey period. Seasonal factors aside, clothing retailers, department stores, and food retailers noted stable demand. Retail sales activity in the District was reported to be in line with or weaker than activity seen throughout the United States. One grocery chain operator noted that population loss in his region and increased use of alternatives to physical store locations had led to weaker regional sales activity relative to the rest of the country. Looking ahead to the next several months, most respondents expect stable demand. However, uncertainty surrounding tariffs on Chinese imports is a source of concern for some retailers that have operations overseas or use imported goods as inputs.\nIn the auto industry, customer demand improved modestly, thanks to improving labor markets, better weather, and higher consumer confidence. Furthermore, most auto dealers expect customer demand to remain stable going into the next quarter. Some auto dealers reported weaker sales in the region relative to the rest of the country, a situation which they partly attributed to prolonged cold weather conditions. Additionally, some auto dealers indicated that lenders are tightening credit and that loan and lease payments made by consumers are rising because of higher interest rates.\nManufacturing\nMost contacts in manufacturing indicated that demand was better during the past two months because of strong consumer confidence, seasonal factors, and the fear of future price increases leading to accelerated purchasing. Many fabricated metals and durable goods producers noted increased demand for heavy machinery and other capital goods. Some even moved up capital expenditures and plant expansions to keep up with increasing demand. Extractive industries, transportation equipment, and agriculture were noted as strong end markets. Because of trade-related price increases, most contacts did not believe that this strong demand would continue during the remainder of 2018. Finished goods inventories were down because of increased demand and uncertainty about future prices.\nReal Estate and Construction\nHomebuilders reported that overall customer demand was either steady or improving and that current trends are expected to continue into the next few months. A stronger job market, higher mortgage rates, and rising home prices were noted as enabling and motivating purchases. Financing conditions for homebuilders were reported to be stable. Real estate agents noted stable demand for first-time home purchases and Section 8 vouchers. Some contacts reported increases in housing inventory. Sales of homes in the lower price range strengthened, according to some contacts, while sales of higher-priced homes softened. Financing conditions for homebuyers remain generally stable.\nBusiness conditions for nonresidential builders improved from what was an already strong environment. Contacts noted decreased uncertainty and pent-up demand as supporting activity and leading to increased backlogs. One contact noted his company had a record month for contracts because of manufacturing and distribution projects. Another contact noted a recent uptick in demand for speculative lease products.\nFinancial Services\nBankers reported stronger demand for financial services as construction lending, home equity lines, and mortgage activity picked up with the warmer weather. Demand for commercial credit increased as customers drew down cash reserves at the beginning of the year and pivoted back to relying on credit. Business confidence remained high, and some contacts reported that their customers increased their capital expenditures. Core deposits increased over the past two months. In some areas, deposit increases were driven by royalty checks and bonuses from increased shale activity. That aside, most contacts cited seasonal changes following tax filing season as boosting deposits. Businesses that had drawn down deposits to pay taxes at the beginning of the year have since increased their balances, while many consumers received refund checks that they have yet to spend. In addition, one contact noted that increased competitive pressure had led to higher deposit rates and special incentives to win deposits from nonbank competitors.\nNonfinancial Services\nNonfinancial services firms reported strong demand, thanks to generally favorable economic conditions. Notably, transportation firms cited an uptick in industrial production, construction, and activity in the energy industry as leading to higher freight volumes. Railroad contacts attributed some of their volume growth to ongoing capacity constraints in the trucking industry. Within the professional services sector, business advisory firms and software developers reported the strongest activity, which they attributed to improved business earnings, profits, and confidence. One contact noted increasing digital transactions as driving demand for his firm's software. A number of professional services firms reported boosting their capital investments, namely for cybersecurity and IT infrastructure.\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"

St Louis

/beige-book-reports/2018/2018-05-sl

"Beige Book Report: St Louis\nMay 30, 2018\nSummary of Economic Activity\nEconomic conditions in the District have improved slightly since our previous report. Firms reported slight increases in employment despite continued difficulties finding workers. Wages and nonlabor costs increased at a moderate pace. Prices and price pressures grew modestly. Reports from consumer spending contacts were mixed. Manufacturers reported declines in production, capacity utilization, and new orders. Contacts in nonfinancial services indicated modest growth across their sectors. Residential real estate contacts reported sluggish sales resulting from low inventories and slightly lower demand, while construction activity increased modestly. District bankers reported slightly weaker demand and a decline in the creditworthiness of loan applicants. Agriculture conditions improved modestly. Overall, the outlook among contacts weakened somewhat but remains optimistic. On net, 27 percent of contacts expect conditions in 2018 to be better or somewhat better than in 2017.\nEmployment and Wages\nEmployment has increased slightly since the previous report. Of the contacts surveyed, on net, 13 percent reported that second-quarter employment was higher or slightly higher than a year ago. Several firms across a variety of industries announced plans to expand and hire new employees, including manufacturers of chemical products, wood products, and primary metals. Contacts in Missouri and Arkansas also reported difficulties filling skilled technical and engineering positions. Some local employers have begun relaxing drug-testing standards and reducing restrictions on hiring convicted felons in order to alleviate labor shortages.\nContacts reported moderate wage growth since the previous report. On net, 51 percent of contacts reported wages were higher or slightly higher than a year ago, and 43 percent reported increases in labor costs. Several contacts noted that the tight labor market has exerted upward pressure on wages for both entry-level and skilled positions.\nPrices\nOverall, prices charged to consumers increased at a modest pace. On net, 31 percent of contacts reported that prices were higher than a year ago. This is higher than three months ago, indicating an increase in growth from earlier this year.\nNonlabor input costs rose modestly, though at a slower pace than the previous survey three months ago. On net, 29 percent of contacts reported that costs were higher than a year ago. Multiple contacts noted that construction costs increased. In particular, a contact in Little Rock reported a strong increase in lumber prices, and several contacts in Louisville reported that the proposed steel and aluminum tariffs caused metals prices to rise. Automotive and corrugated products manufacturers also reported increases in raw materials prices.\nCommodity price movements were mixed. Sorghum and soybean prices decreased modestly; coal, corn meal, cottonseed, rice, and soybean meal were flat; and corn, corn feed, cotton, and wheat prices increased modestly.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate mixed consumer spending activity. Real sales tax collections increased in Arkansas and Tennessee relative to a year ago, remained flat in Missouri, and declined in Kentucky. Reports on sales from general retailers were mixed. On net, 40 percent of auto dealers indicated that sales were below expectations in the second quarter. About the same net percentage noted a shift in demand toward used vehicles. Hospitality and tourism contacts in Missouri reported business activity that met or exceeded expectations and have a positive outlook for the next few months.\nManufacturing\nOverall manufacturing activity has declined slightly since our previous report. Most contacts reported that production, capacity utilization, and new orders were down in the second quarter relative to one year ago, with greater shares reporting declines in production and new orders than in our previous survey. The percentage of contacts reporting increases in new orders has fallen for over a year. However, contacts were more optimistic about the next quarter.\nNonfinancial Services\nActivity in the service sector has expanded modestly since the previous report. Transportation and service contacts generally reported that sales met expectations in the current quarter. On net, 23 percent of contacts reported higher dollar sales in the current quarter than this time last year, and 43 percent expect sales to be higher in the next quarter relative to the same time a year ago.\nReal Estate and Construction\nResidential real estate activity has declined slightly since the previous report. Seasonally adjusted home sales dipped slightly in March across the four major MSAs in the District. On net, a third of contacts reported that sales halfway through the second quarter have fallen short of expectations. Contacts attributed this shortfall to a decline in inventory and a slight drop in demand relative to the same time last year. However, demand is expected to return to year-ago levels in the third quarter.\nResidential construction activity has increased modestly since the previous report. There was a moderate uptick in March permit activity across most of the District's MSAs. On net, only 10 percent of contacts reported that residential construction increased in the second quarter compared with a year earlier, but around twice that number expect activity to increase in the coming quarter.\nCommercial real estate activity improved slightly. Local contacts, on net, reported increased demand for industrial and office properties relative to a year ago. They also state that inventories for both property types have declined. These trends are expected to continue into the third quarter.\nCommercial construction activity improved modestly. On net, contacts reported higher demand for construction of all property types and noted that inventories for industrial and retail property types have improved. The majority of contacts continued to have an optimistic outlook for the remainder of 2018.\nBanking and Finance\nBanking market conditions in the District have weakened slightly since the previous report. Banking contacts reported that demand for mortgage and auto loans fell modestly in year-over-year terms while demand for business loans was flat. Bankers also reported that the creditworthiness of loan applicants declined relative to last year, particularly among applicants for auto loans and credit cards. Delinquencies fell across all loan categories but to varying degrees; mortgage and auto loan delinquencies dropped slightly, while delinquencies on business loans and credit cards decreased at a moderate rate.\nAgriculture and Natural Resources\nDistrict agriculture conditions improved modestly from the previous reporting period and robustly from the same time last year. After contacts reported concerns about weather being too wet and cold for a strong early planting season, mid-May planned acreage planted for corn, cotton, and soybeans were, respectively, 13, 12, and 24 percentage points above the same time last year. Rice planting progress was slightly behind 2017. Contacts indicated that the prospective Chinese tariffs on U.S. soybeans would be damaging to exporters but at this point seemed unlikely.\nNatural resource extraction conditions were roughly unchanged from the previous report and year. Seasonally adjusted coal production fell 1 percent from March to April, and April production was also down 4 percent from the same month last year.\nFor more information about District economic conditions, visit: www.research.stlouisfed.org/regecon/\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/2018/2018-05-kc

"Beige Book Report: Kansas City\nMay 30, 2018\nSummary of Economic Activity\nOverall Tenth District economic activity expanded at a moderate pace in April and early May, with many contacts expecting further growth in the months ahead. District manufacturing contacts reported a more rapid pace of expansion compared to the previous survey. Consumer spending, energy, and business services activity increased at a moderate pace, while District real estate firms reported a modest pace of growth. Bankers reported a modest increase in overall loan demand and deposit levels, and a moderate improvement in loan quality. Agricultural conditions weakened, but at a slower pace, as most commodity prices have risen slightly. Employment and employee hours continued to rise modestly, and contacts reported modest wage growth with moderate increases expected in coming months. Input prices were up moderately compared to the previous survey period, while selling prices rose modestly.\nEmployment and Wages\nDistrict employment and employee hours continued to rise modestly in April and early May, and expectations were for a slightly faster pace of growth in the months ahead. Contacts in the auto sales, education, restaurant, and health services sectors noted a decline in both employment and employee hours, while all other sectors reported growth. All sectors expected an increase in employment in the months ahead with the exception of auto sales. Respondents noted a shortage of commercial drivers, salespeople, and service workers.\nContacts in most sectors reported modest wage growth and anticipated moderate wage gains moving forward.\nPrices\nIn most sectors, input prices were up moderately compared to the prior survey period, while selling prices grew modestly. In the retail sector, input prices rose moderately and selling prices increased at a modest pace. Restaurant contacts reported flat growth in input prices, while selling prices edged up. Respondents in the transportation sector noted moderate growth in both input and selling prices, and expected continued moderate rises in both. Prices in the construction sector continued to expand moderately, with moderate increases expected in the coming months. Manufacturers reported a modest rise in prices for finished goods, while raw material costs continued to increase moderately. Manufacturers anticipated moderate price gains for both finished goods and raw materials in the next few months.\nConsumer Spending\nConsumer spending activity grew moderately in April and early May, and firms expected strong growth in coming months. Retail sales increased moderately compared to the previous survey period, and remained well above year-ago levels. Several retailers noted an increase in sales for outdoor and lower-priced items, while higher-priced products sold poorly. Retail contacts anticipated sales to rise considerably in the next few months, and inventory levels were expected to increase moderately. Auto sales rose rapidly after many months of decline and were above year-ago levels. Dealer contacts anticipated a moderate pickup in sales for the months ahead, and inventory levels were expected to increase modestly. Restaurant sales rose modestly and were above year-ago levels. Restaurant contacts expected activity to continue to increase moderately heading forward. District tourism activity rebounded strongly after a slight decline during the last survey period, and contacts expected activity to increase modestly heading into the summer months.\nManufacturing and Other Business Activity\nManufacturing activity expanded more rapidly than in the previous survey period, and the majority of other business contacts reported moderate sales increases. Factory activity accelerated at both durable and nondurable goods plants, particularly for machinery, plastics, and chemicals. Despite rising trade concerns, production, shipments, and new orders grew moderately, and activity was higher than a year ago. Manufacturers' capital spending plans remained solid, and optimism remained high for future activity.\nOutside of manufacturing, professional, high-tech, and transportation firms reported moderate sales growth, and wholesale trade contacts reported a strong increase in activity. All firms expected sales to rise rapidly in the next six months. Professional, high tech, and transportation contacts anticipated moderate growth in capital spending plans, and wholesale trade contacts expected strong capital spending growth in coming months.\nReal Estate and Construction\nOverall District real estate activity increased modestly as residential real estate sales were stable, residential construction activity picked up moderately, and the commercial real estate sector expanded modestly. Residential home sales and inventories were flat compared to the previous survey period, while home prices rose modestly. Sales and inventories of residential homes were expected to remain flat, while home prices were projected to increase. Residential construction activity increased moderately compared to the previous survey period and the same time last year, including higher housing starts, traffic of potential buyers, and construction supply sales. Contacts anticipated additional gains in residential construction activity in the months ahead. Commercial real estate activity continued to increase modestly as absorption, completions, construction underway, and sales increased, while vacancy rates declined. Activity in the commercial real estate sector was expected to expand further moving forward.\nBanking\nBankers reported a modest increase in overall loan demand for the month of April. Respondents reported modest increases for commercial real estate, commercial and industrial, and residential real estate loans. Consumer installment loans were down slightly, while agricultural loans were steady. Bankers indicated loan quality improved moderately compared to a year ago. In addition, respondents expected a modest increase in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported a modest increase in deposit levels.\nEnergy\nDistrict energy activity increased moderately since the last survey period with steady expectations for the future. The number of oil rigs continued to increase modestly, while the number of active gas rigs was mostly unchanged. Oil and gas production has increased and was expected to continue increasing. Activity has picked up in the Niobrara and Oklahoma shale plays. Oil prices reached their highest level since 2014, which has encouraged additional production. In Wyoming, applications for drilling permits are at record levels as producers seek opportunities to operate in the Powder River Basin. Increased oil and gas production has put pressure on energy transportation infrastructure, and new oil and gas pipeline projects have been announced for Oklahoma's Anadarko region that should alleviate some of the pressure later in the year.\nAgriculture\nThe Tenth District farm economy continued to weaken but the pace of deterioration slowed due to a slight uptick in agricultural commodity prices. Prices for all major agricultural commodities in the District increased slightly during the survey period. Despite the increase in prices, farm income continued to decline and demand for financing remained high. Bankers generally expect the pace of loan demand to increase in coming months and continued to report increased interest rates on all types of agricultural loans, which could raise interest expenses for farm borrowers. However, farmland values remained relatively stable and loan delinquency rates remained low. District contacts expressed concern about liquidity in the farm sector due to further income declines, but the relative stability of farmland values provided ongoing support for both producers and lenders.\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

/beige-book-reports/2018/2018-05-bo

"May 30, 2018\nSummary of Economic Activity\nFirst District economic activity continued to expand at a moderate pace, with all responding retailers and manufacturers citing year-over-year increases in sales and revenues in recent periods; nearly all staffing firms also reported revenue growth. Residential real estate markets saw price increases and mixed sales results, still largely attributed to very limited inventories of homes. Commercial real estate markets were mostly improved since the last report, or at least steady. Some firms, including staffing firms, cited pick-ups in wages; most noted ongoing difficulty finding workers. One retailer cited vendor-price increases of about 3 percent, which they intended to pass along to customers; manufacturers noted no unusual price pressures although some were concerned about future effects on prices of tariffs or other changes in trade policy. Outlooks continued to be positive.\nEmployment and Wages\nMany responding firms have done some hiring; most reported tight labor markets and modest increases in pay. Retail contacts reported that labor supply is tight for some skills, like IT, and in some regions. All contacted manufacturers were hiring or maintaining current levels of employment; they said hiring was not unusually difficult. A contact in the semiconductor industry said the firm was giving 6 percent raises to engineers and 3 percent to the rest of the staff. A contact in industrial distribution said that finding salespeople was hard, while a milk producer said truckers were in short supply. All staffing-firm respondents reported increased labor demand across industries and occupations stemming from both new job creation and increased vacancies from job switchers. Labor supply continued to present a challenge to most staffing firms, increasing search costs and leaving many unfilled jobs. All staffing contacts said that both bill rates and pay rates were rising significantly.\nPrices\nMost respondents reported modest upward movements in prices. One retail firm, which noted that prices were largely flat in 2017, reported recently seeing higher prices from manufacturers and wholesalers that it is passing through as higher retail prices; the increases averaged 3\u00bc percent. Most of these vendor price increases were attributed to higher steel prices and to high oil prices. Two retail contacts specifically noted that higher fuel prices and a shortage of truck drivers were contributing to higher shipping costs. Manufacturing contacts did not report any unusual pricing pressure. Even a contact who said that his firm was having trouble finding components said that although prices were up, there was no gouging. Contacts expressed concern about tariffs, with one manufacturer saying he expected prices of certain inputs to rise 15 percent to 20 percent.\nRetail and Tourism\nRetail contacts consulted for this round all reported year-over-year gains in their most recent comparable-store sales, with growth ranging from mid-single-digit to double-digit increases. Some contacts reported that in-store customer traffic continued to decline, while online and e-commerce sales were up. Nonetheless, the retail outlook was positive, with firms reporting that they plan to continue to make multiyear investments in their businesses.\nA contact in the travel industry reported that Boston's Logan International Airport continued to see robust increases in passenger counts. Scheduled airline seats increased year-over-year in recent months and total passenger traffic was up 4.1 percent in 2018:Q1 compared with 2017:Q1, with domestic passengers increasing 4.6 percent and international traffic up 1.5 percent. Cruise traffic in Boston has also increased significantly, both as a home port and as a port-of-call. The outlook for tourism to Boston and New England was reported to be bullish.\nManufacturing and Related Services\nAll eight responding manufacturing firms reported higher sales, with strength across many sectors. A contact in the industrial distribution business said that activity had finally recovered from the 2014 fall in oil prices, reporting that increased demand was broad-based but energy was playing a large role either directly or indirectly. Technology firms also reported strong sales. A manufacturer of transformers for big-ticket electronic devices described enormous difficulty finding components and said they were keeping inventories at twice normal levels to ensure that they could keep their lines running.\nNo manufacturing contacts cited revisions to their capital expenditure plans. Two reported major share repurchase programs. The outlook was positive for all respondents this cycle. The major concern manufacturers expressed was trade policy. Some worried about the effects of tariffs on their costs, while a maker of testing equipment said they might move some production to Europe to avoid Chinese retaliation against the United States.\nStaffing Services\nNew England staffing firms have experienced an upsurge in business during the second quarter to date, with nearly all reporting revenue growth, both year-over-year and quarter-over-quarter. Reports were mixed on whether labor shortages were greater in skilled or unskilled occupations, but most said that temporary positions had been difficult to fill without the possibility of permanent hire at the end of the assignment; at the same time, clients were reportedly becoming more likely to retain temporary hires for permanent positions to avoid search costs later on. Respondents said they were increasing referral bonuses and professional development opportunities in order to build networks and long-term relationships with workers. Looking forward, contacts expressed optimism: Many expected a short-term boost from a seasonal influx of college graduates and students looking for temporary summer work; on a longer horizon, most expected current labor market conditions to continue, bringing both the great opportunity of strong demand and the difficulty of sparse labor supply.\nCommercial Real Estate\nCommercial real estate markets held steady or improved modestly in the First District. Office leasing activity was described as decent in Providence and Portland, robust in greater Boston, and light in Hartford. Effective office rents were up 2 percent to 3 percent in Providence over the past six months, and office rents continued to rise modestly in Boston. Office vacancy rates were down from a year ago in Boston, Providence, and Portland, and flat in Hartford. With the exception of Connecticut, industrial leasing and sales demand remained strong. Boston contacts noted that office construction--including speculative construction-- is set to increase but the extent of the increase was uncertain because most projects were still in the planning stages. Other new construction included hotel projects in Portland and Providence, student housing in Providence, offices in downtown Portland, apartments in suburban Portland, and numerous small condominium developments around the region. Investment sales demand was seen as stable in Boston and strengthening in Providence. Although the outlook for Connecticut remained weak, most contacts were optimistic that commercial real estate market conditions would remain favorable.\nResidential Real Estate\nResidential real estate markets in the First District saw mixed sales results. (Rhode Island, Massachusetts, Maine, and Vermont reported year-over-year changes from March 2017 to March 2018, while Greater Boston and New Hampshire reported changes through April 2018. An ongoing technical issue made recent data for Connecticut unavailable.) For single-family homes, closed sales increased in Boston and New Hampshire but decreased in Rhode Island, Massachusetts as a whole, and Maine. For condos, closed sales increased in Rhode Island, Boston, and New Hampshire, while Massachusetts as a whole saw a decrease. Vermont reported that closed sales declined for single-family homes and condos combined. Inventory decreased in all areas.\nMedian sales prices increased in all reporting areas. Although rising prices are favorable for construction, contacts noted that homebuilders in New England faced many obstacles. A Massachusetts contact mentioned high costs, legislative hurdles, difficulties in acquiring land, and the need for approval from local governments, which made it very hard for homebuilders to enter new markets. Contacts expressed a generally positive outlook for activity in the coming months.\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"

Minneapolis

/beige-book-reports/2018/2018-05-mi

"May 30, 2018\nSummary of Economic Activity\nThe Ninth District economy grew moderately since the last report. Employment grew modestly and continued to be restrained by a tight labor supply. Wage growth was moderate, while price pressures increased slightly. Growth was noted in consumer spending, services, commercial construction, commercial real estate, manufacturing, energy, and mining. Agriculture and residential real estate conditions were mixed, while residential construction was broadly lower across the District.\nEmployment and Wages\nEmployment grew modestly since the last report and continued to be restrained by a tight labor supply. Hiring demand appeared robust. A job fair in northwestern Wisconsin had a full roster of interested employers and had to turn away others. A job fair in eastern Minnesota was also sold out with 50 employers, who reported almost 1,700 open positions. North Dakota saw April online job postings rise 9 percent over a year ago. Minnesota construction firms reported strong hiring, especially among skilled workers. A poll of human resource professionals in Montana found near-universal hiring, along with more unfilled jobs compared with last year. A poll of Minnesota staffing firms found that a majority saw job orders increase in the first quarter of 2018 compared with the same period a year earlier, and similar results were expected in the second quarter. However, hours booked did not grow at a similar rate, reflecting an inability to find workers for available jobs. There were some signs of softness. Through the end of April, initial unemployment insurance claims were higher in Minnesota and Wisconsin, temporarily halting a lengthy downward trend; continuing claims were also higher in Minnesota and South Dakota. The bankruptcy of a major retailer has affected or will affect an estimated 2,000 or more workers across the District.\nWage pressures were moderate but with some signs of stronger growth. A majority of Minnesota staffing firms said wages paid by clients in the first quarter of 2018 were more than 3 percent higher than a year earlier. However, a notable majority of staffing respondents expected wages at their own firms to grow less than 3 percent. A poll of Montana human resource professionals found that close to half expected average wages this year to increase by more than 3 percent. However, a poll among Minnesota construction firms showed that 2018 wage expectations were more modest despite persistent reports of labor shortages.\nPrices\nPrice pressures increased slightly relative to the previous report, while certain input prices were growing more rapidly. An April survey of purchasing managers indicated increased inflation expectations relative to the previous month. Contacts from manufacturing, energy, and construction reported that prices of steel products continued to increase sharply in response to recently announced tariffs. Retail fuel prices in most District states as of mid-May increased briskly from the previous reporting period. Prices received by farmers for corn, soybeans, wheat, hay, chickens, and eggs increased in March compared with a year earlier; cattle prices were flat, while prices for milk, hogs, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending rose modestly since the last report. Several Montana bankers noted an increase in consumer retail loans, especially home equity loans, which were being used for home improvements and general spending. An operator of several car dealerships reported that new car sales were up every month this year relative to last, while used car sales were flat. While gaming revenue this spring in Deadwood, S.D., declined by 5 percent compared with a year earlier, total hotel stays and occupancy rates in the region rose compared with last year; Minnesota lodging demand also increased by 1 percent over a year earlier. Thanks to heavy snowfall, Montana resorts reported strong ski seasons; one resort bested its previous record for visitors by 10 percent. However, a cold and wet spring--including record April snowfall in some parts of the District--delayed or otherwise dampened fishing-related visits and spending in northern areas, where lakes remained frozen as long as a month later than normal.\nServices\nActivity in the professional services industry increased moderately since the last report. Accountants reported a strong tax season, partly due to recent changes in federal tax policy. Contacts reported major disruptions in international supply-chain management and import-export banking business due to uncertainty over trade policy. While the health care sector has seen strong growth overall, rural healthcare providers were experiencing weaker demand, as the slowdown in agriculture lingered.\nConstruction and Real Estate\nCommercial construction saw moderate growth overall since the last report, though activity levels differed regionally. An industry database of project activity across multiple states showed that current levels were similar to last year's solid activity. A Minnesota concrete contact reported that commercial construction \"continues to be busy.\" However, the aforementioned poll of Minnesota construction firms found less optimism, with a majority reporting flat or lower activity compared with a year ago, likely the result of a cold and wet April. Certain markets, including Sioux Falls, S.D., and Mankato and St. Cloud, Minn., have seen strong permitting activity this spring. Medical construction continued to show strength, with major hospital expansions announced in Minnesota and Montana. Residential construction was broadly lower across most of the District. Following a strong March, residential permits in Minneapolis-St. Paul fell significantly in April. Single-family permits in April were also lower in Rochester, Minn., Fargo, N.D., and Billings, Mont.\nCommercial real estate grew modestly since the last report. In Minneapolis-St. Paul, industrial activity saw continued growth, with solid levels of new construction and low vacancy rates. Office sales in the region have been brisk, and vacancy rates in this sector have been stable. Apartment sales have slowed year-to-date in Minneapolis-St. Paul compared with last year, though 2017 was a very strong year. The recent bankruptcy of a national retailer will see the closure of almost 40 stores and well over 1 million square feet of space in the district; this comes on top of numerous earlier chain-store closures this year. While retail vacancy rates in some cities have remained stable, others have risen, including in Eau Claire, Wis. Residential real estate was mixed. April sales in Minnesota were down 3 percent from a year earlier, with Minneapolis-St. Paul seeing a drop of almost 6 percent. However, Missoula and Bozeman, Mont., saw notably higher sales, and Sioux Falls home sales also rose slightly.\nManufacturing\nDistrict manufacturing activity increased robustly. An index of manufacturing conditions indicated strongly increased activity in April compared with a month earlier in Minnesota and South Dakota; the index for North Dakota indicated flat to slightly decreased activity. Multiple contacts from a diverse group of industries described strong orders so far this year, with some experiencing record growth; strong demand was leading to challenges filling orders and to increased lead times. Contacts were also concerned about supply-chain disruptions in the steel and aluminum materials markets in response to recent tariff announcements.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were mixed. While recent increases in some commodity prices were viewed as a positive sign, farmers were also concerned about access to international markets. Late-season snows delayed spring planting in much of the District, with crop progress well behind five-year averages as of mid-May. Activity in the energy sector continued to increase. District oil and gas exploration increased from the previous report. March natural gas production in North Dakota hit a new record, while oil production declined slightly. District iron ore mines were operating near capacity, and an idled facility was reportedly considering restarting production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2018/2018-04-su

"Beige Book: National Summary\nApril 18, 2018\nThis report was prepared at the Federal Reserve Bank of Dallas based on information collected on or before April 9, 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 continued to expand at a modest to moderate pace across the 12 Federal Reserve Districts in March and early April. Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs. Consumer spending rose in most regions, with gains noted for nonauto retail sales and tourism, but mixed results for vehicle sales. Manufacturing activity grew moderately, and demand for nonfinancial services was mostly solid. Residential construction and real estate activity expanded further, although low home inventories continued to constrain sales in several Districts. Loan demand increased, and commercial real estate activity and construction improved since the last report. Transportation services activity expanded in over half of the reporting Districts, buoyed by increases in port traffic and/or air, rail and/or trucking shipments. Agricultural conditions were little changed or worsened on net, in part due to persistent drought conditions. Contacts in the energy sector cited a pickup in activity, except in the Richmond District, where coal production was flat and natural gas production dipped slightly.\nEmployment and Wages\nWidespread employment growth continued, with most Districts characterizing growth as modest to moderate. Labor markets across the country remained tight, restraining job gains in some regions. Contacts continued to note difficulty finding qualified candidates across a broad array of industries and skill levels. Reports of labor shortages over the reporting period were most often cited in high-skill positions, including engineering, information technology, and health care, as well as in construction and transportation. Businesses were responding to labor shortages in a variety of ways, from raising pay to enhancing training to increasing their use of overtime and/or automation, among other strategies. Upward wage pressures persisted but generally did not escalate; most Districts reported wage growth as only modest.\nPrices\nPrices increased across all Districts, generally at a moderate pace. There were widespread reports that steel prices rose, sometimes dramatically, due to the new tariff. Prices for building materials continued to rise briskly, especially for lumber, drywall, and concrete. Transportation costs also generally rose, with contacts citing higher fuel prices and shortages of truck drivers as the primary causes. There were scattered reports of companies successfully passing through price increases to customers in manufacturing, information technology, transportation, and construction. Businesses generally anticipate further price increases in the months ahead, particularly for steel and building materials.\nHighlights by Federal Reserve District\nBoston\nRevenues and sales were moderately higher than a year earlier at almost all contacted retailers, manufacturers, and software and IT services firms. Most commercial real estate markets recorded positive results; residential markets continued to see inventory shortages and rising median prices. Business sector respondents' outlooks remained positive.\nNew York\nEconomic activity grew at a modest pace, while labor markets have remained tight. Input price pressures have persisted, and selling price increases have picked up somewhat. Housing markets and commercial real estate markets have been steady to slightly softer.\nPhiladelphia\nEconomic activity continued to grow at a modest pace, in particular for nonauto retail sales, tourism, nonfinancial services, and nonresidential leasing. Manufacturing accelerated to a moderate pace, while existing home sales declined. Auto sales continued to decline, while construction activity was flat. On balance, employment, wages, and prices continued to grow modestly.\nCleveland\nThe District economy expanded at a moderate pace. Labor markets tightened, with wage pressures noted broadly. Rising commodities prices and transportation costs are pressuring goods producers. Stronger confidence in the economy supported rising demand in manufacturing, retail, and nonfinancial services. Construction activity remained robust.\nRichmond\nThe regional economy expanded at a moderate rate. Ports and trucking firms continued to report robust activity but faced capacity constraints. As a result, manufacturers faced longer delivery times and, in some cases, began stockpiling raw materials. Prices grew moderately, overall, but steel and aluminum prices rose sharply and were expected to rise further as a result of the tariffs.\nAtlanta\nEconomic activity increased modestly. Contacts continued to report difficulties filling positions in high-demand/high-growth sectors. Many contacts noted steady but modest wage pressures. Overall, nonlabor input costs were subdued. Retail sales were stable. Manufacturers noted an increase in new orders and production. District bankers reported solid commercial and consumer loan growth.\nChicago\nGrowth in economic activity remained at a moderate pace. Employment, consumer spending, and manufacturing production increased moderately, and business spending and construction and real estate activity grew slightly. Wages and prices increased modestly and financial conditions improved slightly on balance. Income prospects for the agricultural sector improved a bit.\nSt. Louis\nEconomic conditions continued to improve at a modest pace. District bankers reported an increase in lending activity driven by robust commercial and industrial loan growth. Some steel and aluminum manufacturers announced plans to reopen facilities and call back workers. District acreage for the four major crops for the year is expected to be the same as in 2017.\nMinneapolis\nNinth District economic activity grew moderately. Employment grew modestly even as hiring demand was robust, due to tight labor supply. Wages grew moderately, as did prices overall, but price pressures at the wholesale level appeared to accelerate. While growth was noted across sectors, activity in professional services, energy, and mining was particularly strong.\nKansas City\nOverall economic activity in the Tenth District increased moderately, with further growth expected in coming months. Manufacturing, energy, and consumer spending activity expanded at a moderate pace, while real estate and business services activity grew modestly. Agricultural conditions remained weak, while District employment and wages rose modestly.\nDallas\nEconomic activity grew moderately, with a rebound in retail sales and an acceleration in financial and nonfinancial services activity. Robust expansion in the energy industry continued, while growth in manufacturing eased somewhat. Hiring was solid despite a tight labor market, and wage and price growth remained elevated. Numerous contacts expressed concern about new tariffs and trade policy uncertainty, although outlooks overall were still positive.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods were down slightly, and growth in the consumer and business services sectors remained solid. Conditions in the manufacturing sector picked up modestly. Activity in residential real estate markets remained strong, and conditions in the commercial real estate sector were solid. Lending activity ticked up.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2018/2018-04-bo

"April 18, 2018\nSummary of Economic Activity\nEconomic activity continued to expand at a moderate pace in the First District, with almost all retail, manufacturing, and software and information technology services respondents citing year-over-year increases in sales and revenues since the last Beige Book. Commercial real estate contacts reported mostly positive results while residential real estate markets again saw sales declines in some areas accompanied by price increases, a combination contacts attributed to very low inventories. With some exceptions, headcounts, wages, and prices were said to be rising modestly. Notwithstanding a few manufacturers' concerns about tariffs, outlooks remained generally positive.\nEmployment and Wages\nSelective net hiring continued; contacts said wages were rising, but not steeply. With one exception, responding retailers are hiring or planning to hire new workers, mainly due to business expansion. Some restaurants and regional chambers of commerce have been proactive in trying to attract foreign workers to fill positions during the summer tourist season. All but two manufacturing contacts reported flat employment; firms were hiring, but largely for replacement. Nonetheless, several respondents reported the labor market was extremely tight; skilled workers continued to be in short supply and one contact said that they were having trouble finding \"moderately skilled labor needed to manage the mostly automated production equipment.\" Software and IT services contacts were planning on zero to 5 percent increases in headcount during 2018 and expressed concern with the tight labor market for technically skilled workers such as engineers. Regarding wages, one retailer said it had to pay higher starting wages in New Hampshire, which has the region's lowest unemployment rate, than elsewhere in New England. Wages in the region's software sector increased 3 percent to 5 percent across the board.\nPrices\nMany respondents cited modest to moderate price increases; a few noted steeper jumps. While other vendor prices were reportedly steady, two retail contacts indicated that food prices were starting to increase. A Massachusetts restaurant-industry contact reported that menu prices were up about 2.6 percent over the year because of higher labor and food costs. Manufacturing contacts reported flat or slightly increasing prices for both the goods they buy and the goods they sell. One manufacturer and one retailer said that shipping costs were rising rapidly, which both attributed to a shortage of truck drivers. Two software and IT services firms were able to pass through price increases without any backlash; an online backup company increased prices on individuals by as much as 20 percent.\nRetail and Tourism\nRetailers consulted for this round reported that between late February and early April, year-over-year comparable-store sales results were positive, with gains ranging from 1 percent to 5 percent. Most noted that multiple severe winter storms in the northeast dampened sales--one contact calculated that in the absence of weather disruptions, this period's results would have been 1.5 percentage points higher than the 2.5 percent reported. A Massachusetts restaurant-industry contact reported that business was up about 2.5 percent year-over-year. Retail contacts regarded the outlook for 2018 as positive based on currently high levels of consumer sentiment.\nA contact in the Connecticut auto industry reported that vehicle sales in the state were softer than the nation's, possibly because the state's employment and population growth have been weak. Nonetheless, given Connecticut's generous incentives, electric vehicle sales have continued to rise.\nManufacturing and Related Services\nOf seven firms contacted this cycle, only one reported a year-over-year decline in sales and four reported higher sales versus the same period a year ago. A furniture maker said that sales were up 25 percent versus the same period a year earlier, a major turnaround from years of weak sales growth which they attribute to \"an improved emphasis on marketing.\" One of the other firms reporting higher sales, a textile and chemical manufacturer, indicated sales had fallen over the last twelve weeks but were still up versus the period one year earlier. Two contacts reported flat sales versus a year earlier, both for idiosyncratic reasons; for example, a producer of frozen fish attributed their flat sales to Lent occurring earlier than usual. A toy and game manufacturer reported lower sales due to the liquidation of a major toy retailer, which they see as a temporary setback. No contacts revised their capital expenditure plans recently.\nIn general, respondents were optimistic in their outlook. However, two contacts brought up the proposed China tariffs and said they represent a major risk. One was a toy manufacturer who sources 75 percent of their production from China. The second said that punitive tariffs on Chinese aluminum had already had a big effect: \"Thin gauge foil\" is produced only in China and tariffs raised the price three-fold; the contact argued that \"these tariffs are now killing high-paying American manufacturing jobs and businesses.\"\nSoftware and Information Technology Services\nThe software and IT services sector continued to be healthy in the first quarter. Revenues at contacted firms grew 1 percent to 10 percent year-over-year in the first quarter. Demand was strong for cloud-based solutions, healthcare and industrial IT software, and enterprise software for building apps. Contacts did not note significant changes in the costs they were facing aside from labor. The overall outlook was positive.\nCommercial Real Estate\nReports from First District commercial real estate contacts were mixed, but positive on balance. Office leasing demand remained strong in Boston, especially in the urban core, leading to further increases in rents. Providence saw stable, healthy office leasing activity and modest upward pressure on rents. Office leasing remained slow in the Portland area and weakened further in Hartford. Industrial and warehouse space enjoyed robust demand in most of the First District, with the exception of Connecticut. A Portland contact reported that industrial rents in that city increased 20 percent from a year ago in response to demand from diverse users including small manufacturers, while a Boston contact said that demand for retail fulfillment centers had driven up industrial rents in the Boston metro area.\nNonetheless, contacts say that both industrial and office construction have been restrained by the fact that building costs remain high relative to rents. Multifamily apartment construction was expected to slow moving forward amid slower or flat rent growth in most areas. By contrast, condominium development activity increased in both Boston and Portland. Investment sales activity was stable at a slow to modest pace depending on location. Two Boston contacts perceived small increases in capitalization rates for office properties that were seen as consistent with increases in interest rates. Commercial real estate contacts were optimistic on balance.\nResidential Real Estate\nHeading into spring, residential real estate results in the First District continued to reflect sellers' markets. Closed sales for single family homes and for condos were up in Maine, Vermont, and Rhode Island, while other areas experienced moderate decreases. (Vermont reported combined results for single family homes and condos. All First District areas but Connecticut reported changes from February 2017 to February 2018; a technical issue caused December 2017 to be the most recent data from Connecticut.)\nBecause of ongoing inventory shortages, all reporting areas but Vermont reported increases in median sale prices for both single family homes and condos. A contact from Maine pointed out that negotiations over multiple offers may be fueling higher median sale prices: \"multiple-offer situations [are] happening on a regular basis, especially on properties at $250,000 or less.\" Inventory dropped by double-digit percentages year-over-year across all area markets. A contact in Massachusetts noted that \"inventory is so low and demand so high that many low- and moderate-income home buyers are being left on the outside looking in.\"\nNotwithstanding the prospect of rising interest rates, contacts cited eager buyer populations and were optimistic about activity levels in coming months.\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/2018/2018-04-ri

"April 18, 2018\nSummary of Economic Activity\nSince our previous report, the Fifth District economy grew moderately. Manufacturers provided mixed accounts of business conditions with some noting continued challenges of rising input prices and shipping delays. Port activity remained strong, overall, with particularly high export growth coming out of South Carolina. Trucking firms continued to see robust demand and several companies were able to hire new drivers and increase capacity. Retailers reported weaker demand in recent weeks and tourist activity varied as atypical weather resulted in travel disruptions and lower hotel occupancies in some areas. Residential real estate sales picked up modestly, particularly for lower-priced homes. Meanwhile, commercial real estate leasing activity rose moderately, led by increased demand for office space. Nonfinancial services saw a moderate rise in demand, overall. Labor demand strengthened moderately in recent weeks while wage pressures remained modest. Prices grew moderately, on balance; however, steel and aluminum prices rose sharply and were expected to rise further as a result of recently-imposed tariffs.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks. Compared to the previous report, employment agencies noted no change in the level of new job openings; however, openings remained at strong levels. Executives reported difficulty filling positions for accounting and finance professionals, IT professionals, engineers, health care providers, and construction workers. Wage pressures reportedly rose for residential builders, professional services workers, manufacturers, and IT professionals. Wage increases remained modest, overall.\nPrices\nPrices grew moderately, on balance, since our previous report. According to our most recent surveys, manufacturers' input costs grew at a moderate rate and continued to outpace growth in selling prices. Steel and aluminum prices rose sharply and were expected to rise further as a result of recently-imposed tariffs. Housing and construction material prices, such as those for appliances, cabinetry, carpet, drywall, lumber, and concrete were also on the rise. Service sector prices grew at a modest rate, overall. Contacts reported that coal and natural gas prices declined slightly in recent weeks. Meanwhile, oil and petroleum-based product prices grew moderately.\nManufacturing\nManufacturing business conditions were mixed in recent weeks. A Virginia food manufacturer reported an improvement in business activity with particularly strong Easter sales. A North Carolina machine parts company saw a rise in orders in March after a slow start to the year. Meanwhile, a Virginia window and door manufacturer reported softer demand due to adverse weather conditions. Manufacturers generally struggled with rising input prices and slow delivery times. In fact, a West Virginia rubber manufacturer said he started to store more raw materials on site since delivery times have more than doubled, on average. Similarly, a Virginia display case manufacturer reported stockpiling steel in anticipation of higher prices resulting from the new tariffs.\nPorts and Transportation\nPorts saw fairly strong activity in the past several weeks, with volumes of loaded containers rising, particularly for exports. A South Carolina airport saw growth in both passenger and cargo traffic, and continued to see a balance of imports and exports after a long period of exports lagging. A South Carolina port saw a slight softening of imports compared to last year but experienced a drastic increase in exports. A Maryland port saw strong growth in imports and exports compared to last year with import growth slightly outpacing export growth. Several ports noted some uncertainty about what effects the steel tariffs might have on trade.\nTrucking companies continued see robust growth, with many facing more freight than they could handle. However, several companies had more success hiring drivers in the past few weeks, which helped to increase their capacity. Even with this capacity boost, firms had to turn away business because they were unable to meet demand. Several trucking firms were also concerned about rising equipment and repair costs potentially leading to a shortage of trucks that could add to capacity constraints.\nRetail, Travel, and Tourism\nMany retailers reported weak demand in recent weeks. A Virginia auto dealer attributed low sales to reduced customer traffic and low credit scores among potential buyers and said that the lower sales combined with increasing prices from manufacturers had hurt profits. A West Virginia sporting goods retailer reported that retail sales continued to fall as some consumers were increasingly buying directly from manufacturers; however, the wholesale sales continued to keep the business afloat. On a positive note, several furniture and clothing retailers saw a slight uptick in sales, and a West Virginia appliance retailer reported strong business activity.\nTourist activity was mixed in recent weeks, due in part to adverse weather conditions. A Virginia ski resort was unable to make up losses after temporarily closing for unusually warm weather. At the same time, the nor'easter storms caused flight cancellations and shutdowns in Washington, D.C., leaving hotels in the area with low occupancy rates. Hotels in Charleston, South Carolina also had low occupancy rates, but attributed them to increased supply as demand for rooms actually rose in the area. Meanwhile, some North Carolina restaurants and hotels reported strong demand despite difficult travel conditions created by winter storms. Hotels and tourist attractions around the District were optimistic that business would improve along with the weather in the coming weeks.\nReal Estate and Construction\nResidential real estate sales increased modestly compared to the previous report. Agents reported steady buyer traffic in recent weeks, while homes in the $200,000 \u2013 $400,000 price range sold quickly with multiple offers. Overall, inventory levels remained low and in some regions were below last year's levels. Home prices rose modestly, while average days on the market were generally unchanged. New home construction and sales increased slightly across the District.\nCommercial real estate leasing activity rose moderately in recent weeks as brokers reported increased demand in office leasing, while the industrial and retail markets remained active. Vacancy rates were mostly unchanged, although some agents reported modest increases in office vacancy rates due to new supply coming on line. Rental rates were stable to increasing modestly across the District. On the commercial sales side, brokers reported modest increases in prices and sales. Commercial construction varied across the District, but most contacts noted that new construction remained limited.\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. Interest rates inched higher in recent weeks, while deposits were up modestly, overall. On the commercial side, loan demand varied, with a notable uptick reported in the greater Raleigh and Asheville, North Carolina areas. Credit quality remained strong 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 demand picked up moderately since our previous report. The strongest demand was reported for administrative services and health care services. Comments from professional and business services firms were mostly positive; however, some firms noted a decline in activity due to reductions in federal spending. Lastly, a natural gas utility firm reported softer demand as usage declined due to warmer weather.\nAgriculture and Natural Resources\nA farmer in South Carolina saw more acreage being used to grow cotton as a result of higher export selling prices. He also said that more agricultural land was being converted to solar farms. Coal production was little changed in recent weeks while natural gas production declined slightly.\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

/beige-book-reports/2018/2018-04-cl

"April 18, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District expanded at a moderate pace as customer demand strengthened broadly and confidence remained high. Firms' demand for labor increased, but difficulty finding qualified candidates is limiting the pace of hiring. In response, employers are raising wages to compete for workers, albeit only moderately. Rising commodity prices, particularly for steel, are pressuring goods producers. Meanwhile, services firms mostly noted stable input prices. Goods producers and transportation companies were generally successful at raising their selling prices. Service producers, however, tended to hold the line on their prices. Retailers reported continued growth in customer demand, although auto dealers reported higher inventories of passenger cars. Housing and commercial real estate markets remained strong, but builders are increasingly concerned about rising input costs. Manufacturing output trended higher.\nEmployment and Wages\nDistrict employers continued to hire at the same moderate pace as in the past few months. Contacts generally reported stronger demand for their goods and services, but worker turnover and difficulty finding qualified workers restrained net job gains. Notably, manufacturing employment has been steadily trending higher since mid-2017. Nonfinancial services firms cited strong confidence in the economy and rising freight volumes as boosting business and demand for workers. Retail showed the weakest gains in hiring. Replacing departed workers was the most prevalent labor-related activity, though several contacts in nearly all industries reported creating new positions. Nonresidential builders overwhelmingly reported creating new field and office jobs. Contacts continued to report difficulty finding qualified candidates across a broad array of occupations. Nevertheless, no meaningful changes to wage pressures were noted. In general, employers are raising wages to stay competitive, but incremental increases are in keeping with recent trends.\nPrices\nUpward pressure on input prices remained strong, particularly for commodities used by goods producers. According to contacts, recently imposed tariffs have accelerated price appreciation of steel products, in some cases at double-digit rates. Independent of policy, prices for other commodities have also increased. One producer of industrial packaging noted that resin prices were still elevated because of lingering impact from hurricanes in 2017. Professional services mostly reported little change to their nonlabor input costs. Firms' ability to pass through price increases to their customers was little changed from the previous survey period, though there was considerable variation across industries. Transportation companies across the board were able to raise freight rates in response to strong demand relative to available capacity without pushback from customers. To a lesser extent, manufacturers have been steadily raising their prices since the beginning of the year to pass along their higher raw materials and transportation costs. Construction firms are also finding success in passing along their higher costs. In services, however, firms' ability to pass through prices remains relatively soft. Retailers held their prices steady.\nConsumer Spending\nThe retail sector reported improved customer demand since the beginning of the year and on a year-over-year basis. Reasons cited included improvements in product quality, marketing, customer service, and business strategies. Vendor and shelf prices were generally stable. New motor vehicle unit sales across the District declined about 2 percent during February when compared to those of the same period a year ago. Year-to-date unit sales fell 5 percent. One auto dealer reported that banks are tightening credit, which could negatively impact future sales activity. Dealer inventory was higher than usual, which one contact attributed to lower incentives and less demand for passenger cars.\nManufacturing\nDemand strengthened during the past two months in most industries. Some contacts attributed this to seasonal fluctuations and a recovery from slow growth in previous months. Contacts in primary metals and electrical and industrial products manufacturing noted that probusiness fiscal policy and corporate tax reform spurred capital expenditures and drove up demand. One steel manufacturer mentioned that customers are attempting to stock up as prices rise because of increased demand and tariffs on primary metals imports. Elsewhere, an electronics manufacturer noted that high consumer confidence encouraged demand for discretionary items, a situation which is good for manufacturers of higher-end products. The majority of contacts indicated that demand was better than it was a year ago. A supplier to the HVAC industry mentioned that they saw increased demand for finished products previously produced by downstream OEMs because those companies were struggling with capacity constraints and labor shortages.\nReal Estate and Construction\nNew-home builders reported that customer demand was either steady or improving and that current trends are expected to continue into the spring selling season. That said, builders are becoming concerned that rising construction costs (materials and labor) are driving up new home prices and that this may dampen buyer enthusiasm during the prime selling season. Construction costs are expected to increase through the summer. Year-to-date unit sales through February of new and existing single-family homes declined 2 percent compared to those of a year earlier. The average sales price rose more than 7 percent. Buying patterns and inventory levels remained steady.\nAmong nonresidential construction firms, demand generally improved during the survey period and on a year-over-year basis thanks to more opportunities for projects emerging, especially as the weather improves. Increases in backlogs, inquiries, and bidding were observed. Current levels of activity are expected to continue into the summer months. Almost all nonresidential contractors reported that rising construction costs (materials, labor, and transportation) are among the biggest challenges they are facing currently.\nFinancial Services\nGrowth in demand for bank products and services was little changed, though contacts noted that conditions remain favorable. Demand for commercial loans was healthy, but some contacts worried that businesses increasingly are relying on cash savings to fund capital investments before looking for bank credit. Most contacts seemed optimistic about the outlook for business investment in the coming quarter. On the consumer side, demand for loans was flat or declining. Some contacts, particularly in rural areas, reported that lack of inventory and depreciation of the housing stock dampened growth in home mortgages. Also, a lack of construction labor was constraining new home construction, thereby constraining opportunities for mortgages. More broadly, demand for consumer loans was flat, mostly because of seasonal factors. Reports indicated that competition from fintech firms and the nonbank sector continued to stifle growth in consumer loans and, to a lesser extent, in deposits.\nNonfinancial Services\nActivity in the nonfinancial services sector continued to grow at a moderate-to-strong pace. Rising freight volumes across product segments were attributed primarily to solid economic growth. There is concern about the sustainability of increasing volume because of newly enacted tariffs and potential outcomes from NAFTA negotiations. Railroad contacts attributed some of their volume growth to ongoing capacity constraints in the trucking industry. Within the professional services sector, contacts from engineering, software development, and accounting firms reported the strongest growth, which they said was due to strong confidence in the overall economy. One accounting firm noted that its work in mergers and acquisitions was the strongest that it has been in the past 10 years.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2018/2018-04-ph

"April 18, 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. Manufacturing activity appeared to accelerate to a moderate pace, while nonauto retail sales, tourist activity, nonfinancial services, and nonresidential leasing markets grew modestly. Contacts from new home construction and nonresidential construction reported no change in activity. Auto sales continued to decline modestly, and existing home sales fell moderately. On balance, employment, wages, and prices continued to grow modestly. Contacts from various sectors noted that manufacturers may need to train workers and raise wages to attract and retain employees. The growth outlook over the next six months remained positive, with over half of all firms anticipating increases in general activity.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Manufacturing and nonmanufacturing firms reported ongoing net additions to staff; average hours worked edged down over the period for manufacturing firms but rose among nonmanufacturers.\nWhile wage growth edged higher among some contacts, on balance, the pace appeared to remain modest. The share of nonmanufacturing firms reporting increases broadened to over 40 percent. However, most banking contacts continued to note few signs of wage inflation.\nStaffing firms continued to report steady demand for temporary workers and direct hires in several local labor markets. Wage pressures continued to be higher in tighter markets, such as central Pennsylvania, where one firm reported wages rising 4 percent over the year.\nOne staffing firm noted manufacturing clients' reluctance to raise wage rates. Among our contacts, manufacturers were most likely to cite a lack of skilled labor; however, one contact recently said that \"higher pay and good medical benefits help in recruiting and keeping people.\" That contact also noted that the firm is raising prices to cover the cost and is running at 100 percent of practical capacity. Another manufacturer stated, \"It's time for private enterprise to learn more about how to bring in raw talent and train up to the requirements.\"\nPrices\nOn balance, prices rose modestly, as most contacts continued to report no change in prices paid and received. The percentage of manufacturing firms reporting increases edged down from the prior period for prices paid and for prices received for their own goods. Among nonmanufacturing firms, slightly more contacts noted increases for prices paid and received than during the prior period.\nBuilders continued to note rising prices for construction materials as well as labor and noted concerns about a potential trade war. Contacts cited double-digit price hikes for lumber and drywall and expressed concern for steel and reinforced concrete.\nLooking ahead six months, manufacturing firms continued to anticipate higher prices, with nearly two-thirds expecting increases in prices paid and over half expecting increases in prices received for their own goods. Of the 22 manufacturing firms that offered general comments, seven mentioned impacts from recent tariffs or proposed tariffs--most noted rising prices or anticipated rising prices; just one firm anticipated greater demand.\nManufacturing\nOn balance, manufacturing activity accelerated a bit to a moderate pace of growth, with more firms reporting increases in shipments and new orders.\nThe makers of paper products, chemicals, primary and fabricated metal products, industrial machinery, and electronic equipment tended to note gains in new orders and shipments; no sectors noted declines. The growth may be partially due to seasonal trends because the same pattern was apparent during the same period last year.\nMost manufacturing contacts continued to expect general activity to increase over the next six months; the percentage of firms expecting future increases remained between 55 percent and 60 percent. The percentage of firms expecting increases in future capital expenditures and future employment also held steady at just above 40 percent.\nConsumer Spending\nOn balance, nonauto retail sales continued to grow modestly. Retailers were generally more positive about consumer demand, despite losing several shopping days to winter storms, including the Monday after Easter. Closings and consolidations of stores, brands, and malls appear to be boosting sales for surviving retail locations.\nAuto dealers continued to report modest declines in year-over-year sales this period. However, sales remain at high levels, and dealers are optimistic that the year will end with only a slight decline.\nTourism contacts continued to report modest growth overall. A Delaware contact reported heavy traffic, busy outlets, optimistic merchants, and several new hotels in the planning stages. New Jersey contacts were less optimistic regarding the local housing rental market in southern beach communities. Atlantic City's casino revenues fell on a year-over-year basis for a third consecutive month, which dampens neighboring shore activity.\nNonfinancial Services\nOn balance, service-sector firms have continued to report modest growth in general activity since the prior Beige Book period. The percentage of firms reporting an increase in sales edged down, while the percentage reporting an increase in new orders rose. Expectations of future growth remained high but the percentage of firms anticipating increased activity slipped below 60 percent.\nFinancial Services\nFinancial firms continued to report little change in overall loan volumes (excluding credit cards). Volumes did grow moderately in mortgages, commercial real estate loans, and commercial and industrial lending. Home equity lines, auto loans, and other consumer loans (not elsewhere classified) fell moderately.\nCredit card lending fell further as consumers continued paying down holiday bills. Over the entire year, credit card loan volumes and total lending in all the other categories combined have grown at a moderate pace.\nBanking contacts continued to describe solid ongoing economic growth in most parts of the District, with high consumer sentiment and business confidence. Overall, contacts noted that credit standards remain unchanged and credit quality remains very sound.\nReal Estate and Construction\nHomebuilders reported challenging weather conditions for construction activity and mixed reports for new contracts, suggesting little overall change in activity. Single-family detached home construction continues to give way to greater demand for townhomes, apartments, and condos.\nAccording to Third District brokers, ongoing low inventories of houses for sale continued to constrain sales and place upward pressure on prices. Sales of existing homes fell moderately in February across most major markets compared with the same period last year; brokers saw no signs of an improvement in March.\nNonresidential real estate contacts reported no change in the already high levels of construction activity and the modest growth in leasing activity. Contractors report sufficient work to carry through to year-end, but a few new projects must break ground to maintain current activity levels through 2019. Although demand varies by sector and geography, rents tend to be rising in many markets, especially for industrial/warehouse sectors everywhere and for most sectors within the city of Philadelphia.\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"

Chicago

/beige-book-reports/2018/2018-04-ch

"April 18, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District continued at a moderate pace in late February and March and contacts expected growth to continue at that pace over the next 6 to 12 months. Employment, consumer spending, and manufacturing production increased moderately, and business spending and construction and real estate activity grew slightly. Wages and prices increased modestly and financial conditions improved slightly on balance. Income prospects for the agricultural sector improved a bit, in spite of concerns about the impact of Chinese tariffs.\nEmployment and Wages\nEmployment growth continued at a moderate pace over the reporting period and contacts expected gains to continue at that rate 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 reported difficulties filling positions at all skill levels. A number of manufacturers reported that because of the difficulty in finding production workers, they were being more picky about which orders to fill and investing more in automation. One contact reported increasing production at their China plant because they couldn't find workers for their US operation. Wage growth remained modest overall, though more contacts reported pay increases for administrative workers. In spite of the modest overall growth, a number of contacts (particularly in manufacturing) noted that wage growth had picked up compared to six months ago, especially for entry-level workers. Most firms reported increased benefits costs.\nPrices\nOverall, prices rose modestly in late February and March, and contacts expected prices to continue to increase at that rate over the next 6 to 12 months. Retail prices again increased slightly overall, though grocery prices were flat. Producer prices rose modestly, reflecting in part the pass-through of higher labor, materials, and freight costs. Manufacturers facing higher steel and aluminum costs because of the new tariffs expected to pass on about half of the increased costs to their customers on average.\nConsumer Spending\nConsumer spending increased moderately over the reporting period. Nonauto retail sales rose modestly, with gains reported in the home furnishings, building materials, home improvement, and general merchandise segments. Contacts continued to report strong e-commerce growth. New light vehicle sales increased considerably, helped by stronger incentives, particularly for leases. One contact called the incentives for some vehicles \"a little irrational.\" Contacts generally expected the sales pace to slow in the coming months. Used vehicle sales also increased considerably. The sales mix of new light vehicles again shifted toward light trucks.\nBusiness Spending\nBusiness spending increased modestly in late February and March. Retail and manufacturing contacts indicated that inventories were generally at comfortable levels. 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. A number of manufacturing contacts reported that lead times for purchasing new equipment were notably longer than six months ago. Demand for commercial and industrial energy increased modestly and transportation demand increased moderately.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly over the reporting period. Residential construction rose modestly, led by expanded suburban single-family building. Contacts again reported that rising labor and materials costs were squeezing margins. Overall, home sales were down slightly as low inventories of starter homes continued to hold back sales. Home prices rose modestly overall, with notable increases in the starter home segment and no change in prices for higher-end homes. Nonresidential construction increased modestly, with growth spread across sectors. That said, contacts expected growth to pick up over the next 6 to 12 months because vacancy rates for office and industrial space are low. Commercial real estate activity increased slightly from an already strong level, and contacts expected activity to increase slightly further over the next 6 to 12 months. Numerous contacts characterized the commercial real estate environment as \"very good\" or \"exuberant.\" Commercial rents were flat overall. And while there was a slight decline in vacancy rates, the availability of sublease space increased a bit.\nManufacturing\nGrowth in manufacturing production continued at a solid rate in late February and March. Steel production increased at a moderate pace, primarily in response to steady end-user demand. Steel imports spiked in anticipation of the 25% tariff imposed in late March. Demand for heavy machinery increased strongly, as end-user demand expanded and dealers rebuilt inventories. Demand for heavy trucks remained at a strong level. Order books for specialty metals manufacturers increased modestly: growth was spread across a wide variety of sectors, with particularly strong growth from the oil and gas sector. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction. Auto production was flat, but remained at a solid level.\nBanking and Finance\nFinancial conditions improved slightly over the reporting period. Financial market participants noted higher volatility compared to the beginning of the year and rising short-term interest rates. Business loan demand increased modestly, led by growth in the small business segment. One contact noted that manufacturers throughout the District were increasing their credit line utilization. While competition remained strong, contacts reported little change in lending standards or loan quality. Consumer loan demand also increased modestly, with contacts reporting rising demand for auto loans, lines of credit, and loans secured by durable goods. Residential mortgage activity picked up, and a contact in northern Indiana reported a notable increase in the number of mortgages for new home construction. Consumer loan quality and lending standards were little changed.\nAgriculture\nIncome prospects for the agricultural sector improved a bit during the reporting period, in spite of concerns about the impact of Chinese tariffs. Corn and soybean prices moved higher (helped by weather concerns in Argentina) and allowed farmers to lock in modest profits for at least a portion of their crops this year. Moisture profiles for most of the District improved, though drought persisted in a portion of Iowa. Prospects for livestock operations dimmed some as cattle and hog prices declined and milk prices stayed low. Egg prices and prices for some dairy products did move up. Agricultural lenders continued to report a slowly rising number of financially stressed crop and livestock borrowers. Cash rents for cropland were lower than a year ago, but land values were stable overall.\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"

Kansas City

/beige-book-reports/2018/2018-04-kc

"Beige Book Report: Kansas City\nApril 18, 2018\nSummary of Economic Activity\nOverall economic activity expanded at a moderate pace in March, although more modest growth was reported across a few District sectors. Consumer spending, energy, and manufacturing activity increased at a moderate pace, while District real estate and business services firms reported a modest pace of growth. Bankers reported a moderate increase in overall loan demand, steady deposit levels, and a modest increase in loan quality. Agricultural conditions remained weak, as drought conditions emerged and production expectations declined. Employment and employee hours increased in most sectors, and contacts reported modest wage growth with moderate increases expected in coming months. Input prices were up moderately compared to the previous survey period, while selling prices rose modestly.\nEmployment and Wages\nEmployment and employee hours across the District continued to rise modestly in March, and respondents expected continued modest increases moving forward. Contacts in all sectors reported steady-to-increasing employment, with the exception of those in the transportation sector who noted a moderate decline. Employment in all sectors was expected to grow in the months ahead. Employee hours declined in the auto sales and transportation sectors, but rose in all other reporting industries. Respondents noted a shortage of commercial drivers, skilled technicians, and service workers.\nContacts in most sectors reported modest wage growth and expectations were for moderate wage growth moving forward.\nPrices\nOverall, input prices were up moderately compared to the previous survey period, while selling prices grew at modest pace. Respondents in the retail sector reported moderately higher input and selling prices, and anticipated continued moderate rises in both. Restaurant input prices were up moderately, while selling prices edged up slightly. Transportation contacts reported modest growth in both input and selling prices, but at a slower pace than in the prior survey. Prices in the construction sector continued to rise moderately, with strong increases expected in the coming months. Manufacturers noted a modest increase in prices for finished goods, while raw material costs rose moderately. Manufacturers expected moderate growth in both finished goods and raw material prices over the next few months.\nConsumer Spending\nConsumer spending grew moderately in March, and firms expected strong growth in coming months. Retail sales increased robustly compared to the previous survey period, and remained well above year-ago levels. Several retailers noted an increase in sales for appliances and lower priced items, while outdoor and higher-priced products sold poorly. Retail contacts anticipated sales to rise considerably in the next few months, and inventory levels were expected to increase moderately. Auto sales rose modestly after many months of decline and were equal to year-ago levels. Dealer contacts anticipated a strong pickup in sales for the months ahead, and inventory levels were expected to increase considerably. Restaurant sales declined moderately and were well below year-ago levels. However, contacts expected a strong rebound in activity heading forward. District tourism activity fell slightly, but contacts expected activity to increase moderately heading into the summer months.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand at a moderate pace, and the majority of other business contacts reported modest sales increases. Durable goods manufacturers reported sustained growth in production, particularly for machinery and aircraft, while growth in nondurable goods activity moderated slightly. Shipments and order backlog grew at a modest pace, and activity was higher than a year ago. Manufacturers' capital spending plans rose moderately, and firms' expectations for future activity remained strong.\nOutside of manufacturing, professional, high-tech, and wholesale trade firms reported modest sales growth, while transportation contacts noted a moderate decrease in activity. All firms expected sales to improve moderately in the next six months. Professional and high tech contacts anticipated moderate growth in capital spending plans, while transportation and wholesale trade firms expected capital spending to be relatively flat in coming months.\nReal Estate and Construction\nReal estate activity in the District continued to increase at a modest pace, and additional gains were expected in the months ahead. Residential home sales rose modestly, while home prices and inventories increased at a slight pace compared to the previous survey period. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential sales and home prices were expected to increase at a moderate pace in the months ahead, although one contact in Colorado reported that the typical spring seasonal pick-up in activity was slow to begin this year. Residential construction activity was mixed as construction supply contacts noted lower sales while builders reported moderately higher housing starts and traffic of potential buyers. Commercial real estate activity continued to rise at a modest pace, and expectations were for additional gains moving forward.\nBanking\nBankers reported a moderate increase in overall loan demand for the month of March. Respondents reported a modest increase for commercial real estate loans and slightly improved demand for commercial and industrial and residential real estate loans. Consumer installment loans were down slightly, while agricultural loans were steady. Bankers indicated loan quality improved modestly compared to a year ago. In addition, respondents expected a modest increase in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported steady deposit levels.\nEnergy\nEnergy activity expanded moderately since the last survey period, and expectations remained cautiously optimistic. The number of active oil and gas rigs increased slightly, while oil production continued to grow. Respondents said the price they needed to be profitable in the areas in which they were active inched up slightly, and they expected mostly stable oil prices over the next six months due to strong domestic production. The majority of contacts said potential steel and aluminum tariffs would have a low-to-medium impact on their drilling costs, and several have already experienced moderate increases in the cost of steel. The natural gas market continued to be oversupplied, straining available takeaway capacity in Oklahoma.\nAgriculture\nIn the Tenth District, farm income and credit conditions remained weak, and the short-term outlook for the agricultural sector has been influenced by 2018 crop production expectations and drought. Approximately half of winter wheat acres in Kansas and Oklahoma were rated as poor or very poor due to abnormally dry conditions. Corn production was expected to remain unchanged or decline slightly in all District states. After very strong growth in 2017, production of soybeans was expected to remain relatively unchanged in most states, while cotton production in Oklahoma was forecasted to continue to expand due to higher prices relative to other crops. Lower production expectations for corn, soybeans and wheat supported slightly higher prices. However, District contacts continued to express concerns about severe drought, cash flow shortages, decreasing liquidity among farm borrowers, high production expenses and trade uncertainty.\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"

Minneapolis

/beige-book-reports/2018/2018-04-mi

"April 18, 2018\nSummary of Economic Activity\nThe Ninth District saw moderate economic growth since the last report. Employment increased modestly, constrained by a tight labor supply. Wage and price pressures were moderate. Growth was noted in consumer spending, tourism, services, commercial construction, commercial real estate, manufacturing, energy, and mining. Home construction was generally flat, while commercial real estate was mixed and residential real estate was slow. Agricultural conditions were stable at low levels.\nEmployment and Wages\nDespite healthy labor demand, employment grew modestly since the last report, muted by tight labor supply. A survey of large Minnesota businesses found that about half were hiring to increase total head counts. Three other surveys also showed healthy hiring sentiment in District states. Several job-tracking databases showed generally strong labor demand. February job ads in Michigan's Upper Peninsula and North Dakota were higher compared with a year earlier. In Minnesota, figures released at the end of March showed job vacancies at an all-time high, increasing 16 percent over a year earlier. However, in South Dakota, both new and total advertised jobs declined in February relative to a year earlier. Tight labor markets were evident across the District. Initial and total unemployment insurance claims continued a downward trend through mid-March compared with last year. A western Montana staffing contact said labor orders were \"up in all of our markets. Our biggest struggle is lack of candidates.\" A Minneapolis-St. Paul workforce contact said more companies are turning to job fairs and local workforce centers for help, but \"attendance has been down at hiring events,\" and foot traffic at job centers has been slow. Participants in dislocated-worker programs \"are getting jobs so much faster than in the past. Many are exiting the program in two or three months.\"\nWage pressures were moderate since the last report. A survey of Minnesota businesses found that wage increases coalesced a little below 3 percent. There were signs of stronger increases for some workers. Union construction workers in Minnesota were seeing wage increases of 3 percent to 4 percent. Montana high tech firms expected wages to increase by 5 percent in 2018. Wage increases in the public sector were weaker. In South Dakota, state workers received an increase of 1.2 percent, while 30,000 state workers in Minnesota received a 2 percent increase this year, though roughly half were also eligible for other increases.\nPrices\nPrice pressures were moderate overall since the last report, but wholesale prices increased more briskly. Multiple contacts reported dramatic increases in the prices for steel products, partly attributable to recently announced tariffs; a manufacturer of tractor trailers said they \"can't raise prices as fast as material costs.\" Retail fuel prices in most District states as of late March were slightly higher than in the previous reporting period, while prices for heating oil and propane in late March--their usual seasonal peak--saw double-digit percentage increases relative to a year earlier. Prices for construction materials continued to increase briskly.\nConsumer Spending and Tourism\nConsumer spending grew moderately since the last report. Gross sales in South Dakota saw a notable increase in the first two months of the year, and Wisconsin also saw a rise in gross sales. Retail closures continued, including nine stores across the District from a single chain. But they appeared to be due to shifts in consumer buying habits rather than soft overall demand, as retail vacancy rates remained healthy overall. A convenience store chain announced plans to open 11 new locations in Minnesota this year, though that expansion was smaller than in years past. Gaming revenues in Deadwood, S.D., to date have been flat compared with the same period a year earlier, but hotel occupancy rates improved. After a boom related to the Super Bowl, hotel occupancy rates and average room revenue in Minneapolis-St. Paul returned to more normal levels, which were softening due to a major expansion of new space. Passenger boardings at Minneapolis-St. Paul International Airport for the first two months of 2018 were 2 percent higher than the same period in 2017, and cargo volumes rose more than 6 percent.\nServices\nActivity in the professional services industry increased briskly since the last report. An electronic components distributor was preparing for a $300 million expansion. Demand for information technology services was strong, according to sources. A civil engineering contact in Montana reported that demand for work was up briskly. A distributor of office products described recent sales as strong. Contacts in transportation generally described freight demand as steady, though some trucking firms were reporting substantial increases in business.\nConstruction and Real Estate\nCommercial construction saw moderate growth since the last report. An industry database showed continued growth in new projects and total active projects through mid-March compared with the same period a year earlier. Most industry contacts were also upbeat. A Minnesota contact said firms were reporting a \"pretty strong\" pipeline for 2018, fueled by robust activity in K-12 school and multifamily housing construction. An Upper Peninsula source said overall activity there was \"very strong,\" with a number of large energy, healthcare, and infrastructure projects. At the same time, construction has slowed recently from very high levels in Sioux Falls, S.D. Residential construction in the single-family market was generally flat across the District. Numerous sources noted that high and rising labor and materials costs were a major constraint. However, multi-family construction was strong in multiple District markets.\nCommercial real estate sales grew modestly since the last report. Vacancy rates continued to remain low and stable in many real estate sectors across the District. However, the multifamily vacancy rate in Sioux Falls rose to its highest level in several years after a persistent expansion of supply. The city has also seen a number of restaurant and big-box store closures, pushing retail vacancies higher. Given the influx of new multifamily units, sources expected vacancy rates in Minneapolis-St. Paul to start rising. Residential real estate sales were slow, especially relative to demand, due to low inventories of homes for sale. Though most regions in the District have seen year-over-year sales remain flat or fall over the first two months of the year, tight inventories have persistently pushed median prices higher across the District.\nManufacturing\nDistrict manufacturing increased moderately since the last report. An index of manufacturing conditions indicated increased activity in March compared with a month earlier in Minnesota and South Dakota; North Dakota fell to a level indicating contraction. Several contacts in the metal-fabricating industry reported strong demand. A producer of precast concrete products said demand had increased capital investment at their firm and across the industry. A maker of shipping and storage pallets also said demand increased notably. Several firms around the District were expanding facilities, including a construction equipment producer in North Dakota and a custom manufacturer in Minnesota. In contrast, an electrical equipment producer closed a plant in Wisconsin.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. Though drought conditions abated slightly since the last report, most of the Dakotas and portions of Montana remained dry heading into the spring planting season. Activity in the energy and mining sectors increased. Oil and gas exploration activity was up; the drilling rig count in the District as of late March increased about 10 percent from the last reporting period. A large solar energy development was proposed in South Dakota and a wind farm in North Dakota was expanding. Contacts at nonferrous mines in Montana said the market for metals was strong, with one noting that they could not produce enough molybdenum to meet demand.\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/2018/2018-04-sl

"Beige Book Report: St Louis\nApril 18, 2018\nSummary of Economic Activity\nReports from contacts suggest economic conditions have continued to improve at a modest pace since our previous report. Labor market conditions remain tight: Employment grew slightly and wage growth was modest. Overall inflation strengthened slightly, held down by a slight decline in commodity prices. Reports on consumer spending were generally positive. Residential real estate activity improved modestly while construction activity was little changed. District banks reported increased lending activity driven by robust growth in commercial and industrial loans. Agriculture and natural resources conditions have remained generally unchanged since the previous report.\nEmployment and Wages\nAnecdotal evidence suggests employment has grown slightly since the previous report. There were reports of modest increases in manufacturing employment in Arkansas and Missouri as well as a modest increase in small business employment in Missouri. Contacts continued to report difficulties finding qualified employees. For example, a construction contact in Little Rock reported difficulties filling skilled positions, and a used-auto retailer reported trouble hiring mechanics and technicians. Several organizations in Little Rock have undertaken initiatives to create training opportunities to address the skills gap.\nWages have increased modestly since the previous report. Reports from contacts in Little Rock indicate that wages have risen for workers such as truck drivers, warehouse workers, and skilled mechanics. One used-auto retailer noted plans to use some of their tax savings to increase compensation for some employees.\nPrices\nPrice pressures have increased slightly since the previous report. Building materials prices rose. A contact in northwest Arkansas reported an increase in construction costs, and steel and scrap metal prices increased moderately throughout the District. Flooding throughout the Midwest led to a significant increase in barge freight rates along the Mississippi River.\nAfter modest to moderate increases through the first two months of the year, commodity prices have declined slightly since the previous report. Wheat, sorghum, corn, and soybean prices decreased moderately, and coal, cotton, and rice prices were unchanged.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate that consumer spending has modestly increased since our previous report. Real sales tax collections decreased in Missouri relative to a year ago but increased in Arkansas, Tennessee, and Kentucky. Consumer confidence surveys continued to show improvements in West Tennessee, although households expect no change in their level of spending over the next few months. Reports from Little Rock auto dealers were mixed. Hospitality contacts in St. Louis reported that sales increased year-over-year and that their outlook remains positive over the next few months.\nManufacturing\nManufacturing activity has increased modestly since our previous report. Overall manufacturing activity was stronger than one month earlier in both Arkansas and Missouri, and the pace of expansion increased in both states. Several companies in the District reported facility expansion and hiring plans, including firms that produce auto parts and aviation equipment. In addition, steel and aluminum manufacturers announced plans to reopen facilities and call back workers. Contacts at economic development agencies in central Arkansas reported growing interest from manufacturing firms looking for locations to build new facilities.\nNonfinancial Services\nActivity in the service sector has been mostly unchanged since the previous report. The number of vacancies posted by firms for non-financial services occupations in March remained flat since the prior month, with the exception of St. Louis area vacancies, which moderately declined. In Arkansas, river barge traffic was much lower in the beginning of 2018 compared with a year ago, while air passenger volume remained unchanged.\nReal Estate and Construction\nResidential real estate activity has improved modestly since the previous report. Seasonally adjusted home sales increased modestly in February across the District's four major MSAs. Local contacts reported that demand remains strong but shortages in inventory continue to hinder sales.\nResidential construction activity remained unchanged. February permit activity was flat within District MSAs. Local contacts continued to report that a shortage of labor is limiting new construction.\nCommercial construction activity was flat. February nonresidential construction starts remained unchanged relative to the previous month, although multifamily permits declined moderately. Little Rock construction contacts reported healthy levels of commercial construction activity across most sectors and expect this trend to continue through the second quarter of 2018.\nBanking and Finance\nBanking conditions in the District strengthened at a moderate pace relative to the previous reporting period. According to reports from District bankers, overall loan volume has accelerated since our previous report, increasing by 9 percent on a year-over-year basis in the first quarter of 2018, up from 7 percent growth for the previous quarter. Stronger loan growth was driven by robust activity in commercial and industrial lending, where loan volumes grew by 17 percent relative to year-ago levels. In addition, outstanding loans for commercial real estate increased by 11 percent, more than double the national rate. Meanwhile, mortgage lending slowed slightly as loan volumes rose by 3 percent, down from 4 percent the prior quarter.\nAgriculture and Natural Resources\nDistrict agriculture conditions were unchanged from the previous reporting period and the same as a year earlier. District corn acreage for 2018 is expected to decrease 2 percent from last year. Planned soybean acreage is about the same as 2017 acreage. Cotton and rice acreages are expected to increase 2 percent and 16 percent, respectively, due to expectations of improved profitability. Overall, District acreage for the four major crops is expected to be roughly the same as in 2017.\nNatural resource extraction conditions improved modestly from January to February, with seasonally adjusted coal production increasing 9 percent. However, February production was down 6 percent from the same month last year.\nFor more information about District economic conditions, visit: www.research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2018/2018-04-ny

"Beige Book Report: New York\nApril 18, 2018\nSummary of Economic Activity\nEconomic activity in the Second District continued to grow at a modest pace since the last report, and the labor market has remained tight. Input price pressures have remained widespread but do not appear to have intensified further, while selling prices have accelerated somewhat. Growth has picked up in the manufacturing sector but slowed in most distribution and service industries. Consumer spending was mixed but still generally sluggish in March--partially attributable to unseasonably cold and wet weather--though tourism has shown signs of picking up. Housing markets have been mixed, while commercial real estate markets have been steady to slightly softer. Construction activity has been steady to somewhat slower. Finally, banks reported a pickup in loan demand and no change in delinquency rates.\nEmployment and Wages\nThe labor market has remained tight, and hiring activity has been steady. One employment agency in upstate New York noted a seasonal pickup in hiring. A major New York City agency indicated that hiring has been robust and that it is taking longer to fill jobs, particularly those requiring technical skills. Businesses noted particular shortages of tech workers, truck drivers, and skilled tradespeople. A few contacts cited difficulties in attracting young job-seekers away from major urban centers.\nBusiness contacts in the finance and information sectors reported fairly brisk hiring activity, while those in manufacturing, wholesale trade, education & health, and leisure & hospitality indicated modest hiring, on net. Retailers continued to report declining employment. Still, firms in most service industries, including retail, said they plan to expand hiring in the months ahead, while manufacturers have scaled back hiring plans.\nBusinesses across all major service industries reported ongoing wage pressures. Some contacts maintained that wages had accelerated over the past year, though plans to raise wages in the months ahead were little changed. A New York City agency reports that a new law prohibiting potential employers from asking about a candidate's salary history has led candidates to demand higher pay.\nPrices\nInput prices have continued to rise briskly but have not accelerated further, according to contacts in most industry sectors. Still, businesses generally anticipated further increases in the months ahead. A growing proportion of service-sector contacts indicated that they were raising their selling prices--most notably, wholesalers--but manufacturers noted only modest hikes in their prices.\nAmong retailers, some contacts indicated that they have held prices steady, while others reported price increases. Prices for New York City hotel rooms and Broadway theater tickets picked up noticeably in March. Looking ahead, a growing proportion of businesses in manufacturing and wholesale trade said that they planned to raise their prices, while most retailers did not foresee any significant price hikes.\nConsumer Spending\nRetail contacts reported that sales have picked up somewhat in recent weeks but are still considered lackluster, reflecting unseasonably cold and wet weather. Retailers in upstate New York indicated that sales have strengthened but remained fairly subdued, despite strong customer traffic. A major retail chain noted that sales advanced in March, running somewhat ahead of plan and up modestly from a year ago. Inventories were generally reported to be at satisfactory levels, and retailers were moderately optimistic about the near-term outlook.\nNew vehicle sales in upstate New York were reported to have weakened in February but there were some signs of a rebound in March. Sales of used cars were steady to up slightly. Vehicle inventories were said to be in fairly good shape. Dealers continued to characterize retail and wholesale credit conditions as favorable.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) edged up to a new multi-year high in March.\nManufacturing and Distribution\nManufacturers reported some acceleration in growth since the last report. In contrast, wholesalers indicated a pause in growth, and transportation firms reported some decline in activity. Looking ahead, manufacturers have become substantially less optimistic about the near-term outlook, while contacts in wholesale distribution and transportation have remained moderately optimistic.\nServices\nReports from service-sector firms were mixed but generally pointed to little growth in activity. Contacts in professional & business services and leisure & hospitality reported modest growth, while those in the information and health & education sectors reported flat activity. Service sector businesses have grown less optimistic about the near-term outlook, most notably in the health & education sector.\nTourism in New York City has picked up since the last report. Hotels reported an increase in both revenues and occupancy rates in March. Broadway theaters indicated that business was sluggish in February and early March but picked up noticeably in the second half of the month.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, weaker in the latest reporting period. Real estate contacts in upstate New York reported that buyer traffic and sales activity have picked up in recent weeks, but that lean inventories have held back sales activity--especially at the lower end of the market. In New York City, sales of condos and co-ops have receded noticeably, while prices have edged down. One industry contact attributes this to uncertainty about the effects of the new federal tax law. However, housing markets in the areas around New York City have seen strong demand--while sales volume has been constrained by low and declining inventories, prices have picked up noticeably, except at the high end of the market.\nApartment rental markets have been mixed. Across New York City, vacancy rates have been steady, as landlord concessions have been increasingly prevalent, and effective rents have slipped across the board. In northern New Jersey and upstate New York, rents have continued to rise moderately, and concessions have remained fairly infrequent.\nCommercial real estate markets have been steady to slightly softer. Office markets have been steady across the District--while leasing activity has slowed somewhat, vacancy rates and asking rents have been generally flat. The retail market has shown further signs of slackening, particularly in New York City, where vacancy rates have risen. However, northern New Jersey's retail vacancy rate edged down. In upstate New York, retail vacancies have been fairly stable. The industrial market has lost a bit of momentum but remains fairly strong. Asking rents have continued to rise at a fairly brisk pace throughout the District. Industrial vacancy rates have edged up across downstate New York but have continued to edge down in northern New Jersey and upstate New York.\nMulti-family construction activity has leveled off in northern New Jersey and across upstate New York, but has slowed further in New York City. Office construction has picked up somewhat in New York City and upstate New York but has remained subdued elsewhere. Industrial construction has been steady at a fairly sturdy level.\nBanking and Finance\nSmall to medium size banks in the District reported higher demand for residential mortgages, commercial mortgages, and C&I loans, and steady demand for consumer loans. Banks reported lower loan spreads for consumer loans and residential mortgages, and no change in spreads across all other loan categories. Bankers reported that both credit standards and delinquency rates were unchanged 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"

Atlanta

/beige-book-reports/2018/2018-04-at

"April 18, 2018\nSummary of Economic Activity\nSixth District business contacts indicated that economic conditions continued to improve modestly from the previous report. The majority of contacts were relatively optimistic with expectations for continued modest growth over the next three to six months. The labor market remained tight and overall wage growth was modest. Most firms noted that most nonlabor input cost pressures were muted, though some noted increases related to the threat of tariffs. Retail sales remained stable since the previous report while automotive dealers remarked that demand for vehicles had weakened. Hospitality contacts noted solid domestic activity. Residential real estate builders and brokers indicated that home sales were flat to slightly down. New home construction increased slightly since the previous report. On balance, commercial real estate conditions continued to improve. Manufacturers cited increases in new orders and production.\nEmployment and Wages\nDistrict contacts continued to report difficulties filling positions in high-demand/high-growth sectors, particularly in the information technology, long-haul transportation, construction, and medical fields. Several contacts from the transportation sector reported elevated driver turn-over. In response to labor shortages, firms continued to enhance training efforts for less-experienced candidates, expand partnerships with workforce development entities and community colleges, and broaden their geographical search for candidates.\nOverall, reports of wage growth were mixed across the District. Many contacts noted steady but modest wage growth; however, geographies and sectors experiencing high growth continued to report large wage increases in order to attract and retain workers. In particular, contacts from the transportation sector reported that they were compelled to provide drivers with sizeable bonuses and wage increases in an attempt to thwart turnover. Employers continued to share that they were increasing the proportion of employee compensation that is not permanent and can be withdrawn, if needed (e.g., bonuses, incentives, etc.).\nPrices\nOverall, businesses continued to report relatively benign input-cost pressures. However, some contacts noted rising prices for transportation, as well as steel as tariff rhetoric increased. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in March. Looking ahead, survey respondents indicated that they expect unit costs to rise 2.1 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retailers continued to report steady sales levels during this reporting period, on net. Home improvement retailers noted an increase in sales levels during the first two months of the year; automotive dealers reported a decline in demand for February compared to the same time last year.\nTravel and tourism contacts reported strong domestic travel while group and convention travel softened since the last report. Demand for hotel rooms accelerated even though occupancy rates declined due to an increase in the number of rooms coming on line and a pick-up in online lodging services. Sentiment from travel and tourism contacts remains optimistic heading into spring.\nConstruction and Real Estate\nReports from District residential real estate contacts signaled continued modest growth. Builders reported flat to slightly higher construction activity in February compared to one year earlier. Builders and brokers indicated that home sales activity was flat to slightly down from the year-ago level. Many brokers reported mixed buyer traffic, while builders characterized traffic as unchanged from the previous report. Builders reported that inventory levels remained flat whereas brokers indicated lower levels compared to one year ago. Builders and brokers continued to note that home prices increased in February. Looking ahead, residential real estate contacts expect home sales activity to hold steady or increase slightly over the next three months relative to the year-ago level, with many builders expecting construction activity to remain unchanged or increase slightly.\nDistrict commercial real estate contacts cited continued improvement in general economic conditions and the availability of capital as factors supporting favorable commercial real estate demand and pricing. However, contacts continued to caution that the rate of improvement varied by metropolitan area, submarket, and property type. Contacts continued to report healthy activity pipelines. The outlook among commercial contacts for nonresidential and multifamily construction remained positive, with the majority anticipating activity to match or exceed the current level.\nManufacturing\nManufacturing contacts indicated that overall business activity remained strong since the last reporting period. New orders and production levels rose, and most firms indicated they were adding to their payrolls. Contacts suggested that prices for their finished products were holding steady, while some input costs continued to increase. Most firms indicated that they are optimistic about the near term.\nTransportation\nTransportation contacts continued to note varying levels of activity over the reporting period. Railroads again cited decreases in year-to-date total traffic, albeit at a slower rate of decline than described in the previous report. Trucking contacts reported increases in freight volume, but driver shortages continued to constrain capacity. District ports indicated further strength in shipments of containers and breakbulk cargo, and air cargo contacts noted year-over-year increases in freight tonnage.\nBanking and Finance\nDistrict bankers continued to report solid commercial and consumer loan growth. Contacts noted that lending rates have coalesced around a narrow range but pricing for consumer lending is increasing. Banking contacts also noted that commercial acquisitions slowed due to difficulties over pricing of the targets.\nEnergy\nSentiment among energy contacts was mostly positive as demand picked up. Global demand for liquefied natural gas (LNG) continued to intensify, resulting in rising exports of LNG out of Louisiana's Sabine Pass liquefaction terminal. In petrochemical markets, contacts shared that supplies remained tight and backlogs continued to build after freezing conditions across the Gulf Coast temporarily reduced or ceased operations at several plants, and in some cases, caused power outages and infrastructure damage. Elevated Mississippi River water levels prevented many petrochemical plants from receiving input products needed to produce chemicals for domestic and global use, which also contributed to growing backlogs and imports.\nAgriculture\nAgriculture conditions across the District were mixed. Drought conditions improved in much of the District although light frosts in March affected some crops. Agricultural exporters indicated that the weaker dollar was having a favorable impact. On a year-over-year basis, prices paid to farmers in February were up for rice, beef, broilers, and eggs and down for corn, cotton, and soybeans.\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

/beige-book-reports/2018/2018-04-da

"April 18, 2018\nSummary of Economic Activity\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. Growth in the nonfinancial services sector accelerated, and retail sales rebounded. Loan demand growth picked up. Robust expansion in the energy industry continued, while growth in manufacturing eased somewhat. Home sales continued to rise. Hiring was solid across most sectors, and widespread labor shortages continued. Wage and price growth remained elevated, and several contacts noted a marked rise in the cost of steel. Outlooks, while still optimistic, have become more uncertain due to new tariffs and trade concerns.\nEmployment and Wages\nSolid employment growth continued, and wage pressures remained elevated. Hiring picked up pace in services, retail and energy. Among manufacturers, employment growth eased a bit. Labor shortages either continued or escalated, covering a wide array of industries and skill levels. Multiple contacts said employee retention had become increasingly difficult across skillsets, although they noted that low-skill workers in particular were quick to leave for better-paying positions. Contacts reported that some rural employers were busing in workers from nearby cities because their local labor pool was tapped out. Wage growth remained elevated across the board and increased further in the energy industry.\nPrices\nPrice pressures remained elevated over the past six weeks. Input cost pressures increased among energy, manufacturing, and construction firms, partly due to the announced tariffs on steel and aluminum. Upstream energy firms said the steel tariffs represent a worry, although some contacts said there shouldn't be much of an impact on costs until 2019 when contracts roll over. Downstream energy contacts were still figuring out how much of their steel is subject to the new tariff and how that will affect their costs and investment decisions. Several manufacturers said that talk of steel tariffs immediately resulted in higher steel prices. An architecture firm noted that the increase in steel costs will impact the ability of their clients to move forward with some construction projects. Average gasoline and diesel prices were fairly stable, although transportation services contacts noted that fuel costs were up notably from a year ago.\nManufacturing\nExpansion in the manufacturing sector continued, although the overall pace of growth eased from the highs seen in recent months. Output growth was led by transportation and high tech manufacturing, two sectors that saw an acceleration over the reporting period. Growth in chemical production receded from February's elevated rates, and fabricated metals and food production continued to post slower growth relative to other types of manufacturing. Expectations regarding future business conditions remained optimistic, although several contacts noted that the newly enacted tariffs were creating a lot of uncertainty in their outlooks for activity and prices. Refiners and petrochemical producers specifically mentioned their views about the potential negative impact of these tariffs on construction projects.\nRetail Sales\nRetail sales rebounded over the past six weeks, led by a sharp rise in auto sales after a challenging start to the year. A clothing retailer noted that sales continued to stabilize in stores located in oil patch markets, while sales in stores along the border started to slip once again. Other contacts also mentioned softness in retail sales along the border, citing online retailing and the development of retail space in Mexico as drivers of the weakness. For retail more broadly, contacts noted a continued increase in internet sales, with growth accelerating over the reporting period. Outlooks among retailers in general remained positive, but some contacts said their expectations were clouded by the potential negative impacts of trade and immigration policies.\nNonfinancial Services\nGrowth in the nonfinancial services sector picked up over the reporting period, with most industries noting an acceleration. Leisure and hospitality was a particular bright spot, with revenue growing again after weakness earlier this year. Transportation services firms said rail and air cargo volumes strengthened further while courier cargo and airline demand remained stable. Growth in health care lagged other industries, with contacts pointing to a challenging environment with increased regulatory requirements and decreased funding and/or reimbursements. Staffing services contacts noted high levels of demand, driven by activity being broad based across geographies and sectors. Outlooks rose slightly over the past six weeks, although uncertainty surrounding trade policies and the new tariffs negatively impacted some firms' expectations.\nConstruction and Real Estate\nHome sales rose moderately since the last report, with particular strength noted at the lower price points. Outlooks were positive, but there is concern among builders about margin compression and the impact of rising mortgage rates on future sales. Apartment demand was seasonally slow during the first quarter, and occupancy rates fell in all major Texas metro areas as an aggressive pace of new deliveries exceeded demand. Rent growth accelerated in Houston, but was sluggish in Dallas and San Antonio and dipped in Austin. Multifamily construction remained active, although it has moderated somewhat relative to last year.\nOffice market conditions remained weak in Houston, and contacts reported an uptick in sublease space. The industrial market was characterized as solid, and the vacancy rate generally remained low across major metros. Reports on retail leasing activity were mixed.\nFinancial Services\nOverall loan volumes and demand increased at a faster pace over the past six weeks. Markedly stronger growth in loan volumes was seen in commercial and industrial, and commercial real estate. Residential real estate loan volumes continued to grow at roughly the same pace as during the prior reporting period, while consumer loan volumes declined. Credit standards and terms continued to tighten, and loan pricing increased at a similar pace as the prior report. Banking contacts remained optimistic, expecting total loan demand to be better six months from now. Some contacts mentioned optimism in the market due to tax reform, while others noted uncertainty about how new tariffs will impact Texas businesses.\nEnergy\nEnergy activity continued to expand moderately. The rig count increased over the reporting period and drilling and completion activity was up in the Permian Basin and Eagle Ford. Outlooks remained positive for 2018, supported by oil prices holding at levels at which the vast majority of firms can profitably increase drilling. However, multiple contacts suggested tight markets for labor and equipment may constrain further acceleration in drilling activity.\nAgriculture\nDrought conditions plagued much of Texas, severely so in the Texas panhandle. Lack of soil moisture particularly affected winter wheat, and the crop was largely in poor to very poor condition. Pasture conditions were also negatively impacted, and some ranchers were moving cattle from grazing to feedlots earlier than usual. Texas will see an increase in cotton acres this year, according to contacts, driven by strong demand, relatively high cotton prices, and new provisions in the farm bill. Cattle prices declined over the reporting period, and milk prices remained low enough to start forcing some smaller dairies out of business. Trade issues continued to make agricultural producers and lenders nervous.\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

/beige-book-reports/2018/2018-04-sf

"Beige Book Report: San Francisco\nApril 18, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of late February through early April. Conditions in the labor market remained tight, and upward wage pressures persisted. Price inflation increased modestly. Sales of retail goods were down slightly, while growth in consumer and business services remained solid. Conditions in the manufacturing sector picked up modestly, and activity in the agriculture sector was flat. Contacts reported that residential real estate market activity continued at a strong pace, and conditions in the commercial real estate sector were solid. Lending activity ticked up.\nEmployment and Wages\nContacts across the District continued to report tight labor market conditions and persistent upward wage pressures in various sectors. Demand for workers experienced in cybersecurity was up. Metals manufacturers reported a modest uptick in employment growth. A contact in real estate development in Northern California observed that demand for contract labor exceeded supply, causing wages to jump. Labor demand in the utilities sector declined somewhat as sales weakened. Employers faced difficulties in filling vacancies in both high- and low-skill positons. In response to labor shortages, several contacts reported increased use of overtime and heightened efforts to automate routine tasks. In Los Angeles, a contact in the air transportation sector implemented process improvements that substituted information technology for labor in customer interactions. In some areas of California, high costs of living made it difficult to attract job candidates. The recent corporate tax cut resulted in some one-time bonuses and a small increase in entry-level wages, according to a few contacts.\nPrices\nPrice inflation increased modestly over the reporting period. Strong construction activity drove further price inflation for a wide variety of building materials, including lumber and sheetrock. Contacts reported a jump in inflationary pressures for metals prices, partly due to the anticipation of tariffs and unrelated increases in raw material costs. Airfares picked up modestly following further industry consolidation and oil price increases. Pharmaceutical prices inched up, resulting in a slight increase in health insurance costs for a Mountain West health-care provider. Retail sales prices were broadly flat to down slightly, with the impact of increased competition in low-cost product spaces mostly offset by the effect of strong demand for high-end goods. Wheat prices decreased modestly due to excess supply. Declines in natural gas prices put downward pressure on heating prices across the District.\nRetail Trade and Services\nSales of retail goods were down slightly over the reporting period. Contacts in the Mountain West noted that bad weather in the past month had a negative impact on sales activity in their region. Demand for motor vehicles slowed modestly because of increasing financing costs. The restaurant industry continued to see foot traffic edge down. While mall-based retail activity had been trending down, recently, stores have maintained sales volumes while managing inventories tightly.\nActivity in the consumer and business services sectors remained solid. Demand for airline travel was strong, especially from international passengers following improvements in the global economy. Contacts in Los Angeles noted a pickup in tourism activity. Demand for freight airline services was at its highest level since the recession. A major health insurance provider in Utah reported significant competition in the commercial provider market.\nManufacturing\nConditions in manufacturing picked up modestly. Capacity utilization across a range of manufacturing sectors, including steel, picked up noticeably despite rising input prices. Inventories in some sectors ticked up because of a slight decline in export growth, according to a contact in Northern California. Both deliveries and new orders of commercial aircraft edged down on a year-over-year basis. A contact in the metals industry noted greater uncertainty about production costs because materials suppliers would not enter price guarantee agreements.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector was flat on balance. Wheat yields were up modestly across the District. Demand in the feedlot industry inched up on a year-over-year basis. Cattle profits were solid, though margins narrowed. Demand for electricity in Southern California was flat, leading excess capacity in power generation to edge up in the region. Grain inventories remained elevated in the Mountain West, and sales contracts fell over the reporting period. Contacts noted that much of the grain industry continued to face prices below breakeven levels.\nReal Estate and Construction\nActivity in real estate markets continued at a strong pace. Construction in the residential market picked up noticeably, limited only by the persistent shortage of labor and increasing material costs. Contacts across the District observed a solid increase in housing starts, especially for single-family homes, though lengthy permitting processes acted as an additional headwind. Construction starts on middle- to high-end units grew faster than that of more-affordable units because rising input costs jeopardized returns in lower-end markets. Throughout the District, increases in demand amidst still-low inventory levels caused residential sale prices to rise further. Contacts in the Pacific Northwest reported a jump in apartment rents. Commercial real estate activity moderated to a solid pace. Contacts in Eastern Washington reported a modest decline in permitting for commercial projects on a year-over-year basis. Demand for warehouse space for shipping fulfillment operations was up across the District. Some regions of the District cited rising financing costs as a growing constraint on commercial real estate activity.\nFinancial Institutions\nLending activity ticked up over the reporting period. Loan demand was mixed but increased slightly overall. Strong loan demand in Oregon resulted in a modest jump in lending rates. Contacts in Northern California reported moderate growth in consumer loan demand, while commercial demand fell modestly. On balance, deposit rates edged up and net interest margins remained narrow. Asset quality remained solid. In Oregon, underwriting standards for residential development loans tightened moderately.\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/2018/2018-03-sl

"Beige Book Report: St Louis\nMarch 7, 2018\nSummary of Economic Activity\nEconomic conditions have improved at a modest pace since our previous report. Firms reported modest increases in employment, despite continued difficulties finding workers. Wages continue to increase at a moderate pace, as do non-labor costs. Price pressures strengthened, as contacts generally see a greater ability to increase selling prices. Reports on consumer spending were generally mixed, with reports of bad weather reducing foot traffic and sales. Residential real estate contacts continue to report sluggish sales due to low inventories, while commercial real estate activity was slightly better. District banking contacts reported improving loan demand. Agricultural conditions also improved, thanks to high yields giving a boost to profits. Overall, the outlook among contacts has improved. On net, 54 percent of contacts expect conditions in 2018 to be better or somewhat better than in 2017.\nEmployment and Wages\nEmployment has increased modestly since the previous report. Of the contacts surveyed in early February, on net, 28 percent reported that first-quarter employment was higher or slightly higher than a year ago. Anecdotal evidence suggests that the labor market remained tight. Construction contacts continued to report shortages in qualified labor. Technology and manufacturing contacts in St. Louis and Memphis, respectively, also reported difficulties hiring suitable employees. Contacts in Louisville and Little Rock cited candidates' inability to pass drug tests as an impediment to hiring.\nContacts reported moderate wage growth since the previous report. On net, about 70 percent of contacts reported wages were higher or slightly higher than a year ago, and a similar share reported increases in labor costs. A construction contact in Louisville cited the need for higher wages to attract and retain skilled labor, while a contact in Little Rock reported that unskilled positions remain unfilled because of low wages.\nPrices\nPrice pressures have moderately strengthened since the previous report. Firms reported modest growth in prices charged to consumers: On net, 33 percent of contacts reported that prices were higher than a year ago. Price increases accelerated somewhat in the second half of 2017, as contacts reported that their ability to raise prices has improved over the past three to six months. One food product manufacturer reported increasing their selling prices for the first time in 5 years.\nNon-labor input costs grew at a moderate pace. On net, 67 percent of contacts reported that costs were higher than a year ago. Steel prices increased moderately throughout the District, and contacts in Louisville and Little Rock reported upticks in trucking freight rates.\nCommodity prices generally rose throughout the District. Wheat, sorghum, soybean meal, corn, and corn feed increased moderately, soybeans increased modestly, and coal prices increased slightly. Rice and corn meal prices were flat while cotton prices fell modestly.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers portray a mixed picture of consumer spending activity. January real sales tax collections increased in Arkansas, Kentucky, and Missouri relative to a year ago and slightly decreased in Tennessee. In addition, several general retailers in St. Louis and Louisville indicated that sales fell short of expectations, attributing the slowdown to poor weather. Conversely, hospitality contacts in St. Louis reported that sales exceeded expectations. Multiple auto dealers across the District reported a modest decline in sales, which have failed to meet their expectations. St. Louis dealers indicated a shift in demand toward high-end vehicles.\nManufacturing\nThere has been little to no growth in manufacturing since our previous report. A slight majority of contacts reported that new orders and capacity utilization were lower in the first quarter relative to one year ago, while production remained at the same level. This marks the fourth consecutive quarter of a decline in the share of contacts reporting growth in new orders and capacity utilization. However, the outlook of contacts remains optimistic, with most contacts expecting increases in production, new orders, and capacity utilization in the next three months.\nNonfinancial Services\nActivity in the service sector has expanded moderately since the previous report. Transportation industry contacts reported that the dollar-value of sales has been higher in the first quarter compared with the same period last year. Most contacts expect sales to remain higher in the second quarter. While dollar sales are up, they have largely met expectations: More than half of contacts reported sales met expectations with remaining contacts split between falling short and exceeding expectations.\nReal Estate and Construction\nResidential real estate activity has declined slightly since the previous report. Seasonally adjusted home sales declined in January across the District's four major MSAs. Contacts continued to report that shortages in inventory are hindering sales. On net, about half of the respondents reported that first-quarter sales have fallen short of expectations. However, demand remains strong and a majority of contacts expect demand for single-family homes to increase over the next quarter.\nResidential construction activity improved modestly. There was a modest uptick in December's permit activity within the District compared with the previous month. Two-thirds of local contacts reported that construction activity increased compared with the previous year, and the same fraction expects continued growth over the next quarter.\nCommercial real estate activity increased slightly. Demand for industrial and office properties increased relative to a year ago. However, contacts noted that demand for retail properties fell while retail inventory increased. Contacts expect these trends to continue into the second quarter of 2018.\nCommercial construction activity improved modestly. Local contacts reported increased demand for construction of all commercial property types. Over 80 percent of contacts, on net, expressed an optimistic outlook for 2018, but many continued to report that a shortage of labor is limiting construction activity.\nBanking and Finance\nLending conditions in the Eighth District have strengthened at a moderate rate since the previous report. Loan demand increased moderately in year-over-year terms and, according to District banking contacts, there were some signs that the pace of overall loan growth may be rising after slowing in 2017. Commercial and industrial loan demand increased moderately after exhibiting flat growth last quarter. Bankers reported demand for auto credit remained unchanged after decreasing the previous two quarters. Credit standards for auto loans increased slightly. Overall, delinquencies continued declining, falling in every loan category except mortgages, which increased modestly. District bankers expect delinquencies to continue decreasing next quarter across all loan types, including mortgages.\nAgriculture and Natural Resources\nDistrict agriculture conditions have improved slightly since the previous reporting period. In spite of concerns about low temperatures in early January, the percent of District winter wheat rated fair or better ticked up about a percentage point from the end of December to the end of January. Contacts expressed optimism about near-term farm income as area farmers were able to turn strong yields into profits in 2017, although some expressed concern about the downside risks of NAFTA renegotiations.\nNatural resource extraction conditions declined from December to January, with seasonally adjusted coal production falling 10 percent. January production was also 11 percent down from a year ago.\nFor more information about District economic conditions, visit: www.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/2018/2018-03-ch

"March 7, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District remained at a moderate pace in January and early February, and contacts expected growth to continue at that pace over the next 6 to 12 months. Employment and manufacturing production increased moderately, business spending rose modestly, construction and real estate activity grew slightly, and consumer spending was down slightly. Wages increased modestly, prices rose slightly, and financial conditions deteriorated some, on balance. Expectations for overall farm income in 2018 improved somewhat, though farmers continued to face challenging conditions.\nEmployment and Wages\nEmployment increased at a moderate pace over the reporting period, and contacts expected gains to continue at this rate over the next 6 to 12 months. As they have for some time, contacts indicated that the labor market was tight and reported difficulties filling positions at all skill levels. Hiring was focused on professional and technical, production, and sales workers, though there was a notable pickup in the number of firms looking to hire administrative workers. In addition, a staffing firm that primarily supplies manufacturers with production workers reported an increase in billable hours. Wage growth remained modest overall, though the number of contacts who reported pay increases for management and production workers was higher than a few months ago. In addition, most firms reported increasing benefits costs.\nPrices\nOverall, prices again rose slightly in January and early February, though more contacts now expect the rate of increase to pick up over the next 6 to 12 months. Retail prices increased slightly overall. Producer prices also rose slightly, reflecting in part the pass-through of higher raw materials and freight costs. There was a decline in the number of contacts reporting increased tax and regulatory costs.\nConsumer Spending\nConsumer spending was down slightly over the reporting period. Non-auto retail sales were flat on balance: gains in the electronics and appliance, building and gardening, entertainment, and health and personal care segments were offset by declines in the furniture, apparel, and grocery segments. Contacts continued to report strong e-commerce growth. New light vehicle sales volumes were down a bit, with flat sales in January and lower sales in early February. A number of dealers suggested that stock market volatility led potential customers to delay vehicle purchases. Despite the slow start to the year, contacts generally believed total light vehicle sales for 2018 would be similar to those for 2017. Used vehicle sales remained flat, and the vehicle mix for new and used vehicles continued to shift from cars to light trucks. Demand for residential energy increased moderately.\nBusiness Spending\nBusiness spending increased modestly in January and early February. Retail and manufacturing contacts indicated that inventories were generally at comfortable levels. Capital spending increased modestly, though contacts expected moderate growth over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Demand for commercial and industrial energy increased slightly, and transportation demand increased moderately.\nConstruction and Real Estate\nConstruction and real estate activity ticked up over the reporting period. Residential construction rose modestly, and contacts expected activity to increase moderately over the next 6 to 12 months. With rising costs squeezing margins, contacts noted that homebuilders were focusing on the construction of high-price, high-margin housing. Overall, home sales were up slightly: sales of starter homes increased in spite of low inventories, while sales of high-end homes were flat and inventories ample. Home prices rose slightly, with stronger increases in the starter home segment. Nonresidential construction edged lower on balance, though building is expected to increase modestly going forward. Commercial real estate activity increased slightly from an already strong level, and contacts expected activity to increase slightly further over the next 6 to 12 months. Commercial rents rose slightly as vacancy rates decreased, and the availability of sublease space was little changed.\nManufacturing\nGrowth in manufacturing production continued at a moderate rate in January and early February. Steel production increased at a moderate pace in response to solid end-user demand and the rebuilding of inventories at steel service centers. Demand for heavy machinery also increased moderately as mining and construction activity continued to grow. Demand for heavy trucks was strong. Order books for specialty metals manufacturers increased moderately: growth was spread across a wide variety of sectors, with particularly strong demand from the oil and gas, aerospace, and transportation sectors. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction. Auto production was flat, but remained at a solid level.\nBanking and Finance\nFinancial conditions deteriorated some on balance over the reporting period. Financial market participants noted falling equity prices, rising interest rates, and an increase in volatility. Small and medium business loan demand increased slightly, with growth coming primarily from small businesses. While competition remained strong, contacts reported little change in lending standards or loan quality. Consumer loan volume was little changed overall, though one contact noted a significant increase in demand for home equity loans since the start of the year. Consumer loan quality and lending standards were little changed.\nAgriculture\nExpectations for overall farm income in 2018 improved somewhat in January and early February, though much of the District's farm sector remained under stress. There were reports of more small tracts of ground being offered for sale. Corn and soybean prices were up enough to cover a slight rise in projected production costs for 2018. Soybeans remained more profitable than corn for most operations--one contact predicted that the split of corn and soybean acres planted this spring will be close to even (corn has consistently comprised the larger share). Contacts noted that subsoil moisture was very depleted in many areas because of drought conditions last year, making timely spring and summer rains more important for crop health this coming growing season. Hog, cattle, and egg prices were higher, but dairy prices lagged, leading to an increase in the number of liquidations of diary 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"

Richmond

/beige-book-reports/2018/2018-03-ri

"March 7, 2018\nSummary of Economic Activity\nThe Fifth District economy expanded at a moderate pace since our previous report. Manufacturing activity increased moderately but firms faced longer vendor lead times due, in part, to trucking delays. Trucking firms concurred, saying that driver shortages kept them from meeting the high demand. District ports saw moderate growth, overall, as export activity picked up and, at some ports, came more in line with imports. Retailers experienced a slight slowdown in recent weeks. Tourism and travel remained robust despite a few disruptions from wintry weather. Reports on commercial real estate conditions were mostly positive but varied by region. Likewise, lenders across the Fifth District gave somewhat mixed reports on commercial loan demand. Nonfinancial services firms generally experienced a moderate rise in demand and revenues, although there were some reports of profit margin compression. The demand for labor increased moderately and many employers had challenges finding workers. Wage pressures broadened, and more firms were raising starting wages and offering expanded benefits to attract new hires. Prices continued to grow at a modest pace, overall.\nEmployment and Wages\nThe demand for labor rose moderately in recent weeks. A staffing agent reported a modest increase in orders as the lack of available workers to fill permanent positions drove more employers to staffing firms for temporary help, particularly in manufacturing, warehousing, and distribution. Contacts also reported difficulty filling positions for IT professionals, engineers, accountants, health care providers, and construction workers. Some employers said they were willing to train underqualified workers but had trouble finding workers with soft skills and a strong work ethic. Upward wage pressures continued to broaden moderately. In addition to raising starting wages, there were some reports of employers looking to attract workers with expanded benefit packages and more flexible work schedules.\nPrices\nSince our previous report, prices grew at a modest pace. According to our most recent surveys, manufacturers reported moderate increases in input costs, which outpaced growth in selling prices. Some of the largest raw materials price increases were reported for lumber, plastics, metals, and packaging materials. A food manufacturer saw prices rise for flour and sugar but decline slightly for poultry, eggs, and beef. Service sector prices grew modestly, overall. Export prices rose slightly for metallurgical coal but declined somewhat for thermal coal. Meanwhile, natural gas prices declined modestly in recent weeks.\nManufacturing\nManufacturing activity grew moderately in recent weeks. A South Carolina copper parts manufacturer noted increased sales in both foreign and domestic markets, and an electronics manufacturer in Maryland reported an increase in defense-related orders. A South Carolina packaging manufacturer saw improved business conditions and began to increase capital investment in anticipation of higher interest rates. A Virginia wood-product manufacturer reported unpredictable business from week to week, as demand from restaurants increased while demand from retailers slowed. Manufacturers across the District continued to face supply chain disruptions resulting from delays in trucking.\nPorts and Transportation\nPort activity picked up moderately in recent weeks, with increases in both imports and exports. Faster growth in exports at some ports left them with a better balance in volume growth. Recent increases in exports were largely driven by automotive and commodities shipments. A North Carolina port attributed much of its growth to exporting wood chips to the UK to be used as fuel. However, a Maryland port continued to see more than twice as many loaded import containers as loaded export containers.\nTrucking companies saw sustained growth in recent weeks, and many reported being unable to meet increased demand. A North Carolina company reported demand of about two truckloads for every available truck. Trucking companies have continued to turn away business because of driver shortages and expect this problem to worsen in coming months as shipments pick up seasonally in the spring.\nRetail, Travel, and Tourism\nRetailers experienced somewhat sluggish sales in recent weeks. Many firms noted a drop in revenues but remained optimistic that business would pick up in the near future. District auto dealers were seeing low credit scores prevent many customers from purchasing cars. A Maryland plumbing supplier said business was at a twelve-year high, and a Maryland hardware store saw an uptick in sales resulting from snow storms as people bought gear for removing snow and heating their homes. A West Virginia sporting goods retailer said strong wholesale demand made up for weak retail demand.\nTourism remained robust in recent weeks. Hotel stays around the District continued to increase; however, some North Carolina hotels reported that their business was suffering from increasing competition, despite strong tourism. A Virginia outdoor center reported having to turn away visitors as bookings increased. Tourism in D.C. adjusted down to normal levels compared to abnormally strong business last winter. Also, it did not suffer as much from the federal government shutdown as in the past because of its brevity. District ski resorts experienced a strong season, after a few weak years. However, winter weather hurt tourism elsewhere in the District, particularly in South Carolina, where the Charleston airport was shut down for four days.\nReal Estate and Construction\nMost Fifth District residential real estate contacts reported increases in sales and buyer traffic, and decreased inventories in the past few weeks. Although prices were generally increasing, one report from Washington, D.C. noted that the average price was lower due to higher sales in the lower price ranges. Agents across the Fifth District commented that lower priced inventory was absorbed quickly and that homes at the higher price points were slower to move. A few reports noted increased demand for large tracts of land for lot and house development, but it would be some time before the construction activity translated into increased inventories.\nIn commercial real estate, traffic and sales increased and prices were steady in recent weeks, although activity varied by geographic area and industry segment. An executive from Columbia, SC and another from Richmond, VA reported speculative construction in the industrial market. The Columbia report also noted strong activity in retail, including construction of small retail space. There was also steady demand for restaurant space. There were a few reports of slowing office-related activity. On the other hand, office activity expanded in Virginia Beach and there was strong demand for Class A urban office space and Class B suburban space in the Charlotte, NC area.\nBanking and Finance\nSince our previous report, loan demand increased slightly. Residential mortgage lending was flat to slightly lower, reflecting a typical seasonal slowdown, while refinance loan demand fell slightly. Interest rates edged higher in recent weeks. A banker in West Virginia attributed the decline in mortgage refinancing to the rise in interest rates. Deposits were up moderately, overall. Reports on commercial loan demand varied. For example, lenders in Maryland and North Carolina saw modest increases in commercial lending, while contacts in central Virginia and West Virginia reported flat to slightly lower demand. Credit quality remained strong. Credit standards declined slightly amidst reports of some higher loan-to-value ratios being accepted.\nNon-Financial Services\nDemand for nonfinancial services rose moderately in recent weeks. Professional and business services and administrative support services were among the sectors to report the strongest demand. An advertising and marketing firm saw steady demand but noted that rising input costs were compressing profit margins as they were unable to raise prices for their services.\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"

Boston

/beige-book-reports/2018/2018-03-bo

"March 7, 2018\nSummary of Economic Activity\nEconomic activity expanded at a moderate pace in the First District, with almost all retail and manufacturing respondents citing sales and revenues in recent weeks ahead of year-earlier levels. By contrast, staffing firms reported year-over-year revenue declines, reflecting ongoing difficulty finding workers to fill openings. Commercial real estate contacts offered generally upbeat reports. Residential real estate markets in the region saw sales declines and price increases, which respondents attributed to very low inventories. Outlooks continued to be generally positive.\nEmployment and Wages\nMost responding firms said labor markets were tight. Retail contacts noted increased difficulty hiring workers in some categories and said they expected the labor market to tighten further over the coming year. Merit raises for existing retail employees were in the range of 2.5 percent to 4.0 percent. One large retailer planned to pass along half its savings from the corporate tax cut to selected workers in the form of higher wages, while a smaller retailer said it planned to raise salaries a bit to match the wage increases announced by some prominent retail chains as a result of the tax cuts. A manufacturing contact with declining sales laid off temporary workers but has, so far, avoided any layoffs of permanent workers. Otherwise, no manufacturing respondents reported any major revisions to their hiring, although several said the market was particularly tight for skilled workers from machinists to electrical engineers. Manufacturing contacts reported higher starting salaries and longer waits to fill open positions. Staffing firms noted high labor demand from clients across the board, regardless of industry or occupation, paired with a dearth of candidates to fill open slots. They reported that bill rates and pay rates have risen, with some noting local minimum wage increases as a source of upward movement.\nPrices\nFirms' comments on pricing were mixed. Retail contacts said wholesale prices were steady; one indicated they will increase prices on most retail products by low single-digits in 2018, while another planned to raise retail prices to cover higher labor costs. Another retail contact noted higher shipping costs because of a shortage of trucks and drivers. In manufacturing, specific supply issues have resulted in selective price increases. Otherwise, manufacturing contacts reported no notable changes in the pricing environment.\nRetail and Tourism\nFirst District retail respondents reported that from early January through mid-February, year-over-year sales results were positive, ranging from mid-single-digit to double-digit increases. While two contacts cited high demand for winter items, others believed the increases represented a continuation of more buoyant consumer sentiment that took hold in the second half of 2017.\nContacts said the US economy is expected to do well overall in 2018, notwithstanding challenges facing some retailers. Predictions regarding consumer sentiment varied: One contact said that the cut in federal income taxes and actual or expected wage gains augur well for the retail sector. Others, including one citing recent stock market volatility, opined that consumers were likely to be cautious.\nBoston-area hotels had their strongest December in five years. Despite a slow start during the first half, the average room occupancy rate in 2017 was 82.2 percent, the highest rate ever recorded and the fifth straight year above the hotel industry \"gold standard\" of 80 percent. Some in the tourism industry expressed concern that foreign travel to the United States will decline in 2018.\nManufacturing and Related Services\nOnly one of the ten First District manufacturers contacted this cycle reported lower sales--a gun maker. Otherwise, all manufacturing contacts reported higher sales than a year ago. Contacts in the semiconductor area reported strong sales and new orders. Demand was strong in other industries as well, including a manufacturer of membranes used in batteries and filters who reported December sales up 10 percent to 15 percent versus the previous year.\nSeveral contacts reported constraints on the supply side. Two said they faced shortages of electronic parts; one attributed the shortages to new phones that \"soaked up world supply\" for selected components. Another supply issue was trucking. A contact said that companies now have to plan well in advance to guarantee trucking capacity; finding it at short notice is either impossible or very expensive--the main issue is a shortage of drivers.\nManufacturing respondents had a positive outlook. In general, contacts were increasing capital expenditures, although only one reported a major increase in spending (to build a new plant in New Hampshire). Contacts said that it was too soon to determine the effect of the new tax code on capital spending.\nStaffing Services\nNew England staffing firms have seen mostly negative results over the last quarter of 2017 and the start of 2018, with the majority reporting revenue declines year-over-year. For most respondents, this reflects a low unemployment environment that has slowed hiring volumes and increased competition for the remaining labor supply. Some also remarked on the entry of new tech firms specializing in job posting sites, which has made it easier for companies to host job searches without using intermediaries. This has sparked experimentation as they look for ways to distinguish themselves through advertising, branding, improving online reviews, and increased attention to building relationships with potential talent. One respondent reported the temporary placement side of their business was the strongest, while most noted that few workers want temporary positions in the current labor market. All anticipate the continuation of a robust economy and expect to continue to work under the constraints of a tight labor market for the foreseeable future.\nCommercial Real Estate\nContacts offered mostly upbeat reports on commercial real estate activity in the First District. Office leasing activity remained robust in greater Providence, driving further increases in rents, although suburban office locations remained less sought-after. Rhode Island's industrial property market continued to experience strong demand. Boston posted an increase in office leasing activity, while leasing activity slowed across all sectors in Connecticut. Construction activity remained robust in Providence and Boston, but luxury multifamily construction continued to dominate in Boston where some contacts cited ongoing concerns about overbuilding in that submarket.\nRespondents across the First District voiced concerns that commercial property values could fall in response to rising yields on long-term Treasuries, and cited both upside and downside risks related to recent changes in federal tax laws and the recently signed federal budget. A Connecticut contact said business sentiment remained very weak, leading to a pessimistic outlook for commercial real estate activity. A Rhode Island contact expected slower economic growth in the second half of 2018; by contrast, Boston contacts forecasted stable or strengthening growth despite risks in some submarkets.\nResidential Real Estate\nResidential real estate markets in the First District showed declines in closed sales despite strong demand. Closed sales for single-family homes decreased in four out of the six reporting areas, while New Hampshire and Maine reported moderate increases. For condos, sales decreased in all reporting areas but Maine. (Three of the six states, as well as the Greater Boston area, reported data through December 2017; Maine, New Hampshire and Vermont reported results to January 2018.)\nMedian sales prices increased for both single-family homes and condos, except in Vermont. Low inventory continued to be a key constraint in the First District, with all areas except Greater Boston reporting substantial decreases in inventory.\nContacts expressed positive outlooks in terms of market activity, citing strong buyer demand and the prospect of rising mortgage rates as the reasons. A Boston contact noted \"Despite these drops in overall sales, activity has remained strong and we're seeing an eager buyer population.\"\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"

San Francisco

/beige-book-reports/2018/2018-03-sf

"Beige Book Report: San Francisco\nMarch 7, 2018\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-January through late February. Conditions in the labor market remained tight, and upward wage pressures increased. Overall price inflation increased moderately. Sales of retail goods picked up slightly, and growth in consumer and business services remained solid. Activity in the manufacturing sector continued to pick up, and conditions in the agriculture sector deteriorated modestly. Contacts reported that residential real estate market activity continued at a strong pace, and conditions in the commercial real estate sector were robust. Lending activity ticked up.\nEmployment and Wages\nConditions in the labor market remained tight, and upward wage pressures increased over the reporting period. Contacts noted labor shortages in various sectors, especially for high-skilled positions. Across the District, contacts reported difficulty finding workers experienced in information technology, accounting, and finance. To attract stronger job candidates, some contacts in Seattle and the Mountain West increased nonwage compensation, including vacation time and stock grants. A banking contact observed moderate wage growth for entry-level positions to increase retention. Contacts in the health insurance sector increased their use of offshore labor and automation in response to tight labor market conditions. Minimum wage laws continued to put upward pressure on labor costs generally. A utility provider in Southern California reported flat employment growth in the industry because of muted sales activity.\nPrices\nOverall price inflation increased moderately around the District. Continued strength in construction activity drove an increase in price growth for various building materials. A health-care provider in the Mountain West reported a jump in insurance premiums, partly due to a reduction in federal subsidies for low-income families. Decreased competition from abroad and solid domestic and international demand sustained elevated steel prices. Contacts in Idaho noted that animal health product businesses were able to pass on increased shipping costs to customers. Declines in input costs put downward pressure on electricity prices. Agricultural commodity prices decreased moderately due to excess supply.\nRetail Trade and Services\nSales of retail goods picked up slightly over the reporting period. Contacts in the Mountain West saw stronger-than-expected sales in furniture and home entertainment equipment. A contact in the food and beverage industry reported solid sales. While automotive sales remained elevated, growth over the reporting period was flat. Unseasonably warm weather throughout the District restrained winter clothing and equipment sales.\nActivity in the consumer and business services sector remained solid. A major health insurance provider in Utah reported an uptick in enrollment and ample capacity for further growth. Demand for health-care services increased slightly. Demand for business services in California's entertainment sector increased due to favorable state tax incentives. Restaurants continued to experience a decline in foot traffic.\nManufacturing\nActivity in the manufacturing sector continued to pick up. A contact in the Mountain West noted that strong demand for microchips boosted production and caused some longer wait times for deliveries. Capacity utilization in the steel sector grew at a solid pace, driven by reduced overseas competition. Contacts in Washington noted that new orders for commercial aircraft were steady. Profitability in the aerospace sector increased, partly due to a pickup in sales of military aircraft and systems.\nAgriculture and Resource-Related Industries\nOn balance, conditions in the agriculture sector deteriorated modestly. Low snow and rainfall over the reporting period limited new planting in Central California and resulted in weak crop yields. Contacts in Idaho noted that excess supply drove a decline in dairy sector profits to breakeven levels, with smaller producers being hit particularly hard. Grain inventories in the Mountain West were at record levels. Conditions in the swine industry continued to improve on a year-over-year basis. Increased global demand for beef products boosted feedlot utilization.\nReal Estate and Construction\nActivity in real estate markets continued at a strong pace. Construction activity in the residential market moderated slightly, limited by persistent labor shortages and increasing material costs. Contacts in Eastern Washington observed a notable decline in permits and starts for single-family and duplex dwellings. In Hawaii, housing development starts declined, and several projects were scaled back as prices for building materials increased. In Idaho, construction of residential properties grew at a fast pace. Throughout the District, low construction starts and resale volumes kept residential prices elevated over the reporting period. Contacts in Northern California reported rising home prices stemming from strengthening demand. Brisk demand from out-of-state buyers drove price increases in Oregon. Commercial real estate activity also continued at a strong pace. Large transportation infrastructure projects drove construction activity in Southern California. In Eastern Oregon, demand for warehouse and distribution sites was robust. Contacts in Washington noted an increase in the demand for warehouse space due to the expanding marijuana industry, which drove up industrial rents.\nFinancial Institutions\nLending activity ticked up over the reporting period. Loan demand was mixed but increased slightly overall. Contacts in Oregon noted that increased commercial real estate development drove growth in loan demand. In Central California, however, loan demand slowed modestly, leading to a slight loosening of lending standards. Across the District, interest margins widened slightly, though they remained narrow due in part to robust competition. In Eastern Washington, venture capital lending registered a slight pickup.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2018/2018-03-at

"March 7, 2018\nSummary of Economic Activity\nBusiness contacts indicated that economic activity in the Sixth District continued to expand, albeit modestly, from early January through mid-February. The near-term outlook among District contacts remains positive. On balance, the labor market remained tight and wage pressures were mild. Contacts indicated that non-labor input costs picked up slightly. Retailers cited steady sales since the previous report; however, automobile dealers indicated sales were soft. Tourism activity was robust across most of the District. Residential real estate builders and brokers indicated that home sales and inventory levels were flat to slightly down compared with a year ago. Home prices continued to increase modestly. Demand for commercial real estate continued to improve and commercial construction activity was flat or increased slightly. Manufacturers noted solid activity.\nEmployment and Wages\nDistrict contacts continued to report challenges filling certain positions, particularly in information technology, nursing, some skilled crafts, long-haul transportation, manufacturing, accounting, and low-skill/entry-level positions in many industries. Many employers noted that they continued to broaden their geographical area search for candidates, often pursuing workers from rural areas or from abroad. Firms also resorted to workforce training and education services to increase the pipeline of qualified workers. Additionally, employers further adopted strategies to improve worker satisfaction as an important tool to help attract and retain workers.\nBroadly, contacts noted steady but modest wage growth; however, an increasing number of contacts reported either recently increasing wages or plans to do so in the coming months. This narrative was apparent among firms in the transportation, retail, finance, construction, and professional and business services sectors.\nPrices\nBusinesses across the District reported a slight uptick in non-labor input costs and some contacts indicated an ability to pass along price increases. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.8 percent in February. Looking ahead, survey respondents indicated that they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nOn balance, District retailers reported steady sales levels since the last report. Recreation retailers noted an increase in sales levels during the first few weeks of the year, while automotive dealers reported a slow start to 2018. The outlook among most retail contacts remains positive.\nTravel and tourism contacts across the District noted a strong start to 2018 with growth in business and leisure travel since the last report. Hotel demand was higher than expected in the fourth quarter of 2017; a trend that has carried over into the first quarter of 2018. Contacts in Georgia and Florida cited an uptick in the number of visitors and spending over the first six weeks of the year. The outlook remains positive with healthy advanced bookings across the District through the first quarter of this year.\nConstruction and Real Estate\nReports from District residential real estate contacts signaled continued modest growth. Builder reports on construction activity in January compared to one year earlier were mixed. Builders and brokers indicated that home sales activity was flat to slightly down from the year-ago level. Many brokers reported buyer traffic was flat to down slightly, while builder reports were mixed. Most builders and brokers said inventory levels were down from one year ago. Builders and brokers noted that home prices increased in January. Looking ahead, brokers and builders expect home sales activity over the next three months will hold steady or increase slightly relative to the year-ago level. Many builders expect the pace of construction activity over the next three months to remain unchanged or to increase slightly.\nMany District commercial real estate contacts reported improvements in demand that resulted in rent growth, particularly in industrial and warehouse/distribution properties. However, contacts continued to caution that the rate of improvement varies by metropolitan area, submarket, and property type. The majority of commercial contractors indicated that the pace of nonresidential construction activity was flat to slightly up relative to one year ago. Most contacts indicated that they have a healthy pipeline of activity, with the majority indicating backlogs greater than or similar to the previous year's level. The majority of reports noted that the pace of multifamily construction matched the year-ago level. The outlook among commercial contacts for nonresidential and multifamily construction remained positive, with the majority anticipating activity to match or exceed the current level.\nManufacturing\nDistrict manufacturers reported solid overall business activity since the last reporting period. Although most contacts indicated that production levels were holding steady, demand for their products continued to be relatively strong. Firms said that employment levels were flat to slightly up, and most contacts reported that they had open positions they were finding difficult to fill. Firms reported that input costs continued to rise, specifically steel, brass, and copper. In general, contacts are optimistic about future demand, suggesting that they expect sales levels to be up over the short to medium term.\nTransportation\nDistrict transportation firms cited mixed results since the previous report. Ports continued to see year-over-year increases in container volumes and cargo tonnage. Year-to-date total rail traffic was down by double digits compared with year-ago levels, impacted mostly by decreased shipments of grain, non-metallic minerals, iron and steel scrap, and metallic ores. Intermodal traffic was also down. Trucking firms reported some pricing power amid strong demand and tight capacity.\nBanking and Finance\nDistrict bankers indicated that credit remained readily available for most qualified borrowers except for some contacts in energy and commercial real estate industries. Banking contacts noted healthy loan pipelines and community banks, in particular, reported good loan demand. Some banks indicated more deposit pressure as short-term interest rates increased.\nEnergy\nPlanning and build out of natural gas and crude oil pipelines continued along the Gulf Coast. Contacts indicated that increased spending on pipeline infrastructure and other oil and gas projects intensified labor constraints in an already tight environment for certain skilled crafts. Freezing conditions across the Gulf Coast led a number of refineries to temporarily reduce or cease operations. Some refineries experienced power outages and other technical issues, however contacts indicated that the impact to product supplies was not significant. Persistent and unusual freezing temperatures across the region also caused power consumption to surge, which led to a brief spike in natural gas and heating oil pricing.\nAgriculture\nAgriculture conditions across the District were mixed. Drought conditions persisted in much of the District. However, rain in February brought some relief. The January forecast for Florida's orange crops was down further from the previous report as the effects of the Hurricane Irma continued to be felt. On a year-over-year basis, prices paid to farmers in December were up for cotton rice, beef, broilers, and eggs and down for corn and soybeans.\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"

National Summary

/beige-book-reports/2018/2018-03-su

"Beige Book: National Summary\nMarch 7, 2018\nThis report was prepared at the Federal Reserve Bank of San Francisco based on information collected on or before February 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\nEconomic activity expanded at a modest to moderate pace across the 12 Federal Reserve Districts in January and February. Consumer spending was mixed, as non-auto retail sales increased in just over half of the Districts while auto sales declined or were flat in every District. Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector. On balance, Districts reported modest growth in home sales and construction, with the latter constrained by shortages of labor and materials. Conditions in the nonresidential real estate market improved moderately since the previous report, with robust construction activity noted in three Districts. Commercial rents in and around New York City were up significantly, according to contacts in the area. Increases in production were broad based across manufacturing sectors, with all but one District noting at least modest growth in activity. Loan volumes were generally flat, with a handful of Districts noting a modest decrease in delinquency rates. Among reporting Districts, agricultural sector activity was mixed but flat overall. Contacts in natural resource sectors saw modestly improving industry conditions, except in the Minneapolis District, where energy and mining activity was robust.\nEmployment and Wages\nOn balance, employment grew at a moderate pace since the previous report. Across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services. Several Districts reported continued worker shortages across most sectors, with contacts often mentioning shortages in the construction, information technology, and manufacturing sectors. In many Districts, wage growth picked up to a moderate pace. Most Districts saw employers raise wages and expand benefit packages in response to tight labor market conditions. Contacts in a few Districts conveyed reports of modest increases in compensation following passage of the Tax Cuts and Jobs Act.\nPrices\nPrices increased in all Districts, and most reports noted moderate inflation. Four Districts saw a marked increase in steel prices, due in part to a decline in foreign competition. Price growth for building materials such as lumber picked up, stemming from an uptick in construction activity. Several Districts reported moderate increases in broad transportation costs, caused primarily by higher fuel costs that boosted freight rates. Home and commercial lease prices rose across most of the country.\nHighlights by Federal Reserve District\nBoston\nBusiness contacts at manufacturing and retail firms reported year-over-year revenue increases in recent weeks. These employers and staffing firms said labor markets were tight, and many cited potential wage increases. Price commentary was mixed, although no contacts planned substantial price increases. The outlook remained positive.\nNew York\nEconomic activity grew at a modest pace, while labor markets have remained tight. Input price pressures have intensified, while selling prices generally continued to rise modestly. Housing markets and commercial real estate markets have been mixed.\nPhiladelphia\nEconomic activity continued to grow at a modest pace, in particular for nonauto retail sales, manufacturing, nonfinancial services, and tourism. Nonresidential leasing improved to a modest pace, while auto sales continued a modest decline. Construction and existing home sales changed little. On balance, employment, wages, and prices continued to grow modestly.\nCleveland\nThe District economy expanded at a moderate pace. Labor markets tightened, with wage pressures noted broadly. The Tax Cut and Jobs Act is reportedly enabling firms to invest more and to increase worker pay. Stronger confidence in the economy supported rising demand in manufacturing, retail, and nonfinancial services. Construction activity remained buoyant.\nRichmond\nThe regional economy expanded at moderate pace in recent weeks. Manufacturing activity picked up, but manufacturers faced longer vendor lead times due to trucking delays. Exporting activity rose more quickly and, for some ports, came more in line with imports. Labor demand increased moderately and wage pressures broadened. Prices continued to grow at a modest pace.\nAtlanta\nEconomic conditions continued to improve modestly. The labor market remained tight and wage growth was balanced. Non-labor input costs edged up slightly. Retailers cited flat sales, while auto sales were sluggish. Home prices increased modestly. Demand for commercial real estate continued to improve. Manufacturers noted solid activity and steady production levels.\nChicago\nGrowth in economic activity remained at a moderate pace. Employment and manufacturing production increased moderately, business spending rose modestly, construction and real estate activity grew slightly, and consumer spending was down slightly. Wages increased modestly, prices rose slightly, and financial conditions deteriorated some. Farmers continued to face challenging conditions.\nSt. Louis\nEconomic conditions have continued to improve at a modest pace. District banking contacts reported stronger demand for new loans. Overall price pressures strengthened. The outlook among firms surveyed in mid-February was slightly more optimistic than the outlook in our mid-November survey and generally unchanged from one year ago.\nMinneapolis\nNinth District economic activity grew moderately, and labor markets remained tight. Consumer spending was up modestly, while tourism got a boost from the Super Bowl in Minneapolis and good snowfall elsewhere. Energy and mining activity increased briskly. Commercial construction grew strongly, but residential construction was mixed. Home sales were generally lower across the District.\nKansas City\nEconomic activity continued to expand at a modest pace in late January and February, with broad-based growth across most District sectors. Consumer spending, real estate and energy activity increased modestly, while contacts in the manufacturing, transportation, wholesale trade, and professional and high-tech sectors reported moderate growth. Additional gains were expected in most sectors in the months ahead.\nDallas\nEconomic activity grew moderately, with sectors like manufacturing and energy continuing their solid expansions while others cooled somewhat. Growth in nonfinancial services activity slowed slightly, as did loan growth, and retail sales fell modestly. Hiring remained solid despite a tight labor market, and wage and price pressures remained elevated and in some cases strengthened.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods picked up slightly, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector continued to pick up. Activity in residential real estate markets remained strong, and conditions in the commercial real estate sector were robust. Lending activity ticked up.\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/2018/2018-03-kc

"Beige Book Report: Kansas City\nMarch 7, 2018\nSummary of Economic Activity\nEconomic activity in the Tenth District continued to increase at a modest pace in late January and February, and a faster pace of expansion was expected in the months ahead. Consumer spending picked up modestly, as growth in the retail and tourism sectors more than offset a decline in restaurant and auto sales. Manufacturing contacts reported moderate growth including an increase in production, shipments, new orders, order backlogs, and capital spending plans. Sales rose moderately at transportation, wholesale trade, and professional and high-tech firms, and further gains were anticipated in the months ahead. District real estate conditions expanded modestly as activity in both the residential and commercial sectors increased. Banking contacts reported steady loan demand, unchanged loan quality and credit conditions, and steady-to-decreasing deposits. Energy activity continued to grow a modest pace as production increased and the number of drilling rigs edged higher. Agricultural conditions across the District remained weak, and farm income fell further. Employment and employee hours rose modestly compared to the previous survey period. Wages increased slightly in most sectors, and contacts expected stronger wage growth in the months ahead. Input and selling prices rose moderately, with stronger price gains in the retail sector.\nEmployment and Wages\nDistrict employment and employee hours rose modestly in late January and February, and contacts expected further gains in the months ahead. Respondents in the retail trade, transportation, professional services, real estate, restaurant, tourism, and manufacturing sectors reported employment growth, while contacts in auto sales, wholesale trade, and health services noted a slight decline. However, employment exceeded year-ago levels in all sectors. Employee hours increased in most sectors, but declined modestly in the restaurant sector. Labor shortages were reported in the services sector including commercial drivers, skilled technicians, and salespeople.\nWages picked up slightly in most sectors, and contacts anticipated moderate wage growth in the coming months.\nPrices\nOverall, input and selling prices increased moderately compared to the prior survey period, and additional moderate gains were expected in the months ahead. Retail contacts reported strong growth in input and selling prices and anticipated moderate increases moving forward. In the restaurant sector, input prices continued to rise slightly, while selling prices edged up after falling in the previous survey. Transportation contacts noted moderately higher input and selling prices and expected continued moderate growth in the coming months. Construction prices rose moderately in late January and February after declining in the prior survey period. Prices for finished goods increased slightly and raw material costs rose moderately in the manufacturing industry. Manufacturers expected moderate price gains for both finished goods and raw materials in the next few months.\nConsumer Spending\nConsumer spending activity picked up modestly in late January and February and was expected to increase further in the coming months. Retail sales increased at a moderate pace compared to the previous survey period and remained well above year-ago levels. Several retailers noted an increase in sales for lower-priced items, while higher-priced products sold poorly. Contacts anticipated retail sales to continue to rise in the next few months, and inventory levels were expected to increase moderately. Auto sales fell modestly but were slightly above year-ago levels. Dealer contacts anticipated a moderate pickup in sales in the months ahead, and auto inventories were expected to increase heading forward. Restaurant sales declined moderately but were well above year-ago levels. Contacts expected a strong pickup in restaurant activity in the months ahead. District tourism activity increased moderately since the previous survey and was similar to year-ago levels. Tourism contacts expected a strong increase in activity heading forward.\nManufacturing and Other Business Activity\nManufacturing and other business activity expanded at a moderate pace in late January and February. Manufacturers reported sustained growth in production, particularly for metals, machinery, and plastics products. Shipments, new orders, and order backlogs grew at a modest pace, and activity was higher than a year ago. Manufacturers' capital spending plans rose moderately, and firms' expectations for future activity remained strong.\nOutside of manufacturing, transportation, wholesale trade, and professional and high-tech firms reported moderate growth in sales. Heading forward, transportation and wholesale trade firms expected strong sales growth, while professional and high-tech firms anticipated a moderate sales increase in the next six months. All types of firms reported moderate growth in capital spending plans.\nReal Estate and Construction\nDistrict real estate activity increased at a modest pace in late January and February, and additional gains were expected moving into the spring months. Residential home sales and home prices rose moderately compared to the previous survey period, and inventories declined at a moderate pace. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential sales and home prices were anticipated to rise, while inventories were expected to fall further in the months ahead. Residential construction activity expanded slightly as home starts and traffic of potential buyers rose, while construction supply sales were flat. Commercial real estate activity increased modestly as absorption, completions, construction underway, and sales increased, while vacancy rates declined. Activity in the commercial real estate sector was expected to expand at a modest pace moving forward.\nBanking\nBankers reported steady overall loan demand in late January and February. A majority of respondents indicated stable demand for commercial and industrial, residential real estate, and consumer installment loans. Demand for commercial real estate loans increased modestly, while contacts reported mixed demand for agricultural loans. Most bankers indicated loan quality was unchanged compared to a year ago and expected loan quality to remain stable over the next six months. Credit standards remained largely unchanged in all major loan categories. Bankers reported steady-to-decreasing deposits.\nEnergy\nEnergy activity continued to grow at a modest pace over the last six weeks. The outlook remained positive and somewhat cautious given the recent slight decline in commodity prices. The number of active oil and gas rigs continued to edge higher, primarily in New Mexico and Wyoming. Oil and gas production also picked up in Colorado's Niobrara basin, and growth was expected to be driven by operators completing their drilled-but-uncompleted (DUC) wells since the number of drilling rigs in the region remained relatively flat. In Oklahoma, natural gas activity continued to increase with the start of construction of a natural gas gathering system in the southeastern part of the state.\nAgriculture\nThe Tenth District farm economy remained weak, but farm real estate values slowed their decline from the previous months, providing some stability for farm finances. Farm income continued to decrease. Agricultural credit conditions weakened further against year-ago levels, but at a more modest pace than in previous reporting periods. Although prices for most agricultural commodities increased slightly in February, prices for corn, soybeans and hogs were still lower than a year ago. Alongside an increase in cattle, wheat and cotton prices, farmland values declined only slightly and stabilized significantly in the western portion of the District. Conditions in the farm economy in Oklahoma also improved notably due to an increase in cotton acreage and a moderate increase in cotton revenues.\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

/beige-book-reports/2018/2018-03-ph

"March 7, 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. Nonauto retail sales, tourist activity, manufacturing, nonfinancial services, and nonresidential leasing markets grew modestly, while little change was noted by contacts from new home construction, existing home sales, and nonresidential construction. Auto sales continued to decline modestly. On balance, employment, wages, and prices continued to grow modestly. The percentage of firms anticipating continued growth over the next six months remained essentially the same; however, the percentage fell somewhat among manufacturers and rose among nonmanufacturers. Several contacts observed that sentiment appears to be running a bit hotter than tangible signs of production and investment.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period. Manufacturing and nonmanufacturing firms reported ongoing net additions to staff, while average hours worked edged higher over the period for manufacturing firms but fell among nonmanufacturers.\nOn balance, wage growth held steady at a modest pace; the share of nonmanufacturing firms reporting increases held steady at about one-third. Most banking contacts noted the apparent disconnect between frequent talk of labor shortages and the lack of evidence that wages are rising significantly in response.\nStaffing firms reported being busy in many of the District's labor markets; wage pressures varied a bit more. In two markets, wage rates were up about 3 percent, while firms pushed back against 3 percent hikes in another market with mostly manufacturing clients. Staffing contacts also noted healthy receivables and an absence of any other signs of financial deterioration from clients.\nPrices\nOn balance, prices modestly, although greater price pressures began to emerge among manufacturers. Most contacts continued to report no change in prices paid and received. However, the percentage of manufacturing firms reporting increases rose significantly for prices paid and for prices received for their own goods. Among nonmanufacturing firms, contacts reported little change for prices paid and received.\nBuilders continued to note rising prices for construction materials as well as labor, but no acceleration. Existing home prices also continued to rise, as sellers have failed to emerge in sufficient quantity to provide inventories that meet the demand in most markets.\nLooking ahead one year, manufacturing firms now anticipate receiving significantly higher prices for their own goods and services than they expected one quarter earlier. However, nonmanufacturing firms have lowered their expectations slightly. Overall, firms also reported somewhat higher expectations for annual consumer inflation.\nManufacturing\nOn balance, manufacturing activity continued at a modest pace of growth, with little change in shipments and in general activity, although orders dipped somewhat.\nThe makers of chemicals, primary metal products, industrial machinery, and electronic equipment continued to note gains in new orders and shipments; firms in the lumber, paper, and fabricated metal sectors reported more mixed results with some declines in activity.\nMost manufacturing contacts continued to expect general activity to increase over the next six months; however, the percentage of firms expecting future increases did retreat below 60 percent. By comparison, the percentage of firms expecting increases in future capital expenditures and future employment held mostly steady at levels just above 40 percent.\nConsumer Spending\nOn balance, nonauto retail sales continued to grow modestly. While the weather this year was generally more inviting for shoppers than last year, one contact noted that a snowstorm in January hurt sales when it occurred and then again in February because several school districts chose to make up that time on Presidents' Day, thereby affecting the critical holiday sale.\nAuto dealers continued to report modest declines in year-over-year sales this period. Although sales remain at high levels, dealers noted lower profitability and worries about the future.\nTourism contacts continued to report modest growth overall. A Philadelphia contact noted that hotels benefited from several large conventions, Eagles' home playoff games, and the Super Bowl itself, which drew local fans for downtown hotel stays in anticipation of the evening celebration. A Delaware contact reported strong growth from an inland hotel and heavy traffic, packed outlets, and busy recreation venues at the shore, although shore hotels did not benefit. Also, Atlantic City's casino revenues returned to negative year-over-year comparisons.\nNonfinancial Services\nOn balance, service-sector firms have continued to report modest growth in general activity since the prior Beige Book period. The percentage of firms reporting an increase in sales and the percentage of firms reporting greater orders were essentially unchanged. However, expectations about future growth were more widespread, with nearly two-thirds of the firms anticipating increased activity.\nFinancial Services\nFinancial firms reported little change in overall loan volumes (excluding credit cards) after experiencing modest growth in the prior Beige Book period. Volumes did grow moderately in mortgages, commercial real estate loans, and commercial and industrial (C&I) lending. Home equity lines fell moderately, and auto loans dropped slightly, while growth of other consumer loans was strong.\nCredit card lending fell substantially as consumers paid down holiday bills; however, the seasonal decline this year matched the decline in the comparable prior-year period. Also, over the entire year, credit card loan volumes and total lending in all the other categories combined have grown at a moderate pace.\nBanking contacts continued to describe solid ongoing economic growth in most parts of the District. Although they described the confidence of consumers and businesses as running high, many noted that the sentiment appears greater than the tangible evidence of new consumption and investment. Overall, contacts noted that credit standards remain unchanged, credit quality remains very sound, and credit conditions were not expected to shift through the current year.\nReal Estate and Construction\nHomebuilders reported little overall change in activity. Sales traffic was weak as the year began and was only just beginning to pick up as February drew to a close. Contacts mentioned several possible factors, including higher interest rates and weekend distractions from the Eagles' playoff run.\nBrokers in Third District housing markets reported mixed results for existing homes sales, with slight increases in the Lehigh Valley and the Greater Philadelphia area, but a modest decrease at the Jersey Shore. Increasingly lower inventories of houses continue to constrain sales and place upward pressure on house prices.\nNonresidential real estate contacts reported little change in the high levels of overall construction, although activity may begin to wane a bit at year-end unless new projects are forthcoming. Industrial/warehouse space continues to be the most robust sector throughout much of the District. Contacts have expressed more caution about multifamily housing and office space projects, which have tempered their pace. Neither real estate nor banking contacts have expressed concern about overbuilding of commercial real estate. Leasing activity has picked up a bit to a modest pace, mostly due to a growing cohort of leases that are up for renewal.\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

/beige-book-reports/2018/2018-03-cl

"March 7, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District expanded at a moderate pace since our last report. Labor demand remains strong, but worker shortages are limiting firms' ability to hire. Competition for qualified workers has led employers to raise wages. Some firms reported that the Tax Cut and Jobs Act is enabling them to increase investment and raise worker pay. Upward pressure on input costs continued at the same pace as that seen during the past few reporting cycles. Firms generally were able to increase their selling prices. Retailers reported a continued boost in sales going into the first quarter, and they attributed this boost to stronger consumer confidence. Housing and commercial real estate markets remained buoyant. Manufacturing output trended higher.\nEmployment and Wages\nLabor markets in the Fourth District tightened during the survey period as demand for talent exceeded the available supply. Hiring was strongest in manufacturing and construction. Retailers pared their workforces, citing the end of the holiday shopping season and a need to gain efficiencies. Transportation firms trimmed payrolls because of lower seasonal demand and driver shortages that prompted efforts to boost efficiency. Across industries, the majority of firms reported replacing staff or making seasonal adjustments, though a sizeable share said they had created positions. Overall, the market for talent remains challenging. Turnover and an aging workforce were commonly cited as key challenges. Retirements are limiting the potential pool of workers. One construction contact noted that he is expecting significant labor shortages this year. A steel producer observed that every time his firm gets close to having a full staff, someone quits. The tough competition for workers led employers to raise wages during the survey period, especially for lower-wage jobs. Contacts speculated that savings resulting from the Tax Cuts and Jobs Act (TCJA) will, in part, support pay increases over the short to medium terms. A few bankers expect to raise minimum pay to $15 per hour within the next year or two. However, few contacts expect the tax cuts to lead to more robust hiring. Rather, firms expect to maintain their recent hiring pace over the short term.\nPrices\nNon-labor input costs rose for a majority of contacts, at a pace similar to that of the previous survey period. A combination of stronger demand, supply constraints, and higher materials prices elevated non-labor costs, especially in the construction, manufacturing, and transportation industries. Steel producers reported raising selling prices because of a decline in market share for foreign steel and expectations about potential outcomes of pending trade cases. Manufacturers further down the supply chain reported sizeable increases in the price of steel that they purchased. Firms' ability to pass through price increases to their customers was little changed from the previous survey period, though there was considerable variation across industries. Transportation companies across the board were able to raise freight rates in response to higher fuel costs and capacity constraints. Similarly, construction firms were able to pass along their higher input costs without much pushback. Retailers, however, cited competition as a reason for their holding or lowering their selling prices.\nConsumer Spending\nRetailers reported improving sales during the survey period. Some retailers indicated that in early 2018 they were still benefiting from the holiday season. Others reported that rising consumer confidence could help explain stronger customer demand that began in November 2017. Most retailers were optimistic that sales would continue to increase during the remainder of the current quarter and into the next. Auto dealers experienced more challenges than their general retail counterparts at the beginning of the year. Unit sales of new motor vehicles declined about 7 percent in January compared to those of a year ago. Contacts indicated that this was due in part to poor weather conditions and higher interest rates. One dealer reported that new motor vehicle sales were beginning to slow after five to seven years of growth, increasing dealer inventories, especially for new cars. Pressure from OEMs to buy excess products also contributed to higher than normal inventory levels.\nManufacturing\nDemand for manufactured goods increased during the survey period and on a year-over-year basis for many of our contacts. Strong customer confidence and seasonal demand changes for industrial products contributed to new manufacturing orders. One producer of residential HVAC systems reported a large increase in output during January compared with that of a year ago thanks to stronger consumer confidence and rising liquidity. Manufacturers of material handling and construction equipment were optimistic in their outlook. Rising commodity prices are encouraging demand for products from extractive and metal recycling equipment producers. Fabricated metals producers cited particularly strong growth because of decreased competition from imports. Imports have reportedly fallen because of stronger global demand and concerns about potential outcomes of pending trade cases. Most contacts in the fabricated metals industry reported that the TCJA and business-friendly policies are encouraging capital expansions and increased investment. They expect strong demand growth to continue with increased infrastructure spending. Contacts in the plastics industry relayed a mixed picture, with some contacts reporting slowing demand along seasonal trends and oversupply within the industry.\nReal Estate and Construction\nFor most homebuilders, demand was stable or had improved since December and on a year-over-year basis. One contact reported that an improving labor market was boosting demand. Almost all homebuilders increased their base prices during the survey period as demand rose and as materials and labor costs increased. Some contacts specifically cited the Canadian lumber tax as a source of increased materials costs. The average sales price of new and existing single family homes increased 5 percent during January compared to those of a year ago. Homebuilders continued to raise wages to decrease turnover rates and to attract the best talent. Some homebuilders struggled to fill positions for framers, bricklayers, and drywall hangers.\nNonresidential builders saw a boost in inquiries at the beginning of 2018. Rising demand was attributed to improving economic conditions and higher customer confidence. Builders increased their billing rates because of rising demand and materials costs, both of which are expected to trend higher into the next quarter. Contacts reported that some lenders remain cautious when considering project financing, especially for multifamily developments.\nFinancial Services\nDemand increased for C&I loans and for commercial real estate lending during the survey period. Bankers speculated that they are beginning to see an impact from the TCJA, saying that at the beginning of the first quarter, credit demand grew significantly because of pent-up demand for capital and real estate. Business lending was stronger on a year-over-year basis, with contacts citing greater customer confidence, improving market conditions, and expanding footprints. On the consumer side, credit card usage was seasonally lower following the holiday boom, while direct and indirect auto lending increased. One banker noted that consumers have built up home equity and that drawdowns on HELOCs are expected to increase as the spring home improvement season begins. Delinquency rates were stable. One contact said that current lending standards are working efficiently and that delinquency rates are quite low.\nNonfinancial Services\nActivity in the nonfinancial services sector grew at a moderate-to-strong pace. Rising freight volumes across product segments were attributed primarily to solid economic growth. Freight haulers were concerned about capacity constraints caused by labor shortages. This situation is forcing freight customers to transition from truck to rail carriers. Within the professional services sector, contacts from engineering, software development, and accounting firms reported the strongest demand growth, which they said was due to passage of the TCJA and confidence in the overall 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/2018/2018-03-mi

"March 7, 2018\nSummary of Economic Activity\nThe Ninth District economy grew moderately overall since the last report, with employment, wages, and prices all seeing moderate growth. The District economy showed growth in consumer spending, tourism, commercial construction, manufacturing, real estate, energy, and mining. However, residential construction slowed, and agriculture remained weak.\nEmployment and Wages\nEmployment grew moderately since the last report, as hiring demand appeared robust, but tight labor restrained stronger hiring. An ad hoc survey of Minnesota staffing firms found that hours booked in the first six weeks of 2018 rose for most firms over the same period a year ago. Rural hiring sentiment increased notably over the previous month in Minnesota and the Dakotas, according to a February poll of rural bankers and other firms. Online job openings in January increased slightly in North Dakota over a year earlier; only the third increase in the past 18 months, but the second increase in the past four months. Tight labor markets, however, were limiting hiring. The number of job seekers registered with state workforce offices in January was 11 percent lower in North Dakota and 29 percent lower in Montana compared with a year earlier. Initial unemployment claims in the District over the first five weeks of 2018 fell almost 7 percent compared with a year earlier, though Minnesota's decline was less than 2 percent. Continuing claims fell by 8 percent. A Montana contact said that \"many fear a better economy will exacerbate labor problems.\" There were several notable layoff events, including one at a Minnesota manufacturer that cut 900 workers. But sources suggested that job opportunities were available for those affected.\nWage pressures were moderate since the last report. A number of one-time bonuses were reported, stemming from recent changes in federal tax policy. Several contacts, including a Montana banker, also said raises were more likely because tax reform \"provides a way to pay for increased wages\" without increasing prices or reducing profits. A Minnesota construction contractor said wages \"are going up because we are seeing an increase in productivity.\" A Montana ski resort contact said that tax savings would allow the company to raise wages, and a Montana construction contact believed tax changes would provide a sizable, single-step increase in wages. However, a number of public union contracts--covering South Dakota county employees, Minnesota and Wisconsin state employees, and higher education service workers in Minnesota--all settled for increases of 2 percent or less.\nPrices\nPrice pressures were moderate since the last report. About three-quarters of respondents to a January survey of firms from around the District reported that they expected the prices they charge for their products or services to increase only slightly or not at all in the next three months. Retail fuel prices in District states as of late February were slightly higher than in the previous reporting period. Building materials prices continued to increase faster than overall prices. Prices received by farmers for wheat, hay, hogs, cattle, chickens, and eggs increased in December compared with a year earlier; prices for corn, soybeans, milk, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending grew modestly since the last report. Closures of big-box and other franchised retail stores continued across the District. A large salon franchise headquartered in Minnesota announced the closure of 600 locations across the country. However, consumer spending has continued to grow. North Dakota sales tax revenue in January rose by 14 percent over a year earlier. Gross retail sales in South Dakota over the same period grew by 2 percent, though overall gross sales were much stronger, at 9 percent growth. Gross retail sales in Wisconsin were slightly higher since the last report.\nTourism saw moderate growth, boosted by activity from the Super Bowl, hosted in Minneapolis in early February. Retailers, especially those in or near downtown, reported strong revenue, and hotels saw outsized gains for the period. Elsewhere, Montana snow conditions were good, and a resort said the number of skiers so far this season was ahead of last year's record pace. A source in the Upper Peninsula of Michigan said that \"things have been going well\" for winter tourism so far, and February snow conditions in northern Wisconsin were reportedly excellent for snowmobiling, downhill skiing, and cross-country skiing.\nConstruction and Real Estate\nCommercial construction saw strong growth since the last report. An industry report on January construction spending showed robust growth in District states compared with a year earlier, and every District state registered at least a small increase. Another industry database showed strong growth in new projects and total active projects over the first seven weeks of 2018 compared with the same period a year earlier. Commercial permitting activity was higher in many of the District's largest cities and particularly so in Sioux Falls and Rapid City, S.D. Residential construction was mixed; permit values were down in Minneapolis-St. Paul and Sioux Falls, but up in Billings, Mont., Rochester, Minn., and Rapid City. Total multifamily units permitted in January were lower than a year earlier.\nCommercial real estate grew moderately, remaining at strong levels in Minneapolis-St. Paul. Occupied retail space continued to expand, with vacancy rates hitting their low for the year in the fourth quarter, due in part to the Super Bowl. Multifamily construction, unit sales, and rent increases continued at a healthy pace in Minneapolis-St. Paul, and an industry source said the market \"defies gravity.\" Construction of new industrial space also has been strong while vacancy rates remained stable. The office market was somewhat softer due to a trend in smaller corporate footprints, but overall vacancy has been mostly unchanged. Residential real estate fell moderately. January home sales were lower across most of the District, with the notable exception of northern Wisconsin, where an 18-county rural region posted a 6 percent increase in sales, continuing a persistent growth trend there.\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. A major fertilizer plant began operations in North Dakota. A solar-panel producer announced an expansion at a facility in Minnesota. An appliance manufacturer announced that it will close a plant in Minnesota.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. Respondents to the Minneapolis Fed's 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. Most of the Dakotas and portions of Montana were experiencing below average snowfall over the winter, with concerns that drought conditions could persist into the spring planting season.\nEnergy and mining activity increased briskly from the previous report. Oil and gas drilling in North Dakota and Montana as of mid-February increased from a month earlier, though cold weather slowed recent oil production. Contacts at nonferrous mines had a positive outlook, driven by increases in prices of gold, copper, and molybdenum. Development continued at a new copper mine in Michigan's Upper Peninsula. Iron ore mines in northern Minnesota were operating at high capacity. Output from Wisconsin sand mines increased in recent months, due to greater demand from hydraulic fracturing.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2018/2018-03-ny

"Beige Book Report: New York\nMarch 7, 2018\nSummary of Economic Activity\nEconomic activity in the Second District grew at a modest pace in the latest reporting period, while the labor market has remained tight. Input price pressures intensified, while selling prices continued to rise modestly. Growth in the manufacturing and distribution industries slowed to a moderate pace, and activity declined in some service industries. Consumer spending has weakened somewhat, though this was partially attributed to unseasonably harsh weather across much of the District. Housing markets have been mixed, with the sales market a bit firmer but the rental market steady to softer, especially at the high end. Commercial real estate markets were also mixed, with strength in the industrial segment but some slackening in the office and retail markets. Industrial construction activity remained robust, while office construction remained sluggish and multi-family construction was mixed. Finally, banks reported slightly weaker loan demand from the household sector, and steady to lower delinquency rates.\nEmployment and Wages\nThe labor market has remained tight, while hiring activity has been steady. One employment agency in upstate New York noted that hiring was sluggish in January but picked up in February. A major New York City agency indicated that labor demand has remained brisk, while qualified candidates have been in increasingly short supply--particularly for jobs requiring technical skills. One contact noted that drug testing and background checks have disqualified many job applicants.\nBusiness contacts in most industries indicated that they are expanding staff modestly, with the exception of retailers, who indicated that they have reduced staff slightly. Hiring plans for the months ahead have remained fairly strong.\nBusinesses in the service sector reported further acceleration in wages, and a sizable proportion of firms across most industries indicated plans to raise wages in the months ahead. A New York City agency reports that most new hiring involves recruiting candidates who are already employed, and that this has made businesses increasingly negotiable on wages. A number of contacts in industries such as health care, retail, and restaurants noted they have been squeezed by wage pressures, including the recent hike in New York State's minimum wage rates. Some businesses have refrained from raising wages that are already above the new minimum.\nPrices\nInput prices have accelerated sharply, according to contacts in most industry sectors, and a sizable number of businesses foresee further hikes in the months ahead. However, businesses generally report that they have raised their selling prices only modestly. Looking ahead, a growing proportion of businesses in retail and wholesale trade said that they planned to hike prices in the coming months.\nConsumer Spending\nRetail contacts reported that sales have weakened in early 2018, falling short of 2017 levels. Retailers in upstate New York indicated that customer traffic has been fairly robust in recent weeks, despite unusually cold and snowy weather, but that sales were down from a year earlier. The trend toward online shopping has continued to adversely affect many brick and mortar stores--particularly small businesses--though jewelry stores, nail salons, and other service providers have been less affected. Inventories were generally reported to be at satisfactory levels, and retailers were moderately optimistic about the near-term outlook.\nNew vehicle sales in upstate New York were reported to be steady to softer since the last report, while sales of used cars were mixed. Vehicle inventories were said to be in fairly good shape. Dealers continued to characterize retail and wholesale credit conditions as favorable.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) edged down but remained at a very high level in January.\nManufacturing and Distribution\nManufacturers and wholesalers reported that growth slowed to a moderate pace, while transportation firms indicated that activity leveled off following robust growth in late 2017. Looking ahead, manufacturers expressed increasingly widespread optimism about the near-term outlook and noted that they were planning on boosting capital spending. Contacts in wholesale distribution and transportation were moderately optimistic.\nServices\nReports from service-sector firms were mixed. Businesses in the information and leisure & hospitality industries reported that activity has declined, though part of this--at least for the latter--may be weather-related. Contacts in professional & business services and education & health again reported modest growth in activity.\nStill, service sector businesses were generally optimistic about the near-term outlook, except in leisure & hospitality, where optimism was more subdued.\nBroadway theaters reported that business was brisk in January, with attendance up more than 10 percent from a year earlier and revenues up more than 20 percent. However, both tapered off noticeably in February but were still up moderately from a year ago.\nReal Estate and Construction\nHousing markets across the District have been mixed, with the sales market picking up slightly but the rental market steady to softer. Real estate contacts in upstate New York reported that sales activity slowed in January, partly reflecting unseasonably harsh weather, though buyer traffic and listings picked up in February. In northern New Jersey, prices have been essentially flat, while sales volume declined slightly from a year ago. However, in Long Island, the Mid-Hudson Valley, and southwestern Connecticut, home sales have been fairly brisk, and prices have risen 3-5 percent.\nNew York City's co-op and condo market has also seen fairly brisk activity, though apartment prices have been flat overall--up modestly at the lower end but down at the high end of the market. The inventory of homes on the market was reported to be very thin throughout the District, except in Manhattan where it has been steady at a moderate level.\nRental markets have been mixed but, on balance, softer. New York City's rental market has weakened further, particularly at the high end. Effective rents have trended down, reflecting a combination of modestly declining face rents and rising landlord concessions. While these concessions have been common for high-end rentals for some time, they have recently been used on lower-priced units as well. However, rental markets in northern New Jersey, upstate New York, and the suburbs around New York City have held up better, with rents steady to up modestly.\nCommercial real estate markets have been mixed. Office availability rates were steady to up slightly, while asking rents were mostly flat. The retail market has slackened more noticeably, especially in New York City, where vacancy rates have climbed to multi-year highs. In northern New Jersey and upstate New York, retail vacancies have been fairly stable. The industrial market, in contrast, has continued to strengthen, as availability rates have continued to decline throughout the District. Industrial rents in and around New York City and northern New Jersey have risen at more than a 10 percent pace, while rents in upstate New York have been stable.\nMulti-family construction activity has remained brisk in northern New Jersey and has picked up across upstate New York, but has slowed in New York City. Office construction has been subdued, but industrial construction has been fairly robust.\nBanking and Finance\nSmall to medium-sized banks in the District reported mixed demand for loans overall. Demand declined by a bit more than the seasonal norms for consumer loans and for residential mortgages but increased modestly for commercial mortgages. Refinancing activity also reportedly decreased. Bankers reported higher credit standards for C&I loans but unchanged standards for other types of loans. Finally, bankers reported lower delinquency rates for residential mortgages and unchanged delinquency rates across 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"

Dallas

/beige-book-reports/2018/2018-03-da

"March 7, 2018\nSummary of Economic Activity\nThe Eleventh District economy expanded at a moderate pace over the past six weeks. The manufacturing sector continued to expand robustly, energy activity increased, and home sales continued to rise. Growth slowed slightly in financial and nonfinancial services, while retail sales declined modestly. Hiring was strong across most sectors. Widespread reports of labor market tightness and difficulty finding qualified workers continued, and more firms responded by raising wages than in prior reporting periods. Price pressures remained elevated, and in some cases intensified. Outlooks remained broadly optimistic, although some uncertainty persisted.\nEmployment and Wages\nOverall employment growth remained solid, and upward wage pressure increased somewhat. Hiring continued at a robust pace in manufacturing, services, and retail. Hiring in the energy sector has expanded so far in 2018, although numerous contacts noted a severe shortage of workers in West Texas, particularly for skilled positions. A lack of qualified candidates continued to challenge businesses in other sectors as well, with several reports that this lack of workers was inhibiting growth. Several contacts in construction-related industries noted further tightening in labor markets due to hurricane-related rebuilding. More firms said they raised wages to retain and/or attract workers than in the prior reporting period, particularly in the manufacturing, retail, and hospitality sectors. Energy contacts also noted an increase in wage pressure, for upstream jobs as well as for downstream construction labor. Also, a staffing firm noted that pay increases were fairly widespread among workers earning about $9 per hour.\nLooking ahead, firms were quite bullish on their hiring plans. More than half of the 362 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, up roughly five percentage points from a year ago.\nPrices\nPrice pressures remained elevated over the past six weeks, and a slightly faster pickup was seen in input prices. Transportation firms noted an increase in fuel costs, manufacturers noted increases in steel and petroleum product prices, and homebuilders said the price of some raw materials like lumber and concrete had risen. Selling prices increased at about the same pace as in the prior reporting period, although there was acceleration in manufacturing finished goods prices.\nThe average natural gas price over the reporting period was largely unchanged from the prior period despite some brief cold-weather-related increases, while the average WTI oil price was the highest it's been since December 2014. The price of energy services continued to rise as drilling and well completion activity grew.\nManufacturing\nRobust expansion in the manufacturing sector continued through February. Demand and output growth persisted, with a pickup in nondurables. Contacts noted strength in chemicals manufacturing in particular. One machinery manufacturer said business has been trending up over the past few months, with demand from the oil and gas sector playing a bigger role, and another said growth this year has been the best in the past five years. Outlooks overall remained highly positive, with contacts citing tax reform and a lower dollar as tailwinds, and rising interest rates and inflation as potential headwinds.\nRetail Sales\nRetail sales fell slightly over the past six weeks, led by a decline in auto sales. Several contacts attributed some of the weakness to poor weather. One auto dealer noted that after several years of increases in sales volumes, a slight decrease is to be expected. For retailers more broadly, contacts noted a continued increase in internet sales. One wholesaler noted that their decrease in brick and mortar sales was offset by an increase in internet sales. Outlooks among retailers in general remained positive but were less optimistic than the prior reporting period.\nNonfinancial Services\nThe nonfinancial services sector continued to grow but at a slightly slower pace. The professional and business services industry was a bright spot, with revenue growth accelerating so far in 2018. Demand for staffing services generally increased and was broad-based, especially in Dallas and Houston. Transportation services also remained strong--rail cargo volumes continued to increase, and airline demand held steady at robust levels. Weakness was largely concentrated in leisure and hospitality, although several contacts said the softness was largely due to colder-than-usual weather. Contacts in tourism areas along the Gulf Coast said business continues to struggle after the devastation of Hurricane Harvey. Overall, outlooks remained optimistic, although there was continued caution among transportation services firms and others concerned about the outcome of international trade negotiations.\nConstruction and Real Estate\nHome sales rose over the reporting period, with contacts noting a good start to 2018. Home prices remained elevated, although contacts said it continued to be difficult to pass through further increases. Outlooks were positive, but there was concern among builders about margin compression and the potential impact of rising mortgage rates.\nThe Dallas-Fort Worth office market remained in good shape. Contacts noted a decline in sublease space in Houston, but overall office market conditions continued to be weak. Industrial availability generally remained tight across major metropolitan areas.\nFinancial Services\nLoan volumes and demand increased over the past six weeks, but at a slower pace compared to the previous reporting period. Volume growth was strongest for residential real estate loans and weakest for consumer loans. Interest rates charged on loans picked up, with more than 40 percent of bankers surveyed noting an increase over the past six weeks. Two-thirds of bankers reported an increase in cost of funds, up from the prior reporting period when half noted an increase. The volume of core deposits continued to rise, albeit at a significantly slower pace than in the past several months. Credit standards and terms continued to tighten. Banking contacts remained optimistic, generally expecting stronger loan demand and increased business activity six months from now.\nEnergy\nEnergy activity was up from six weeks ago, as the rig count increased. New well completions also picked up, particularly in the Permian Basin. An oilfield services firm expects a further pickup in activity in the second quarter. Company outlooks remain relatively optimistic for 2018, with current oil prices at levels favorable for increasing production and employment.\nAgriculture\nAgricultural producers were concerned about worsening drought conditions. As of February 20, 70 percent of Texas was experiencing at least moderate drought, with some extreme drought in the High Plains and Panhandle. However, rainstorms late in the reporting period likely alleviated the dry conditions in parts of the state. The cattle sector remained solid with strong demand for beef, both domestic and international, and rising cattle prices. However, the dairy industry continued to struggle with declining prices. Cotton acreage will likely be up in Texas this year, and there was excitement among producers about cotton provisions being added back into the Farm Bill legislation. Financial concerns continued among grain farmers as they prepared for planting, with crop prices remaining low and some inflation seen in fuel and fertilizer costs. NAFTA renegotiations also remained a source of concern and uncertainty.\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"

National Summary

/beige-book-reports/2018/2018-01-su

"Beige Book: National Summary\nJanuary 17, 2018\nThis report was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before January 8, 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\nReports from the 12 Federal Reserve Districts indicated that the economy continued to expand from late November through the end of the year, with 11 Districts reporting modest to moderate gains and Dallas recording a robust increase. The outlook for 2018 remains optimistic for a majority of contacts across the country. Most Districts reported that non-auto retail sales expanded since the last report and that auto sales were mixed. Some retailers highlighted that holiday sales were higher than expected. Residential real estate activity remained constrained across the country. Most Districts reported little growth in home sales due to limited housing inventory. Nonresidential activity continued to experience slight growth. Most manufacturers reported modest growth in overall business conditions. Reports indicated that some manufacturers increased capital expenditures over the reporting period. Most reporting Districts noted continued growth in transportation activity. Loan volumes in many Districts were steady. Among reporting Districts, agricultural conditions were mixed and energy contacts described a slight uptick in activity.\nEmployment and Wages\nOn balance, employment continued to grow at a modest pace since the previous report. Most Districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth. Several Districts noted elevated demand for manufacturing and construction labor. Most Districts said that wages increased at a modest pace. A few Districts observed that firms were raising wages in a broader range of industries and positions since the previous report. Some Districts reported that firms expect wages to increase in the months ahead.\nPrices\nMost Districts reported modest to moderate price growth since the last report; exceptions were Chicago, which noted that prices increased only slightly while San Francisco noted price inflation was down slightly. Reports of pricing pressures were mixed across the country although several Districts noted increases in manufacturing, construction, or transportation input costs. Firms in some Districts noted an ability to increase selling prices. Retailers in some Districts reported modest price increases and there were reports of rising home prices across most of the country. Agriculture and energy commodity prices were mixed.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest pace as 2017 ended, with the majority of contacts at manufacturing, retail, and software and information technology firms reporting revenue increases even as some saw flat or declining revenue. Employers cited tight labor markets as a constraint on expansion. Respondents' outlooks continued to be positive.\nNew York\nEconomic activity continued to expand moderately, while labor markets have remained tight. Input prices have increased at a somewhat faster pace, while selling prices continued to rise modestly. Housing markets and commercial real estate markets have been mixed but generally steady overall.\nPhiladelphia\nEconomic activity continued to grow at a modest pace, in particular for manufacturing, nonfinancial services, and tourism. Nonauto retail sales improved to a modest pace as auto sales slipped to a modest decline. The construction and real estate sectors changed little. On balance, employment, wages, and prices continued to grow modestly.\nCleveland\nThe economy continued to expand at a moderate pace. Labor markets tightened, with wage pressures coming primarily from workers in low- and middle-skills jobs. Retailers reported higher-than-expected revenues for the early part of the holiday shopping season. Homebuilders saw little evidence of a seasonal downturn in the housing market.\nRichmond\nThe regional economy grew at a moderate pace in recent weeks. Robust growth was reported by trucking and tourism firms. Retailers generally reported better-than-expected holiday sales. Meanwhile, commercial real estate activity and commercial lending improved moderately. Labor markets tightened further and wage pressures broadened. Price growth remained modest.\nAtlanta\nEconomic activity improved modestly since the previous report. The labor market remained tight and wage increases were stable. Non-labor input costs picked up slightly. Retailers were optimistic when reporting on holiday sales. Home sales were mixed and prices increased modestly. Commercial real estate contacts continued to indicate improving demand. Manufacturers noted an increase in new orders.\nChicago\nEconomic activity picked up to a moderate pace. Employment, consumer spending, and manufacturing production increased moderately, construction and real estate activity rose slightly, and business spending was unchanged. Wages increased modestly, prices rose slightly, and financial conditions improved some. Crop and dairy farmers continued to face challenging conditions.\nSt. Louis\nEconomic conditions continued to improve at a modest pace. In positive news, retailers' reports of holiday sales were generally upbeat, and real estate activity has picked up somewhat. However, auto dealers continued to report mixed sales results, and agriculture conditions in the District remain weak.\nMinneapolis\nNinth District economic activity grew moderately. Although employment levels dipped, hiring demand appeared to remain strong. District manufacturers indicated that a solid 2017 would continue, with upbeat expectations for the year to come. Holiday retail spending was strong, but winter tourism got off to an uneven start. Commercial construction increased; homebuilding was mixed, but residential sales were up.\nKansas City\nEconomic activity and employment expanded modestly in late November and December. Retail sales increased sharply, and consumer spending remained well above year-ago levels. The manufacturing and energy sectors expanded further, and capital spending plans were positive. A majority of contacts in the services sector reported labor shortages, and strong wage growth was anticipated in the months ahead.\nDallas\nEconomic activity grew robustly, a pickup in pace from the more moderate expansion seen throughout most of 2017. The manufacturing sector remained a bright spot, although growth accelerated in most other sectors as well. Employment growth picked up, and wage and price pressures remained elevated. Labor shortages persisted, with several reports that difficulty hiring was impeding growth to some extent.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods picked up noticeably, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector remained solid. Activity in residential real estate markets remained robust, while conditions in the commercial sector were strong. Lending activity grew at a modest pace.\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/2018/2018-01-sl

"Beige Book Report: St Louis\nJanuary 17, 2018\nSummary of Economic Activity\nReports from contacts indicate that economic conditions have continued to improve at a modest pace since our previous report. Labor market conditions remain tight, the pace of hiring remains slow, while wage growth has been moderate. Reports on consumer spending were positive. Residential real estate conditions have improved modestly after a few months of sluggish home sales. District bankers reported moderate loan growth across most categories. Unseasonably cold weather has negatively impacted the quality of winter wheat in the District.\nEmployment and Wages\nAnecdotal evidence suggests little change in employment since the previous report. Contacts continued to report difficulties finding experienced or qualified employees. Construction contacts in Louisville and Little Rock reported labor shortages, while manufacturing contacts reported difficulties hiring for both skilled and unskilled positions. Labor demand in Missouri was particularly high in healthcare services, leisure and hospitality, retail, and wholesale trade.\nContacts reported moderate growth in wages since the previous report. A contact in Louisville reported increasing starting salaries multiple times a year to attract new hires, as well as increasing wages to retain skilled employees in information technology. Construction and manufacturing contacts across the District reported increasing wages to attract new employees.\nPrices\nPrice pressures have increased moderately since the previous report. Residential real estate prices rose moderately, with especially strong growth in northwest Arkansas. Construction materials price pressures increased as well. Steel prices rose moderately throughout the District, and a Louisville contact reported an uptick in construction costs. A contact in Arkansas reported solid wood products prices increased moderately but saw-timber and pulpwood prices were flat or decreased.\nIn the energy sector, coal prices were flat. In the agricultural sector, prices generally rose at a moderate pace. Corn feed, sorghum, and rice prices increased moderately, soybean prices were flat, and wheat and cornmeal prices decreased slightly. Contacts in Memphis reported strong increases in cotton prices, and Little Rock contacts reported rapid increases in large egg prices.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate consumer spending has grown modestly since our previous report. November real sales tax collections increased in Arkansas, Kentucky, Missouri, and Tennessee relative to a year ago. Consumer confidence continued to increase in West Tennessee, as households indicated their willingness to spend more in the next few months relative to a year ago. Reports from auto dealers were mixed: While multiple auto dealers from Louisville and Little Rock reported improved traffic and sales, Memphis auto dealers reported that sales have softened the past two months. Auto dealers throughout the District hold an optimistic outlook for 2018. Louisville hoteliers continued to report weaker occupancy rates in the fourth quarter.\nManufacturing\nManufacturing activity has increased modestly since our previous report. Overall manufacturing activity was stronger than one month earlier in both Arkansas and Missouri, although the pace of growth slowed in Missouri. Production increased in both states, but at a slower rate than previously. Several companies in the District reported new capital expenditure and facility expansion plans, including firms that manufacture food and beverage products, chemical products, and transportation equipment. Sales to auto manufacturers, however, were flat to slightly down, according to contacts that supply the auto industry. Most manufacturing contacts expect conditions in 2018 to be similar to those in 2017, although a contact in the plastic products manufacturing industry expects a decline in business in 2018, citing increased foreign competition.\nNonfinancial Services\nActivity in the service sector has expanded modestly since the previous report. Firms that provide transportation, logistics, and information technology services announced plans to increase employment, open new facilities, and renovate existing facilities. Demand for commercial trucking remains elevated because of Hurricane Harvey relief efforts, exacerbating a shortage of drivers. Reports from healthcare firms remain mixed. One major healthcare employer is cutting employees to improve operational management, while other healthcare providers began capital expansions.\nReal Estate and Construction\nResidential real estate activity has improved moderately since the previous report. Seasonally adjusted home sales for November increased sharply from the previous month across the District's four major MSAs. Local contacts continued to report shortages in inventory.\nResidential construction activity was flat. November permit activity within District MSAs was unchanged relative to the previous month. Local contacts continued to report that a shortage of labor is limiting new construction.\nCommercial construction activity improved slightly. November nonresidential construction starts increased moderately within the District relative to the previous month while multifamily permits dropped slightly. Little Rock construction contacts reported healthy levels of activity that they expect will continue through the first half of 2018 at least.\nBanking and Finance\nBanking conditions in the Eighth District have improved at a moderate pace since the previous report. District banking contacts report that outstanding loan volumes expanded by 7 percent relative to year-ago levels, indicating that loan growth, which had been slowing since the start of 2017, levelled off in December. Year-over-year growth in residential mortgage lending continued at 4 percent for the second consecutive quarter while commercial real estate lending grew by 9 percent. Commercial and industrial credit growth was also strong as loan volumes rose by 9 percent compared with 6 percent nationwide. Lending activity in open-ended home equity loans declined by 1 percent relative to year-ago levels and was the only major loan category that experienced negative growth.\nAgriculture and Natural Resources\nDistrict agriculture conditions declined moderately from the previous reporting period. Due to unusually low temperatures across much of the District, the percentage of winter wheat rated fair or better fell 4 percentage points from the middle of November to the end of December; it is now 89 percent. Contacts are concerned that crop conditions worsened further during the first week of January, when temperatures plunged.\nNatural resource extraction conditions declined slightly from October to November, with seasonally adjusted coal production falling 2 percent. November production was also down by 4 percent from a year ago.\nFor more information about District economic conditions, visit: www.research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2018/2018-01-mi

"January 17, 2018\nSummary of Economic Activity\nNinth District economic activity increased moderately overall since the last report. Employment declined slightly, but labor demand remained strong. Wage and price pressures were both moderate. The District economy showed growth in consumer spending, services, commercial construction, residential real estate, and manufacturing. Residential construction was mixed, energy and mining activity were steady, and agricultural conditions were stable at low levels.\nEmployment and Wages\nEmployment declined slightly since the last report, as seasonally adjusted November employment fell in Minnesota, Montana, and North Dakota compared with October. However, labor markets nonetheless appeared healthy, with labor demand still quite strong and a notable lack of large layoff announcements. A staffing agency with offices in Minnesota and Wisconsin noted a \"continued strong uptick in hiring.\" Several large Minnesota employers announced expanded seasonal hiring during the holidays. A December poll of South Dakota retailers found that almost half were hiring despite flat sales compared with a year ago; a similar share said the labor market was very tight and getting tighter. According to a state source, Minneapolis-St. Paul had more job openings than at any time since at least 2001. Limited labor supply also continued to hamper hiring. \"Every business we talk to, they can't hire enough workers,\" said a western Wisconsin banker. A transportation company executive said it was failing to see growth because it can't find drivers. A manufacturing firm in southeastern Minnesota said it consistently had 40 openings to fill, and was losing out on available work because there were \"not [enough] people to take the jobs.\" A central Minnesota finance company announced layoffs of 130 workers, said a local source, and other \"companies were already discussing hiring the potential labor.\"\nWages rose moderately since the last report. More than half of the respondents to the Minneapolis Fed's annual survey of District manufacturers saw wages rise by more than 3 percent over the past year, and similar growth was expected in the coming year. A transportation union in Minneapolis-St. Paul agreed to a three-year contract with annual 2.5 percent increases. A transportation executive in Montana said wages were rising between 2 percent and 3 percent. Contacts in rural areas of the Dakotas said wage growth was more sluggish. Retailers in South Dakota reported wage increases of about 3 percent in the past year, with slightly lower increases expected in the coming year.\nPrices\nPrice pressures were moderate since the last report. A majority of respondents (55 percent) to the Minneapolis Fed's annual manufacturing survey reported that prices charged for their products were unchanged over the past year, while slightly more than a third reported increases. For the coming year, 44 percent of manufacturers surveyed expected to increase their prices, while 57 percent expected the rate of inflation in the broader economy to increase. Retail fuel prices in District states as of early January were slightly lower than in the previous reporting period. Prices received by farmers for wheat, hay, milk, hogs, cattle, chickens, eggs, and turkeys increased in November compared with a year earlier; prices for corn and soybeans decreased.\nConsumer Spending and Tourism\nConsumer spending showed moderate growth since the last report. Many retailers reported strong holiday sales. A Minnesota contact said in-state retailers \"are mirroring the country, or doing slightly better.\" In contrast, a survey of South Dakota retailers indicated flat holiday sales there compared with a year ago. A Minnesota department store reported strong in-store traffic during the holidays and a 1 percent increase in same-store sales in November and December compared with a year earlier. Retail expansion continued in Minneapolis-St. Paul. An outdoor equipment retailer reopened the first of multiple, rebranded stores that were previously closed. Warehouse retail firms also opened new locations, and a shopping center unveiled a major renovation, which included new stores.\nWinter tourism reports suggested an uneven start across the District. Good snowpack was reported across much of Montana ski country, with reports of early and broader trail openings than last year. Snow conditions were spottier in eastern District states, especially in northern areas used to heavy snow. Bitter cold across much of the District to end the year also dampened outdoor activity. However, November hotel occupancy rates rose in Minnesota, as did revenue per available room. A hotel waterpark was reopened under new ownership after a $30 million renovation.\nServices\nActivity in the professional services industry increased since the last report. Contacts in the accounting and financial services sectors reported a year-end rush for tax planning services in response to new federal tax legislation. Several new retail technology startups have opened or relocated to Minneapolis-St. Paul recently. A commercial bank was expanding its presence in Minneapolis-St. Paul.\nConstruction and Real Estate\nCommercial construction was up modestly since the last report. An industry database showed that nonresidential construction spending rose in November over a year earlier, but was considerably lower than the previous month due to normal seasonal slowdown. Industry tracking showed that total active projects as of mid-December were moderately higher than the same period a year earlier. A Minnesota labor construction contact said average monthly hours among members reached 200 hours, up from an average of 170 hours. The 2018 outlook appeared to be a \"continuation of a good 2017...not huge, but better than average.\"\nResidential construction was mixed. On the one hand, single-family permit activity in November rose overall across the District compared with a year earlier, with notable growth in Fargo, N.D., Rapid City, S.D., Rochester, Minn., and Minneapolis-St. Paul. However, single-family activity was flat or slightly negative in eight District metros. On the other hand, the number of permitted multifamily units fell considerably in November compared with a year earlier, with only La Crosse, Wis., Missoula, Mont., and Sioux Falls, S.D., registering prominent gains. Limited data (Billings, Mont., Minneapolis-St. Paul, and Sioux Falls) suggested a similarly mixed pattern in December. Residential real estate sales rose moderately since the last report. Closed sales in November were up virtually across the board; only Missoula saw sales decrease in November compared with a year earlier. However, this performance follows somewhat volatile, sluggish home sales for much of the year due to limited inventory of homes for sale.\nManufacturing\nDistrict manufacturing activity increased since the last report. Respondents to the Minneapolis Fed's annual manufacturing survey indicated growth in orders, production, investment, and productivity over the past year, with expectations for more growth in 2018. An index of manufacturing conditions indicated increased activity in December compared with a month earlier in Minnesota and the Dakotas. A producer of wind turbine blades announced that a plant that was scheduled to shut down would instead stay open at least through the end of this year to accommodate new orders. An electronics manufacturer and a producer of aerial lifts announced expansions at facilities in Minnesota.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. Recent estimates of farm income for District states were roughly unchanged from a year ago. Activity in the energy and mining sectors was steady since the last report. Oil and gas drilling in North Dakota and Montana as of late December was unchanged from a month earlier, though industry contacts indicated oil production was up slightly. District iron ore mines continued to operate near full capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2018/2018-01-at

"January 17, 2018\nSummary of Economic Activity\nSixth District business contacts remained largely positive with most noting that economic conditions were improving at a modest pace over the reporting period. Most contacts expect continued slow and steady growth in the near-term. Business contacts experienced on-going labor market tightness but limited wage growth. Non-labor input costs increased slightly from the previous report. Contacts reported that holiday retail sales exceeded expectations, but auto sales softened. Reports from the hospitality sector were positive, reflecting strong advance bookings. Residential real estate brokers and builders noted mixed sales activity for both existing and new homes. Home prices rose and inventory levels were described as flat or down. Commercial real estate contacts reported increased demand in nonresidential construction, especially industrial and warehousing. Manufacturers indicated that new orders picked up since the previous report.\nEmployment and Wages\nJob growth across the District returned to a steady pace in November, following large hurricane-related losses in September. In a survey of business contacts, a little over half indicated that they expect their firms to increase employment over the next 12 months, while about one-third responded that they expect employment to remain unchanged. The remaining respondents expect some staff reductions over the next 12 months. Contacts indicated the most important factor for adding to payrolls was an expectation for high sales growth in their business while the top constraints to hiring were a desire to keep operating costs low and an inability to find workers with requisite skills. A number of contacts continued to describe challenges filling and retaining highly-skilled/specialized and low-skilled/entry-level positions. To find and retain workers, firms continued to broaden their geographical search for candidates and develop or expand training programs.\nOn balance, contacts noted steady but modest wage growth; however, compensation negotiations were more prevalent among highly-skilled/specialized workers.\nPrices\nIncreases in non-labor input costs were reported as mostly modest. Firms reported that pricing power continued to be limited. The Atlanta Fed's Business Inflation Expectations survey showed that year-over-year unit costs were up 1.8 percent in December, and respondents expect unit costs to rise 2.1 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retail contacts reported an uptick in sales levels since the last report. Merchants noted that early holiday sales activity was above expectations. According to automobile dealers in the District, however, momentum of auto sales slowed compared with year-earlier levels.\nHoliday reports from District travel and hospitality contacts indicated much higher-than-anticipated tourism activity. Further, the outlook among contacts remains positive for the first quarter of 2018 with strong advance bookings in the conference and business travel segments.\nConstruction and Real Estate\nReports from residential real estate contacts in the District signaled modest growth since the previous report. The majority of builders reported construction activity was slightly up in November compared with one year earlier. Brokers indicated that home sales activity was flat to slightly down from the year-ago level, yet builders said home sales were flat to slightly up over the same period. Many brokers reported buyer traffic was flat to down; meanwhile, builders said buyer traffic was flat to up. Most brokers indicated inventory levels were down from one year ago, while builders reported that inventory levels remained unchanged. Builders and brokers continued to note home price increases in November. Over the next three months, residential real estate contacts expect home sales activity to either hold steady or increase slightly relative to the year-ago level, while many builders expect the pace of construction activity to remain unchanged or increase slightly.\nMany commercial real estate contacts from the District reported improvements in demand that resulted in rent growth, specifically in industrial and warehouse/distribution properties and to a lesser degree in office and multifamily. Contacts cautioned that the rate of improvement varies by metropolitan area, submarket, and property type. The majority of commercial contractors indicated that the pace of nonresidential construction activity had increased from one year ago. Most contacts continued to report a healthy pipeline of activity, with the majority indicating backlogs greater than or similar to the previous year's level. While the majority of reports indicated that the pace of multifamily construction matched or exceeded the year-ago level, a growing share continued to report that activity was down from one year earlier. Commercial construction contacts' outlook for nonresidential and multifamily construction activity improved across the District since the last report.\nManufacturing\nManufacturing contacts reported increases in overall business activity. New orders continued to rise, while production levels at District firms remained somewhat subdued. Most contacts indicated that hiring activity continued to increase at a healthy pace and suggested that supplier delivery times were getting somewhat longer. Finished inventory levels were reported to have increased slightly and input prices also continued to rise. Contacts' outlook for future production was similar to from the previous period, with about half expecting higher production levels over the next six months.\nTransportation\nTransportation contacts in the District noted increased activity during the reporting period. Ports saw growth in volumes across most sectors; however, automobile shipments were flat year-over-year. Containerized exports and imports were up by double digits from year earlier levels, and solid growth in lumber, iron and steel break bulk cargo was attributed to increased manufacturing and construction activity. Available warehouse capacity was at record low levels. Year-to-date total rail volume was flat compared with last year; intermodal traffic was up modestly. Trucking companies experienced a robust peak season due to substantial increases in e-commerce volumes, and logistics contacts noted greater demand for services due in part to hurricane rebuilding efforts and tighter capacity. All District contacts surveyed anticipate continued growth in activity for 2018.\nBanking and Finance\nCredit remained readily available for most qualified borrowers. Credit union contacts noted strong auto and first mortgage lending and increased credit card activity. Some banking contacts reported a diminished ability to raise deposits.\nEnergy\nContacts indicated that overall, utilities continued to move to natural gas power generation. Pipeline take-away capacity from production to refineries continued to be constrained. It was noted that liquid natural gas exports ticked up slightly with additional liquefaction capacity that came online.\nAgriculture\nAgriculture conditions across the District were mixed. Drought conditions expanded in parts of Alabama, Florida, Georgia, Louisiana, and Mississippi and were classified as abnormally or moderately dry. The District's December cotton production forecast was up over last year, mostly because of increased acres, although there were some reductions in yields. The December forecast for Florida's orange crops was down from the previous report. The USDA designated many counties in Florida and Georgia as natural disaster areas due to damages and losses attributed to Hurricane Irma. On a year-over-year basis, prices paid to farmers in November were up for rice, oranges, beef, broilers, and eggs and down for corn, cotton, and soybeans.\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"

Kansas City

/beige-book-reports/2018/2018-01-kc

"Beige Book Report: Kansas City\nJanuary 17, 2018\nSummary of Economic Activity\nEconomic activity and employment in the Tenth District increased at a modest pace in late November and December, and most contacts expected growth in the coming months. Labor shortages were reported by the majority of contacts in the services sector, while wages rose modestly across most sectors. Retail sales grew sharply since the previous survey, but auto sales, restaurant sales, and tourism activity declined moderately. Overall activity and capital spending plans within the manufacturing sector rose moderately. Contacts in the transportation and professional and high-tech sectors noted growth in sales, while wholesale trade firms reported a sharp decline in overall activity. Real estate activity in the District was mixed as the residential sector declined modestly while commercial real estate activity rose slightly. Banking contacts reported steady overall loan demand, unchanged loan quality and credit standards, and stable-to-increasing deposit levels. Activity in the District energy sector increased modestly since the last survey period, and expectations for capital spending, especially in exploration and development, were positive. Low crop prices continued to weigh on District farm income expectations, and winter wheat production expectations declined further.\nEmployment and Wages\nEmployment across the District rose modestly in late November and December, and employee hours increased slightly. Respondents in the retail trade, wholesale trade, transportation, professional services, real estate, health services, manufacturing, and energy sectors noted an increase in both employment and employee hours compared to the previous survey period, while contacts in the auto sales, restaurant, and tourism sectors reported a decline. Employment was expected to increase over the next six months in all sectors except for retail trade which was projected to be flat. Additionally, respondents anticipated an increase in employee hours in most sectors.\nThe majority of respondents in the services sector reported labor shortages, including shortages for commercial drivers, skilled technicians, and service workers. Wages rose modestly in most sectors, and strong wage growth was anticipated in the coming months.\nPrices\nInput prices and selling prices were modestly higher in most sectors compared to the previous survey period. In the retail sector, both input and selling prices increased modestly, but at a slower pace than in the prior survey. Restaurant contacts reported a slight rise in input prices, while selling prices rose moderately. Respondents in the transportation sector noted moderate growth in both input and selling prices. Prices in the construction sector declined modestly for the first time in over two years, but were expected to rise moderately in the next few months. Manufacturers reported a slight increase in prices for finished goods, while raw material costs continued to edge higher. Manufacturers anticipated moderate increases in both finished goods and raw material prices in the coming months.\nConsumer Spending\nConsumer spending activity grew slightly in late November and December, and was expected to increase moderately in the next few months. Retail sales increased sharply compared to the previous survey period, and remained well above year-ago levels. Several retailers noted an increase in sales for lower-priced and discounted items, while higher-priced products sold poorly. Contacts anticipated retail sales to continue to rise, while inventory levels were expected to decrease moderately in the coming months. Auto sales fell moderately since the previous survey but were above year-ago levels. Dealer contacts anticipated a moderate pickup in sales in the months ahead, and auto inventories were expected to remain stable. Restaurant sales also declined moderately in late November and December but were well above year-ago levels. In addition, restaurant contacts expected a strong pickup in activity heading forward. District tourism activity was moderately lower than the previous survey period and slightly below year-ago levels. However, tourism contacts expected activity to increase moderately heading into the winter months.\nManufacturing and Other Business Activity\nManufacturing activity expanded at a moderate pace in late November and December, while other business activity was mixed. Manufacturers reported sustained growth in production, particularly for food, aircraft, and electronics products. Shipments, new orders, and order backlogs grew at a modest pace since the previous survey period, and overall activity was higher than a year ago. Manufacturers' capital spending plans rose moderately, and firms' expectations for future activity remained favorable.\nOutside of manufacturing, transportation firms reported strong sales increases and professional and high-tech contacts noted moderate sales growth. In contrast, activity among wholesale trade firms declined sharply. However, all firms expected a strong improvement in sales in the next six months. Professional, high-tech, and transportation firms reported moderate growth in capital spending plans, while wholesale trade firms anticipated spending to be relatively flat heading forward.\nReal Estate and Construction\nDistrict real estate activity was mixed, with residential real estate conditions declining modestly and commercial real estate activity increasing slightly. Residential home sales were well below levels from the previous survey period and slightly below year-ago levels. Expectations for residential sales were positive in the coming months due to abating adverse seasonal factors. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential selling prices rose slightly, while inventories fell modestly. Residential construction activity was flat as both new home starts and construction supply sales remained at similar levels to the previous survey period. Activity in the commercial real estate sector increased slightly as sales rose modestly, absorption and construction underway edged slightly higher, rents and vacancy rates remained flat, and completions dropped slightly.\nBanking\nBankers reported steady overall loan demand during the period of late November and December. A majority of respondents indicated a stable demand for commercial and industrial, commercial real estate, residential real estate, agricultural loans and consumer installment loans. Most bankers indicated loan quality was unchanged compared to a year ago. In addition, most respondents expected loan quality to remain stable over the next six months. Credit standards remained largely unchanged in all major loan categories. Overall, bankers reported steady-to-increasing deposit levels.\nEnergy\nEnergy activity increased modestly since the last survey period, and expectations remained positive. The number of active oil and gas rigs rose slightly, particularly in New Mexico and Wyoming. Respondents expected spending in all categories to increase in 2018, with the largest increases for exploration and development capital spending. Firms also expected slightly positive impacts in the near term due to tax reform. Abundant supply continues to weigh on natural gas prices, but several respondents stated that increasing LNG exports could help push up prices.\nAgriculture\nFarm income expectations remained weak in most of the Tenth District, but the outlook for agricultural commodities was mixed. Revenues for corn and soybeans are expected to be slightly lower than last year due to lower prices and yields. Large inventories continued to weigh on prices, and District contacts reported lower yields due to abnormally dry conditions and wind damage. Production expectations for winter wheat declined further since the last reporting period due to limited precipitation and extremely cold conditions that could cause freeze damage. Lower production expectations, however, supported moderately higher prices for winter wheat compared to a year ago. In the livestock sector, prices were higher than last year for cattle and hogs due to strong demand. Despite generally weak agricultural conditions, farmland values remained stable due to limited land sales. However, some bankers in the District expected more sales and declining values in the months ahead.\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

/beige-book-reports/2018/2018-01-ch

"January 17, 2018\nSummary of Economic Activity\nGrowth in economic activity in the Seventh District picked up to a moderate 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 manufacturing production increased moderately, construction and real estate activity rose slightly, and business spending was unchanged. Wages increased modestly, prices rose slightly, and financial conditions improved some. Crop and dairy farmers continued to face challenging conditions.\nEmployment and Wages\nEmployment increased at a moderate pace over the reporting period, and contacts expected it to continue at that rate over the next 6 to 12 months. Contacts continued to indicate that the labor market was tight, with difficulties filling positions at all skill levels. Hiring was focused on professional and technical, production, and sales workers. There was a notable increase in the number of firms looking to hire professional and technical workers, and a staffing firm that primarily supplies manufacturers with production workers reported an increase in billable hours for the first time in many months. Wage increases were spread across most occupation categories. Wage growth remained modest overall, though the number of contacts reporting increases for production workers continued to climb and a number of manufacturers reported raising their starting wages. In addition, most firms reported higher benefits costs.\nPrices\nOverall, prices increased slightly in late November and December. Retail prices were little changed for most categories, though one large grocery chain reported slight price declines. A number of contacts indicated that raw materials prices had risen.\nConsumer Spending\nConsumer spending rose at a moderate pace over the reporting period. Growth in non-auto retail sales picked up to a moderate pace, as holiday sales outpaced expectations. One contact indicated that holiday sales were the best in many years. Contacts reported gains in the electronics, appliances, building supply, tourism, and personal service sectors, but declines in the food and beverage sector. Growth in e-commerce remained strong. New light vehicle sales in the District were flat in spite of generous incentives. Used vehicle sales were also flat. Dealers expected new light vehicle sales in 2018 to be about the same as in 2017.\nBusiness Spending\nBusiness spending was little changed in late November and December. Retail contacts indicated that inventories were generally at comfortable levels. While one auto dealer noted that, with the pickup in light vehicle sales in the final months of the year, inventories had finally returned to a comfortable level, another said that its inventory of crossovers was so low that it may not be able to meet demand in January. Manufacturing inventories were also generally at comfortable levels, with the exception of steel service centers, where inventories remained below historical norms. Capital spending was little changed, though contacts expected spending to grow at a moderate pace over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. Demand for residential, commercial, and industrial energy and for transportation services all increased slightly.\nAlmost all contacts thought that the Federal tax bill would have a positive impact on their firms. Most respondents expected to spread the tax savings across outlays for capital, labor, debt repayment, and profit distributions to owners.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly over the reporting period. Residential construction increased modestly and contacts expected growth to pick up to a moderate pace over the next six to twelve months. New building was concentrated in the single family segment in suburban locations. Overall, home sales remained flat--low inventories in the starter home segment restrained sales, while sales of higher-end homes moved up. Home prices rose slightly overall, with stronger increases in the starter home segment. The pace of nonresidential construction was little changed, but contacts expected a slight pickup over the coming year. Commercial real estate activity increased slightly from an already strong level, and contacts expected modest gains going forward. One contact noted that most lenders are maintaining conservative loan-to-value ratio requirements. Commercial vacancy rates decreased slightly overall, but more so for office space. Commercial rents increased a bit.\nManufacturing\nGrowth in manufacturing production picked up to a moderate rate in late November and December. Steel production increased at a strong pace as imports fell and service centers struggled to replenish already low inventories in response to solid end-user demand. One steel producer said demand was the strongest it had been in 10 years. Order books for specialty metals manufacturers increased moderately--growth was spread across a wide variety of sectors, with particularly strong demand from the oil and gas sector. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction. Auto production was flat.\nBanking and Finance\nFinancial conditions improved slightly over the reporting period. Financial market participants noted that volatility continued to be low. Business loan volume increased slightly, with growth spread across sectors. Contacts reported little change in loan quality or lending standards, though one contact noted that competition for loans was strong and that they had lost deals to lenders offering looser terms and lower rates. Consumer loan volume also increased slightly, led by growth in auto loans. Consumer loan quality and lending standards were little changed.\nAgriculture\nCrop and dairy producers faced further belt-tightening at the start of 2018, while cattle and hog producers were in relatively better shape, owing to the underlying trends in prices received. Soybean prices dipped and corn prices rose over the reporting period, but both remained below last year's levels as plentiful stocks kept a lid on prices. Looking ahead, lower fertilizer costs and slightly lower farmland rents provided limited improvement to crop producers' profit expected margins. Contacts indicated that challenging conditions had led to more financing requests from crop producers. Dairy producers also struggled, and some smaller and less efficient operations closed down. Cattle, egg, and hog prices moved higher, to the point that producers could earn profits.\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/2018/2018-01-bo

"January 17, 2018\nSummary of Economic Activity\nBusiness activity expanded modestly in the First District as 2017 came to a close. Most contacted retailers, manufacturers, and software and information technology (IT) services firms saw revenues increase, although a minority reported flat to slight declines in revenues or sales from a year earlier. Among responding retailers, online sales performed better than in-store sales. Revenue increases among software and IT services firms were strong, ranging from 10 percent to 20 percent year over year. Commercial and residential real estate markets continued much as in the last report, with commercial rents and residential prices increasing in general, while sales were mixed. Labor markets continued to be tight and difficulty in hiring workers has constrained expansion for some firms. Few contacts mentioned price changes. Most responding firms in the region retained a positive outlook for their business.\nEmployment and Wages\nContacts in many sectors cited tight labor markets, but only modest wage increases, if any. A local retailer said 2018 merit raises would be on the order of 2.5 to 3.0 percent. A restaurant contact said labor shortages continued to constrain the industry. Only one manufacturing contact reported significant increases in employment and many said labor markets were very tight. One manufacturer was three months behind schedule in trying to hire workers for a new plant. Another industrial firm had 20 unfilled openings in a plant with 100 employees and said they were making up for it with significant overtime. When asked why they didn't increase wages to fill the openings, the contact said they would have to pay all the existing workers more which would be uneconomic. Another industrial-firm contact said that when a worker leaves, they typically end up paying the replacement 10 percent more than the departing worker. Software and IT services contacts have kept headcount close to flat in recent months, though they plan to increase staff by up to 10 percent during 2018. These contacts noted that shortages for technical roles such as engineers were getting worse.\nPrices\nPrice movements were somewhat mixed. Retailers reported that prices remained steady. Some manufacturers noted input price increases, but most appeared to be idiosyncratic (new environmental regulations in China limiting supply, for example). Manufacturing firms said they had some ability to pass through cost increases to their customers.\nRetail and Tourism\nRetail respondents for this round reported that from mid-November through early January, year-over-year comparable-store sales remained flat or posted low-to-middle single-digit increases. For contacts concluding their fiscal year, 2017 comparable-store sales increased by about 2.5 percent from 2016, though some firms, due to business expansion, saw overall sales revenue increase by double digits. Sales via online channels have expanded faster, and contacts said they planned to invest in information technology supporting the growth of data analytics and e-commerce channels in 2018; some view an online presence as an increasingly critical complement to their traditional brick-and-mortar stores, even as they continue to plan on opening new store locations. The outlook for 2018 is generally optimistic.\nA contact in the Massachusetts restaurant industry reported that year-over-year restaurant sales ranged from flat to up 2 percent. Net margins have narrowed and restaurant contacts said that new business expansion is likely to be very subdued in 2018.\nManufacturing and Related Services\nOf nine firms contacted this quarter, five reported higher sales versus the year-earlier period, two reported flat sales and two lower. Of the firms with improved sales, most said it was a continuation of recent trends. A manufacturer of industrial parts said that sales had finally recovered to their 2014 peak; the fall in oil prices that started in 2014 had led to a big slowdown in sales to extractive industries. To date, most of their recent growth comes from replacement parts. A manufacturer of toys said that sales in the holiday period were lackluster. The weakness was partly due to the fact that there was only one blockbuster movie with tie-in potential but, in addition, the contact cited uncertainty among consumers, particularly regarding tax reform. No contacts reported major revisions to capital spending plans.\nIn general, manufacturing respondents continued to have a broadly positive outlook. No contacts expected the just-passed tax reform package to have a big effect on investment. Two said that tax reform would mainly benefit shareholders. One suggested that the reduced deductibility of state and local taxes would lead them to increase pay in high-tax states to compensate workers. A firm that provides support to financial services firms expected an increase in demand for tax-related services as firms try to manage the changes in the code.\nSoftware and Information Technology Services\nTech contacts in the First District are doing well on the whole, with strong demand across the board and revenue growth between 10 percent and 21 percent year-over-year, excepting one enterprise software firm which has been struggling of late. Even that firm has a healthy outlook. All respondents identified software and technology as a strong space to be in, and anticipate growth from 5 percent to 20 percent over the foreseeable future. Multiple contacts noted particular strength in recent cloud and browser-based offerings, as companies continued to embrace newer technologies. Multiple contacts also indicated that the new tax legislation would help their business, though only as a one-time boost.\nCommercial Real Estate\nContacts reported that commercial real estate markets ended the year on a relatively high note. Leasing activity held roughly steady in recent weeks, with deals proceeding mostly as expected. In the Portland area, office and industrial rents increased 10 percent on a year-over-year basis, while retail and apartment rents were roughly unchanged over the same period. Also in Portland, however, transactions volume for both leasing and sales was down in 2017 as a result of low vacancy rates and low sales inventories. In Boston, office rents edged up further in recent weeks and significant absorption of office space was seen in the Seaport and Back Bay neighborhoods. In Providence, office rents started to increase in recent weeks amid an increasingly tight vacancy environment. Contacts in all three of these metro areas expressed uncertainty concerning the impetus for new office and industrial construction in 2018, but nonetheless expect some. On the one hand, vacancy rates in both of these sectors are low by historical standards and rents are on the rise, but on the other hand construction costs are described as very high, a fact attributed in part to a tight market for construction labor. A Boston-area contact noted that some apartment construction projects are taking longer to complete than anticipated because of worker shortages. Contacts were generally cautiously optimistic about 2018.\nResidential Real Estate\nHeading into the end of the year, residential real estate markets in the First District showed slight to moderate increases in sales and ongoing struggles with inventory. (Data for all six states refer to changes from November 2016 to November 2017, while Boston data were for October-to-October changes.) For single family homes, closed sales increased in all reporting areas except Connecticut. For condos, closed sales increased in all areas. As usual, shortage of inventory prevailed and contacts expressed concern that short supplies will hurt the market in the long run.\nMedian sales prices increased across the region, with the exceptions of Connecticut for single family homes and Vermont for condos. Despite high prices, contacts expressed confidence about the residential outlook. However, many contacts indicated that new legislation passed by Congress could discourage homeownership, as shrinking the cap on the mortgage interest deduction for primary homes and the loss of most deductions for interest on home equity loans will increase costs for most property owners.\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"

San Francisco

/beige-book-reports/2018/2018-01-sf

"Beige Book Report: San Francisco\nJanuary 17, 2018\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 early January. Overall price inflation edged down. Conditions in the labor market continued to tighten, and upward wage pressures increased. Sales of retail goods picked up noticeably during the holiday season, and growth in consumer and business services remained strong. Conditions in the manufacturing sector remained solid, and activity in the agriculture sector improved modestly. Contacts reported that residential real estate market activity remained robust and conditions in the commercial real estate sector were strong. Lending activity grew at a modest pace.\nEmployment and Wages\nConditions in the labor market continued to tighten, with wage pressures increasing as contacts noted shortages of qualified labor in various sectors. Widespread reports of continued shortages of skilled trade and construction workers resulted in a notable increase in wage pressures for those occupations. In Eastern Oregon, shortages of workers in both agriculture and manufacturing sectors pushed up wages significantly. Businesses in the banking sector reported an increase in the duration of job vacancies and continued difficulty finding qualified applicants. Rising labor costs in the District prompted some businesses to open new operations in cheaper locales. Contacts across the District noted that planned minimum wage increases to go into effect in 2018 are likely to affect their labor costs at all compensation levels.\nPrices\nOverall price inflation ticked down slightly over the reporting period. Contacts reported increasing deflationary pressures for generic drug prices partly due to a rise in FDA drug approvals. The elevated dollar continued to put downward pressure on agricultural commodity prices. Overcapacity in electricity production continued to restrain price growth over the reporting period. Contacts in the restaurant industry noted only slight upward price adjustments. Higher input costs and a strengthening global trade environment contributed to a moderate increase in scrap and finished steel prices. In the technology sector, prices for cloud services and tablets continued to trend downward due to increased competition and economies of scale. Prices for potatoes increased following the end of the fall harvest.\nRetail Trade and Services\nGrowth in retail sales picked up noticeably over the reporting period, helped by a solid holiday shopping season. E-commerce sales continued to outpace sales at traditional brick-and-mortar retailers. However, contacts noted that foot traffic at large shopping centers was better than expected during the holiday season. Vehicle dealers reported strong in-store traffic and sales, as activity rebounded from the previous months. A contact noted that online channels continued to disrupt the grocery industry, resulting in overcapacity and soft sales at brick-and-mortar stores.\nActivity in the consumer and business services sector continued to grow at a strong pace over the reporting period. The hotel industry reached peak capacity, having experienced steady increases in activity throughout the holiday season. Air travel was robust at the close of the year, driven by foreign demand. Demand for cloud computing and security software remained strong, supported by financial and business services sectors. In Hawaii, tourist spending and hotel revenues saw a notable increase in December. Contacts in Eastern Washington noted continued expansion of healthcare services in the region as the industry consolidates around a few large service providers. Animal boarding and health service activity increased as pet owners traveled over the holiday season.\nManufacturing\nConditions in the manufacturing sector remained solid. Contacts in Eastern Washington reported energy usage by major manufacturers in metals production and aerospace was consistent with a modest growth in output. Production of steel and manufactured metals picked up further due in part to a reduction in overseas competition. However, capacity utilization rates in the steel sector ended the year below long-run levels. Semiconductor production moderated as contacts cited uncertainty over government policy.\nAgriculture and Resource-Related Industries\nOn balance, activity in the agriculture sector improved modestly. Demand for organically grown crops remained strong. Conditions in the swine industry improved over the previous year. Farm equipment dealers reported higher-than-anticipated year-end demand based in part on an improved outlook. Crop yields in Central California slipped slightly at year-end, driven by the weak performance of certain nuts. The strong dollar continued to hold back exports of some agricultural commodities, particularly for wheat exports. Contacts noted minimal load growth in electricity as efficiency initiatives offset an increase in demand by customers.\nReal Estate and Construction\nActivity in real estate markets continued at a strong pace. Construction activity in the residential market remained robust, held back only by shortages of land and labor. High-end home construction grew faster than that of more-affordable units, due largely to narrowing profit margins in lower-end markets. Contacts in Oregon noted that milder and drier weather helped spur an increase in home sales. Low inventory levels and strong demand pushed up house prices and rents in Eastern Washington and Idaho. One contact expected that recent changes to the federal tax system could slow mortgage lending. Commercial construction continued at a strong pace, driven in part by an increase in construction of warehouse and distribution centers. Contacts in Northern California noted elevated demand for commercial office space.\nFinancial Institutions\nLending activity firmed somewhat over the reporting period. While loan demand was relatively unchanged in most of the District, contacts in the Mountain West reported continued strong gains. Contacts in California reported typical seasonal increases in automotive loans. Demand for deposits outpaced supply, pushing up deposit rates. Interest margins remained narrow. Contacts noted that liquidity was still very strong and overall delinquencies remained low.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2018/2018-01-da

"January 17, 2018\nSummary of Economic Activity\nThe Eleventh District economy expanded at a robust pace over the past six weeks. A broad-based acceleration in growth was seen across the manufacturing, retail, nonfinancial services and energy sectors. Home sales continued to increase over the reporting period, and loan demand grew. Hiring picked up, and wage and price pressures remained elevated. Outlooks improved, although some uncertainty remained, and numerous contacts were optimistic that tax reform would provide a tailwind to business growth.\nEmployment and Wages\nOverall employment growth picked up from six weeks ago, and upward wage pressure persisted at slightly elevated levels. Hiring rose at a markedly faster pace in manufacturing and retail, and at a somewhat faster pace in the service sector, led by health, transportation, and hospitality firms. In the energy sector, hiring slowed among exploration and production firms in the fourth quarter 2017 but ramped up notably among services firms. Labor market tightness continued in most industries and across a wide range of positions, with several contacts saying difficulty finding workers was constraining growth to some extent. Numerous contacts cited rising labor costs, with some noting acceleration over the past couple of months.\nPrices\nPressure on selling prices remained elevated over the past six weeks, notably so in manufacturing and retail. A pickup to above-average price growth was noted among services firms, particularly in finance and transportation, although airlines continued to report falling ticket prices due to increased competition. Looking ahead, overall price expectations increased, with some manufacturers and retailers specifically noting plans to increase prices in 2018 in response to higher labor and input costs.\nAmong energy firms, prices received for services continued to rise and were increasing at a much faster clip than a year ago. Natural gas prices stayed in roughly the same range as the prior reporting period, while oil prices rose slightly. Energy executives responding to the Dallas Fed Energy Survey expect oil prices to be about $59 per barrel by year-end 2018, on average, and about $66 per barrel longer term (three to five years).\nManufacturing\nExpansion in the manufacturing sector accelerated further at yearend 2017. Contacts reported stronger growth in both demand and output, particularly among high tech and transportation equipment manufacturing. Chemical production has also been very robust, and contacts along the border continued to see strong maquiladora activity. Growth generally moderated among firms closely tied to energy or exports, but a sharp rise in growth in the rest of the manufacturing sector more than offset that deceleration. Overall capital spending plans increased noticeably--half of the 104 firms responding to the December Texas Manufacturing Outlook Survey expect increased capital expenditures six months from now, the highest share since 2006. Optimism in firms' outlooks picked up notably, with some manufacturers indicating the tax bill may be a tailwind for manufacturing going forward. However, difficulty hiring remains a headwind, and uncertainty about NAFTA remains.\nRetail Sales\nRetail sales accelerated slightly over the past six weeks. The auto industry remained very strong, with a notable pickup in auto sales after a lull in the prior reporting period. In general, retail sales growth outpaced sales growth among wholesalers, and contacts noted a continued increase in internet sales. A clothing retailer said sales in the oil patch markets have stabilized versus last year. Along the border, some contacts reported continued weakness in retail. Outlooks among retailers in general remained quite positive.\nNonfinancial Services\nNonfinancial services activity picked up pace over the reporting period, ending 2017 with fairly robust growth. A sharp rise in revenue growth among leisure and hospitality firms was a boon to the service sector, while relatively slow growth among administrative and support services firms was a drag. However, staffing services companies reported broad-based demand growth, particularly in the manufacturing and health sectors. Contacts in smaller tourist areas affected by Hurricane Harvey such as Rockport and Port Aransas reported continued struggles in rebuilding and retaining business. Cargo volumes among transportation services firms generally increased. For rail cargo, petroleum and frac sand shipments were up over the reporting period, as were shipments of building products, with recent increases driven largely by hurricane reconstruction. Courier cargo volumes were up from six weeks ago and year over year. Overall, outlooks were more optimistic, although uncertainty remained--particularly surrounding trade negotiations and government regulations. A number of contacts expect the new tax bill to boost activity in 2018.\nConstruction and Real Estate\nHome sales continued to increase over the past six weeks, with sales remaining strong at low- to mid-price points. Contacts in Houston noted that sales and traffic were returning to a normal pace after Hurricane Harvey, and were flat or slightly ahead of last year. Contacts said new home sales in Dallas-Fort Worth were somewhat better than expected. Homebuilders generally did not report concern about the changes in the mortgage interest and property tax deductions in the new tax bill, but they did note ongoing pushback from buyers on new home pricing.\nLeasing activity in the apartment market was little changed since the last report, with rent growth in Fort Worth ahead of other major Texas metros. Office demand stayed solid in Dallas, moderated in Austin, and remained weak in Houston. The industrial market overall was characterized as steady to strong.\nFinancial Services\nDemand for loans increased over the reporting period, and overall loan volumes rose at a faster pace. Residential real estate loans picked up markedly, with more than 40 percent of bankers surveyed noting an increase in volumes over the past six weeks. Commercial real estate loans also increased at an accelerated clip, while commercial and industrial loan growth held steady at a modest pace. Contacts also noted an increase in consumer loan volumes for the first time since February 2017. Bankers reported a notable increase in loan pricing and a tightening in credit standards and terms. Contacts expressed higher levels of optimism about overall business activity and total loan demand going forward, with nearly two-thirds of bankers expecting stronger loan demand six months from now.\nEnergy\nEnergy activity was up from six weeks ago, as drilling in the Permian Basin and Eagle Ford increased and well completions continued to grow. Demand for oilfield services remained healthy in the Permian Basin, and activity in the Eagle Ford firmed. Some energy contacts noted an increase in lending and investment deals. Outlooks for 2018 improved, but remain conservative, with contacts expecting drilling activity, production and employment to grow this year.\nAgriculture\nThe 2017 row crop harvest wrapped up, with generally favorable crop conditions after a dry spell in November. Texas cotton production was up notably from 2016 due to more acres planted and higher yields. Cotton prices rose over the past six weeks, and contacts expect the relatively strong prices to prompt a shift of more acres from grain to cotton this year. Agricultural producers remained concerned about revenue, as grain prices continued trending at unprofitable levels. Loan demand has been decreasing for the last two years while loan renewals and extensions have increased, according to the Dallas Fed Agricultural Survey. Uncertainty about NAFTA is also a headwind for the agriculture sector, as many producers rely on export markets to move their production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2018/2018-01-ny

"Beige Book Report: New York\nJanuary 17, 2018\nSummary of Economic Activity\nEconomic activity in the Second District continued to grow at a moderate pace in the latest reporting period, and the labor market has remained tight. Input prices increased at a slightly faster pace, while selling prices continued to rise modestly. Fairly robust growth was reported in most service and distribution industries. Manufacturers reported that growth has slowed somewhat from its rapid pace during last summer and fall but remains fairly robust. Manufacturers also plan to increase capital spending substantially in 2018. Consumer spending has generally been flat. Housing markets have been steady overall, with continued weakness at the high end of both the sales and rental markets. Commercial real estate markets were also steady, on balance. Finally, banks reported a decline in loan demand, particularly from the household segment, while delinquency rates continued to decline across all loan categories.\nEmployment and Wages\nThe labor market has been steady and tight. Employment agencies generally report that labor market conditions have been strong, though one agency noted that the market is hard to gauge this early in the year--particularly due to the recent snowstorm. Businesses across all industries have had increasing trouble finding qualified workers, with some retailers struggling to find adequate seasonal staff. One large retail chain noted that they hired more holiday season workers than in 2016.\nBusiness contacts generally indicated that they continue to increase staffing levels modestly, though firms in the manufacturing and information sectors have scaled back hiring. However, hiring plans for the months ahead have grown increasingly strong.\nWages have accelerated modestly, and a growing proportion of firms said they expect to hike wages in the months ahead. The minimum wage across New York State rose by 7 to 18 percent, varying by location. An employment agency contact noted that recent New York City legislation restricting employers from asking about job candidates' salary histories may boost salary offers overall.\nPrices\nInput prices have accelerated, according to contacts in the manufacturing, wholesale, transportation, education & health, and leisure & hospitality sectors. In other industries, however, cost increases have remained subdued. Selling prices continued to rise only modestly in most industry sectors and even edged down in the transportation and information sectors. Two exceptions have been in manufacturing and wholesale trade, where selling prices have picked up noticeably. Retailers mostly report that prices have been flat or up modestly, whereas prices for Broadway theater tickets have continued to increase at a roughly 20 percent pace. Looking ahead, the only sectors in which businesses planned noticeable price hikes were in wholesale trade and leisure & hospitality.\nConsumer Spending\nRetail contacts reported that holiday season sales were mixed but steady overall. Retailers in upstate New York indicated that customer traffic was brisk, while sales were more lackluster. On the other hand, a large retail chain reported that sales picked up in December and were ahead of plan and up modestly from a year ago. The ongoing shift from brick-and-mortar to online sales reportedly accelerated this past season. Retailers remained mildly optimistic about the outlook. Inventories were generally reported to be at satisfactory levels.\nAuto sales in upstate New York were steady to somewhat softer as 2017 drew to a close. Vehicle inventories were said to be in fairly good shape. Dealers continued to characterize retail and wholesale credit conditions as favorable.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA) held steady near a multi-year high in December.\nManufacturing and Distribution\nBoth manufacturers and wholesalers reported that activity grew at a fairly strong pace, though not as briskly as in the prior reporting period. Transportation firms, on the other hand, noted that activity picked up noticeably, growing at a robust pace. Looking ahead, manufacturers continued to express widespread optimism about the near-term outlook and plan to substantially ramp up capital spending in 2018. Wholesale distributors have become increasingly sanguine, while transportation firms remained moderately optimistic.\nServices\nService-sector firms noted continued modest growth. Contacts in leisure & hospitality and professional & business services continued to report fairly widespread increases in activity, while information industry firms indicated some weakening in activity. Education & health service firms noted that activity picked up modestly after declining for a number of months. Service sector businesses were generally optimistic about the near-term outlook--particularly those in business & professional services and leisure & hospitality.\nBroadway theaters reported mixed results for December. Attendance was down about 7 percent from a year earlier, but revenues were up nearly 10 percent, reflecting a sizable increase in ticket prices.\nReal Estate and Construction\nThe housing market across the District has been mixed but, on balance, stable. Real estate contacts in upstate New York report that, despite a typical seasonal slowing in sales activity, strong demand and tight inventories continues to boost prices. In northern New Jersey, sales volume has been subdued and prices have been flat to up slightly. In the lower Hudson Valley and southwestern Connecticut, sales volume has plateaued at a high level; selling prices have risen moderately, except at the high end of the market, where they have languished. Long Island's market has been somewhat more robust, with prices rising and some pickup in activity at the high end of the market.\nNew York City's sales market has been softer. Median prices of existing condos and co-ops have been flat overall--rising at the entry level, where inventories are lean, but declining at the high end, where there is a large supply.\nNew York City's rental market has continued to soften, mainly at the high end. Landlord concessions on higher-end rentals have remained prevalent, and more recently face rents have declined. A major real estate appraiser estimated that effective rents are down 5-7 percent from a year ago on higher end units but up modestly on smaller, entry-level apartments.\nIn areas around New York City, there has been some concern that the new federal tax legislation, which limits deductions for mortgage interest and especially property and state income taxes, will weaken the housing market, especially the high end. However, this is seen as much less of a concern in upstate New York.\nCommercial real estate markets have been mixed but mostly steady overall. Office availability rates have climbed modestly in New York City, remained steady in Long Island and Fairfield County, and have edged down in northern New Jersey. Asking rents for office space have remained essentially flat. The industrial market has been more robust: vacancy rates have steadied at very low levels, and asking rents have risen briskly. The retail market, in contrast, has softened further, with vacancy rates rising, while asking rents have been flat to up slightly.\nBanking and Finance\nSmall to medium-sized banks in the District reported weakening demand for consumer loans, residential mortgages, and C&I loans, but no change in demand for commercial mortgages. Bankers also reported a decrease in refinancing activity. Credit standards were tightened somewhat on commercial mortgages but left unchanged for other types of loans. Bankers reported rising loan spreads for commercial loans and mortgages. Finally, bankers reported continued improvement in delinquency rates 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"

Cleveland

/beige-book-reports/2018/2018-01-cl

"January 17, 2018\nSummary of Economic Activity\nBusiness activity in the Fourth District grew at a moderate pace since our last report. Labor markets continued to tighten. Challenges in attracting and retaining qualified workers, especially for low-skills jobs, contributed to wage pressures. Manufacturers and professional services providers experienced pushback when attempting to increase their selling prices. Retailers reported higher-than-expected sales for the early part of the holiday shopping season. Manufacturing output grew, albeit at a slow pace. Freight transport and nonfinancial services firms saw moderate to strong gains in activity. The housing and commercial real estate markets remained healthy.\nEmployment and Wages\nDistrict labor markets continued to tighten during the survey period. The strongest activity was found in the construction and nonfinancial services sectors. After softening late in the second quarter, hiring by manufacturers has been trending slowly higher. A large majority of contacts reported they are replacing departed workers; the share of firms creating new jobs was stable. The main labor-related challenge reported was attracting and retaining workers for low-skills and, to a lesser extent, middle-skills jobs. In response, firms are raising wages and creating career paths within these job categories. A professional services contact reported boosting wages for select low-skills jobs by up to 20 percent, while a fast food executive said that wages at her restaurants are now up to $11 per hour. Higher labor costs were difficult to pass through to customers because of competitive markets. Turnover is reportedly much less of an issue in high-skills and STEM jobs.\nPrices\nUpward pressure on input costs remained strong, especially in the construction and nonfinancial services sectors. Building contractors generally attributed higher materials prices to rebuilding efforts from last summer's hurricanes. Trucking firms cited rising prices for fuel and maintenance products. Price spikes for petrochemical products resulting from the hurricanes are beginning to moderate. Reports on selling prices were mixed. Building contractors, trucking firms, and railroads all reported rate increases in response to higher input costs, including labor costs, and a desire to widen margins. One construction contractor reported raising rates up to 10 percent during the past two months. A trucking firm cited across-the-board rate increases of 6 percent to 12 percent. In contrast, reports indicated a decline in manufacturer selling prices on net, mainly because of competitive pressures. Professional services firms described their billing rates as flat. Some of these firms are feeling pressure from clients to lessen the rate of increase in billing rates or to reduce rates overall for the next year or two.\nConsumer Spending\nAn improving outlook, on the part of most retailers, continued into the holiday shopping season. Retail chains that invested in technology to enhance customers' shopping experiences saw improving same-store sales. One chain reported that a growing share of online orders are for in-store pickup. This model has been good for generating increased in-store sales when the customer comes in to pick up an order. Another smaller chain is testing same-day delivery options in order to keep up with consumer expectations set by big retail players. A fast food chain observed that the average revenue per transaction from recently installed self-service kiosks was higher than transactions generated by cashiers. Anecdotes suggest that revenues for the early part of the holiday shopping season are moderately higher when compared to those of the same period a year ago, and they are also higher than expected. Cold weather across the District and the use of promotional discounting are believed to be contributing to higher revenues. One large chain reported that this is the first holiday season for which gains from e-commerce are expected to offset losses from brick-and-mortar operations. Year-to-date unit sales through November of new motor vehicles rose 3 percent compared to those of a year ago. One dealer commented that interest rate changes have not yet made an impact on new-car transactions.\nManufacturing\nManufacturing output continued to strengthen, albeit at a slow pace. Several contacts cited an improving economy as the primary reason for new orders, while others pointed to ongoing strength in the construction and motor vehicle industries and stability in the energy sector. Contacts linked to the petrochemical industry reported a residual boost in activity resulting from hurricane-related damage. Steel producers saw rising activity, which they generally credited to increased manufacturing output. One steel producer noted that some of his customers are concerned that the domestic economy may be reaching the peak of the current business cycle, resulting in a dampening in capital investment. Year-to-date production through November at District auto assembly plants declined about 20 percent when compared to that of the same period a year earlier. The decrease can be attributed to retooling for a next-generation sport utility vehicle and cutbacks in small passenger car production. Contacts reported a pull back on spending for plant expansions and product development after spending rose during most of the second half of 2017. Our contacts' outlook calls for a moderate pickup in the pace of growth in the near term.\nReal Estate and Construction\nSeveral homebuilders reported that they have not seen the typical seasonal decline in demand. One builder attributed this situation to low interest rates, a healthy economy, and low inventory of existing homes. Looking across the District, unit sales of new and existing single-family homes during November 2017 were almost 4 percent higher when compared to unit sales of November 2016. The average sales price rose more than 6 percent. Homebuilders are concerned about declining lot inventory and the availability of land.\nDemand for nonresidential construction services remains at a high level. A majority of contacts cited their customers' confidence in the economy as the primary driver for the strong demand. Property development was broad based. We heard reports about a pickup in office construction and owners' expanding the scope of their projects. Backlogs increased during the survey period and were at high levels. A moderate increase was reported in selling prices for office and industrial properties during the first nine months of 2017 compared to those of the same period in 2016. During the same time frame, reports indicated a decline in the number of apartments coming on the market. Apartment rents continued to trend moderately higher.\nFinancial Services\nBusiness lending trended up slowly across loan products, and bankers saw higher loan balances on a year-over-year basis. Increasing confidence in the economy was frequently cited for rising credit demand. Merger and acquisition financing remains strong. An accounting executive said that his firm has performed more acquisition work during 2017 than in the past five years combined. A large-bank contact reported that although his pipeline for loans remains strong, the closure rate is relatively weak. He attributed this situation to seasonal factors and uncertainty spawned by political activity at the federal level. Consumer lending weakened along seasonal trends, with several contacts reporting declines in credit card balances and drawdowns on HELOCs.\nNonfinancial Services\nFreight volume increased at a moderate to strong pace during the period. Demand was broad based but was driven especially by demand for steel products and by the energy sector. Strong growth in e-commerce was also mentioned as driving up volume. Capacity constraints and labor shortages were cited as factors contributing to escalating shipping rates. Current freight volumes are expected to continue in the near term. Professional services firms experienced moderate gains in activity. The strongest gains were reported by firms that assist customers in applying digital technologies to both production and back-office activities.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2018/2018-01-ri

"January 17, 2018\nSummary of Economic Activity\nSince our previous report, the Fifth District economy expanded at a moderate pace. Manufacturing activity picked up modestly, overall. Trucking firms continued to report robust growth compared to the prior period, while district ports experienced a mild seasonal slowdown, but strong year-over-year increases. Retailers saw a moderate increase in sales, with many stores citing better than expected holiday shopping this year. Tourist activity was strong in recent weeks, particularly at ski resorts. Home prices generally rose. Meanwhile, commercial real estate activity increased moderately. According to lenders, residential loan demand was flat while commercial loan demand rose moderately. Nonfinancial services firms reported moderate revenue growth. Labor demand increased modestly and firms had difficulties finding workers across a broad range of occupations. Wage pressures broadened moderately and many employers planned to raise starting wages. On balance, prices increased at a modest pace.\nEmployment and Wages\nOn balance, the demand for labor increased modestly in recent weeks, but several firms indicated that hiring was constrained by the tight labor market. Some of the most hard-to-fill positions were restaurant workers and chefs, construction workers and managers, nurses, retail workers, administrative assistants, software engineers, electricians, and truck drivers. A trucking company said that the labor shortage left many trucks sitting idle and was putting upward pressure on driver wages. In general, wage pressures broadened moderately as more businesses reported increasing starting wages. Many also planned to raise wages for existing employees, particularly for high performers.\nPrices\nPrices grew at a modest pace overall, since our previous report. According to our latest surveys, prices paid for manufacturing inputs slightly outpaced a modest rise in selling prices. Manufacturers of textiles, paper, wood products, chemicals, and plastics saw the largest increases in input goods prices. Food manufacturers, on the other hand, reported some of the smallest input price increases. In the service sector, price growth continued at a modest pace. Manufacturers and service sector firms expected prices to grow at a slightly faster pace over the next six months. Natural gas prices increased modestly, in recent weeks, while steam coal prices inched up and metallurgical prices rose modestly.\nManufacturing\nDistrict manufacturing activity increased at a modest pace, overall. A West Virginia rubber manufacturer said that sales picked up in recent weeks after a somewhat weak year, and they were optimistic that growth would continue in the coming months. Packaging and metal manufacturers reported moderate growth while a Virginia food company noted a slight uptick in sales. In contrast, a North Carolina machinery manufacturer reported one of the worst months on record, and a South Carolina paper product manufacturer reported a continued decline in business. According to our survey, vendor lead times increased on average, and many firms reported longer delivery times despite higher delivery costs.\nPorts and Transportation\nDistrict ports reported robust year-over-year growth in shipping volumes despite a slight seasonal slowdown in recent weeks. Ports continued to handle more imports than exports, but some expected the gap to narrow in coming months. A Maryland port reported increased exports to the Middle East, coinciding with the rise of oil prices. Trucking companies continued to see robust growth in the past several weeks, which was especially noteworthy since they usually see a seasonal downturn at the end of the year. Some firms were unable to meet rising demand, as they were constrained by lack of truck drivers. Trucking companies expressed concerns that the newly mandated use of electronic logs could lead to an even greater shortage of drivers and lead to more mergers and acquisitions in the trucking industry.\nRetail, Travel, and Tourism\nDistrict retailers generally reported moderate sales growth since our previous report, with many stores experiencing better-than-expected holiday sales. A Virginia hardware store had robust sales growth, particularly for power equipment and high-end grills. Meanwhile, a furniture store reported strong growth and a slight increase in its profit margin. A high-end women's clothing store noted slightly weaker sales, attributing much of the softening to online competition. A North Carolina auto dealer saw a surge in sales and a Virginia auto dealer reported a rise in sales of parts.\nFifth District tourism remained strong in recent weeks. A West Virginia ski resort was booked to capacity through the holidays and is on track for a record breaking season. Demand for hotel rooms rose across the District, although some North Carolina hotels reported slowing business and pressure to lower rates due to competition from newly built hotels and by-owner rental units. Hotels in D.C. and Virginia noted typical seasonal declines in rates and occupancy.\nReal Estate and Construction\nResidential real estate markets improved modestly in the past few weeks. Most contacts noted a seasonal slowdown, although one broker reported \"unusually strong traffic for December.\" Sales prices were generally up and inventories were down. In fact, there were numerous reports of low inventories inhibiting activity, particularly at the more affordable price points. Real estate professionals generally indicated that the higher the price level, the broader the availability of homes for sale. In some markets, construction continued at a moderate pace--including in multifamily--while others reported very limited new home construction.\nOn the whole, commercial real estate activity picked up moderately in recent weeks, with low vacancy rates, strong absorption rates, and rising rents, despite the usual seasonal slowdown in leasing. However, there were some reports of softening activity particularly in office and in retail. A broker from Baltimore expects more retail store closures in 2018. In contrast, a broker in South Carolina said that retail construction was very active but office rents were flattening due to minimal white collar job creation in his market. He noted, however, that industrial leasing and construction activity was strong, and that speculative building was occurring for the first time since 2008. He also stated that multifamily construction, while slowing, was still active. Finally, a contact from D.C. reported that the skilled-labor shortage in construction has been the root of rising costs for a while, but the shortage recently started to manifest itself in deteriorating work quality and project delays.\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 a year earlier. Deposits rose moderately, on balance, in recent weeks. On the commercial side, demand picked up moderately. In South Carolina, industrial lending was the most active. In West Virginia, the demand for coal and natural gas operating and expansion loans were increasing. Credit quality remained high throughout the District. However, credit standards loosened slightly as competition for loans led to more concessions on lending terms. Interest rates increased slightly, overall.\nNon-Financial Services\nNonfinancial services firms continued to report moderate growth in revenues. The most upbeat reports came from professional and business services, administrative and support services, and legal services. A law firm in West Virginia said they had the best quarter since the recession. An administrative support firm said that clients were willing to pay higher fees for temporary staff, which was helping to boost their profits. Utility companies continued to report rising demand as temperatures declined.\nAgriculture and Natural Resources\nCoal production was little changed in recent weeks but was up considerably compared to the same time last year. Exports of coal, particularly to China, were responsible for much of the growth. Meanwhile, natural gas drilling and pipeline development work picked up moderately. A hardwood producer reported a modest rise in export demand.\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

/beige-book-reports/2018/2018-01-ph

"January 17, 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. Nonauto retail sales, tourist activity, manufacturing, and nonfinancial services grew modestly, while new home construction and existing home sales appeared to grow slightly. Little change was noted by contacts in nonresidential construction and nonresidential leasing markets. Auto sales appeared to have declined modestly. On balance, employment, wages, and prices continued to grow modestly. Most firms anticipated continued growth over the next six months--a somewhat higher percentage than during the prior period.\nEmployment and Wages\nEmployment continued to grow at a modest pace during the current Beige Book period, although reports of net additions to staff edged lower for both manufacturing and nonmanufacturing firms. Average hours worked edged lower over the period for manufacturing firms but rose among nonmanufacturers.\nOn balance, wage growth held steady at a modest pace, although the percentage of nonmanufacturing firms reporting increases slipped below 40 percent. One manufacturing firm noted that significant annual increases in health-care costs precluded the firm's ability to offer wage increases; several other firms cited difficulties with rising benefit costs. A few contacts commented on the recent news that numerous large firms had announced plans to offer bonuses this year and/or to raise their minimum wage rates.\nIn one of the District's tighter labor markets, a staffing firm reported that wages had risen 4 percent over the year, while various firms from that same market noted that they were very busy, but the lack of qualified labor was constraining their growth. In the Poconos, the tight labor market was impacting firms' ability to fill low-skilled jobs and middle management positions.\nPrices\nOn balance, price levels continued to rise modestly, although most contacts indicated no change in prices paid and received. Across all contacts, the percentage of firms reporting increases in prices received for their own goods and services was somewhat higher during the current period than the prior period. For prices paid, the percentage of manufacturing firms reporting increases rose, while the percentage of nonmanufacturing firms reporting increases fell.\nRetailers and banking contacts reported few signs of inflationary pressure, and builders noted little change to the typical price increases for construction materials. Overall, existing home prices continued to rise, with some variation across markets and price categories.\nManufacturing\nOn balance, manufacturing activity continued at a modest pace of growth, with a few signs of slight improvement. The percentage of firms reporting increases in new orders rose slightly compared with the prior period but changed little for shipments.\nThe makers of paper products, chemicals, primary metal products, industrial machinery, and electronic equipment continued to note gains in new orders and shipments; firms in the lumber and fabricated metal sectors reported declines in activity.\nA majority of manufacturing contacts continued to expect general activity to increase over the next six months. The percentage of firms expecting future increases for general activity rose above 60 percent. By comparison, the percentage of firms expecting increases in future capital expenditures and future employment held mostly steady at levels just above 40 percent. However, a somewhat higher percentage of firms expected decreases in future employment compared with the prior period.\nConsumer Spending\nOn balance, nonauto retail sales appeared to grow modestly over the holiday season--an improvement over the prior period. Contacts reported that sales started flat, but growth materialized in the weeks before and after Christmas. The abnormally cold December temperatures lifted sales of warm weather apparel, and long lines of last-minute shoppers were noted at mall jewelry stores.\nAuto dealers reported modest declines overall in year-over-year sales this period, a further deterioration from slight decreases during the prior period. Nevertheless, sales remain at high levels. While early reports from Pennsylvania dealers suggested a slight increase, later reports from New Jersey dealers noted that the cold weather dampened sales, which are normally very strong in late December due to year-end bonuses. However, this year dealers felt that \"people with cash on hand ran to the municipal tax office to prepay property taxes, not buy cars.\"\nTourism contacts continued to report modest growth overall. A Poconos contact reported that ski resorts were sold out on weekends and that visitors exhibited confidence by extending their stays and keeping restaurants busy. In November, Atlantic City's casino revenues continued to grow modestly relative to the prior year. However, the January 4 bomb cyclone limited activity over this period's final weekend as shore areas dug out from heavy snows and skiers in mountain resorts were greeted by single-digit temperatures.\nNonfinancial Services\nOn balance, service-sector firms have continued to report modest growth in general activity since the prior Beige Book period. The percentage of firms reporting a higher level of sales has increased since the last period; however, the percentage reporting greater orders has declined. Expectations about future growth have remained positive, with well over half of the firms anticipating increased activity, marking little change since the prior Beige Book period.\nFinancial Services\nFinancial firms reported modest growth of overall loan volumes (excluding credit cards)--similar to the prior Beige Book period. Loan volumes grew modestly in home equity lines and auto loans, while mortgages and commercial real estate loans grew slightly. Growth in commercial and industrial loan volumes was stronger, while the volume of other consumer loans fell.\nThe significant seasonal increase in credit card volumes anticipated for the recent holiday period did occur and was comparable in size to the increase during the same period last year.\nBanking contacts described solid ongoing economic growth in most parts of the District. Several noted that previously hot sectors, including commercial real estate and multifamily housing, appear to have plateaued or cooled off a bit. Credit quality was portrayed as very good; one contact reported telling bank staff to \"take a picture,\" as the bank's loan portfolio was so sound.\nReal Estate and Construction\nHomebuilders continued to report slight growth in activity during the current period. One builder noted that the company's backlog of sales is off considerably from last year and that other local builders are also feeling a slowdown that began last summer.\nOn balance, brokers in Third District housing markets continued to report slight growth of existing home sales. In most local markets, exceedingly low inventories of houses constrain sales and place upward pressure on house prices.\nNonresidential real estate contacts reported no significant changes in the high levels of overall construction activity. Commercial contractors focused on Philadelphia noted that 2017 was a strong year and that activity should continue through 2018. New project announcements are needed to extend current activity levels into 2019. Rising lease rates and new construction of industrial/warehouse space continued to be noted in many Third District markets. Essentially, little change was noted in the level of leasing activity, although markets vary significantly by sector and geography.\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"

Kansas City

/beige-book-reports/2017/2017-11-kc

"Beige Book Report: Kansas City\nNovember 29, 2017\nSummary of Economic Activity\nEconomic activity in the Tenth District increased moderately in October and early November, and most sectors expected continued moderate growth in future months. Transportation and manufacturing contacts reported a strong increase in activity, and professional, high-tech, and wholesale trade activity expanded at a moderate pace. District real estate activity continued to increase at a slight pace, while consumer spending contacts indicated growth was unchanged since the previous survey period. District energy activity continued to grow modestly and bankers reported steady overall loan demand, stable deposit levels, and unchanged loan quality. Agricultural conditions weakened but at a slower pace, with subdued farm income and lower farmland values in most areas. Employment and employee hours increased in most sectors, and contacts reported modest wage growth with further moderate increases expected. Input and selling prices were up moderately over the previous survey period in most sectors.\nEmployment and Wages\nRespondents in the wholesale trade, professional services, real estate, and manufacturing sectors reported an increase in employment, while respondents in the auto industry noted a slight decline. A significant majority of respondents in the District expected either increasing or unchanged employment levels in the next twelve months, due primarily to higher expectations of sales growth. Contacts in the manufacturing sector and most of the services sector with the exception of the auto industry reported rising employee hours. Respondents noted a shortage of commercial drivers, skilled technicians, and service workers. The primary factors cited as restraining hiring plans were a desire to keep operating costs low followed by the lack of available qualified workers.\nContacts in most sectors reported modest wage growth and expectations were for moderate wage growth in the coming months. Additionally, the majority of District contacts noted rising wages for both new and existing employees.\nPrices\nOverall, input prices were up moderately compared to the prior survey period, and selling prices also increased at a moderate pace. Respondents in the retail sector reported moderately higher input and selling prices, with both expected to rise strongly moving forward. Restaurant input prices increased moderately, while selling prices edged up. Transportation contacts reported moderate growth in both input and selling prices and anticipated strong increases in the coming months. Construction prices continued to increase at a moderate pace with modest increases expected in the next few months. Manufacturers reported a slight increase in prices for finished goods, while raw material costs continued to edge higher. Manufacturers anticipated moderate growth in both finished goods and raw materials prices over the next few months.\nConsumer Spending\nConsumer spending activity was mostly flat in October and early November, while expectations for future growth increased at a moderate pace. Retail sales increased moderately over the previous survey period, and remained above year-ago levels. Several retailers noted an increase in sales for lower priced and discounted items, while higher-priced products sold poorly. Contacts anticipated sales to rise considerably in the next few months, and inventory levels were expected to increase moderately. Auto sales continued to fall moderately and were well below year-ago levels. Dealer contacts anticipated a moderate pickup in sales for the months ahead. Auto inventories were expected to remain stable heading forward. Restaurant sales increased slightly and were modestly above year-ago levels. Contacts expected a mild decline in activity heading forward. District tourism activity was slightly lower than the previous survey and below year-ago levels. Tourism contacts expected activity to increase moderately heading into the winter months.\nManufacturing and Other Business Activity\nManufacturing activity expanded at a strong pace in October and early November, and the majority of other business contacts reported moderate to strong sales increases. Manufacturers reported sustained growth in production, particularly for metals, plastics, and electronics products. Shipments, new orders, and order backlog grew at a solid pace, and activity was higher than a year ago. Manufacturers' capital spending plans rose moderately, and firms' expectations for future activity remained favorable.\nOutside of manufacturing, transportation firms reported strong sales increases, while professional, high-tech, and wholesale trade contacts indicated more moderate growth. All firms expected a strong improvement in sales in the next six months. Professional, high-tech, and wholesale trade firms reported modest growth in capital spending plans, while transportation firms anticipated a moderate decrease in capital expenditures heading forward.\nReal Estate and Construction\nDistrict real estate activity continued to expand at a slight pace in October and early November. Residential home sales remained steady since the previous survey period, but expectations for home sales were modestly negative in the coming months. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential home prices rose modestly, while inventories fell further. Residential construction activity edged up, as construction supply sales increased modestly while new home starts were flat and traffic of potential buyers fell moderately. Commercial real estate activity continued to expand at a modest pace as absorption, completions, and sales rose, while vacancy rates declined. Activity in the commercial real estate sector was moderately above year-ago levels, and expectations were positive moving forward.\nBanking\nBankers reported steady overall loan demand for the month of October. A majority of respondents indicated a stable demand for commercial and industrial, commercial real estate, residential real estate, agricultural and consumer installment loans. Most bankers indicated loan quality was unchanged compared to a year ago. In addition, most respondents expected loan quality to remain essentially the same over the next six months. Credit standards remained largely unchanged in all major loan categories. Finally, results for the trends in deposits were varied with no discernible majority.\nEnergy\nTenth District energy activity continued to grow modestly and expectations for future activity were positive. The number of active oil and gas rigs moderated somewhat, particularly oil rigs in Oklahoma. Still, oil and gas production was expected to increase since most drilling activity focused on development rather than exploration. Activity picked up modestly in New Mexico's San Juan Basin and Colorado's Denver-Julesburg Basin. Activity in Oklahoma's Arkoma basin, a predominately natural gas play, also expanded modestly since the last survey period. Respondents continued to focus on operating within cash flows, but said private equity capital remained readily available.\nAgriculture\nThe District farm economy and credit conditions continued to weaken since the previous reporting period, but the pace of the declines slowed. Farm income remained weak in November, which continued to reduce working capital and increase demand for financing. Farm loan repayment rates also generally declined, but at a more moderate pace than in the previous reporting period. District contacts reported that stronger livestock markets and expectations of a strong fall harvest kept loan repayment rates from declining more sharply. Farmland values also moderated further in most areas, but remained steady in areas where crop production was particularly high. District contacts noted that credit monitoring has increased slightly and interest rates on farm loans have edged higher alongside the elevated risk in the sector. However, most contacts expected only minimal sales of farm assets to improve cash flow and working capital.\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

/beige-book-reports/2017/2017-11-cl

"November 29, 2017\nSummary of Economic Activity\nBusiness activity grew at a moderate pace in the Fourth District since our last report. Labor markets continued to tighten. Challenges in attracting and retaining qualified workers contributed to wage pressures. Supply chain disruptions furthered upward pressure on input costs. Retailers saw a boost in brick-and-mortar traffic, while new motor vehicle sales strengthened. Manufacturing output grew at a modest pace overall, but production at District motor vehicle assembly plants trended lower. Nonfinancial services and freight transport firms saw moderate to strong gains in activity. Homebuilders and realtors expressed concern about the impact of rising home prices on the first-time buyer market. Activity in commercial real estate remained elevated.\nEmployment and Wages\nA boost in hiring that began in the third quarter continued during the survey period. The strongest activity was found in the construction and nonfinancial services sectors. Retailers reported a seasonal increase in payrolls. The spike in bank hiring late in the third quarter has faded. Staffing changes at banks are now in line with levels seen for most of 2017. A majority of contacts reported they are replacing departed workers and that the share of firms creating new jobs remains high. Attracting and retaining qualified workers, both low- and high-skilled, is a challenge facing many of our contacts across industry sectors. A growing number of firms reported increasing wages more frequently or giving mid-year bonuses as a means of retention. The strongest wage pressures were found in the banking and retail sectors.\nPrices\nUpward pressure on input costs remained strong, while the share of contacts who reported they were increasing selling prices was at its highest level since the end of the second quarter. Higher input costs were widespread in the construction, manufacturing, and nonfinancial services sectors. Construction contractors generally attributed higher materials prices to rebuilding efforts resulting from recent hurricanes and ongoing disputes with Canada over lumber tariffs. Manufacturers cited hurricane-related damage to petrochemical plants as the primary reason for near-term price spikes for a wide-range of petrochemical products. One report indicated that the price of resins has risen 20 percent. Another manufacturer pointed to speculation driving up commodity prices to unsustainably high levels, causing material costs to grow significantly. However, he expects these prices to fall from these high levels. The home building and freight hauling industries reported the highest share of companies raising their selling prices. Several freight haulers reported that FEMA contracted with carriers from across the country to assist in hurricane rebuilding, further limiting freight capacity, which is already tight. The end result is a boost in freight rates and higher labor costs. Once the hurricane damage is overcome, expectations are that freight rates will decline.\nConsumer Spending\nRetailers' outlooks were generally more upbeat when compared to their outlooks during recent reporting periods. A few contacts noted that efforts to improve the customers' shopping experiences, including technology upgrades, have resulted in increased store traffic. A specialty apparel chain reported that consumers seemed a little more confident and that the chain's products are resonating with customers. A furniture retailer said that despite higher expectations set earlier in the year, he is still experiencing revenue growth across his stores ranging from 2 percent to 5 percent. Most contacts are cautiously optimistic heading into the holiday shopping season. Year-to-date unit sales through September of new motor vehicles rose 2 percent compared to those of a year ago. That said, auto dealers reported that they are starting to see a slowing in demand after seven consecutive years of gains. One OEM remarked that the outlook for 2018 and 2019 is uncertain, but early projections call for new vehicle transactions nationally to decline about 2 percent from 2017 levels.\nManufacturing\nLittle change was seen in the manufacturing sector during the period, with output largely expanding at a modest pace. The strongest levels of activity were reported by suppliers to the aerospace, consumer electronics, motor vehicle, oil and gas, and residential construction industries. An aerospace executive noted that her industry is reporting strong backlogs and order books and more aggressive production schedules. Steel producers and service centers are seeing rising volume. One service center indicated that volume increased 13 percent when compared to year-ago levels. Year-to-date production through September at District auto assembly plants declined about 20 percent when compared to that of the same period a year earlier. The decrease can be attributed to retooling for two next-generation vehicles and to cutbacks in small passenger car production. Manufacturers reported an increase in spending for plant expansions and product development after spending declines in the third quarter. The outlook by our contacts calls for a gradual pickup in the pace of growth in the near term.\nReal Estate and Construction\nYear-to-date unit sales through September of new and existing single-family homes increased 1 percent compared to those of a year earlier. The average sales price rose 5 percent. Homebuilders are concerned about rising input costs (land, development, materials, and labor) and the negative impact these costs may have on the first-time buyer market. One builder reported that he can no longer build a starter home for less than $200,000. A realtor noted that although the market is seeing a high number of first-time buyers, the major challenge is a shortage of properties, a limitation which results in multiple-offer situations.\nComments from commercial contractors were mainly unchanged from our last report. Activity remains at elevated levels. Property development was broad based except in retail, for which demand continued to be weak. Backlogs were stable at high levels. The downturn in inquires cited in the third quarter has abated. A moderate increase was reported in selling prices for office and industrial properties during the first nine months of 2017 compared to those of the same period a year ago. During the same time-frame, reports indicated a decline in the number of apartments coming on the market. Apartment rents continued to trend moderately higher.\nBanking\nBusiness and consumer lending increased during the period, but both segments reported a modest pace of growth. On the business side, M&A financing and CRE loans are healthy, while the market for C&I loans to manufacturers is soft. Indirect auto lending and purchase mortgages remain relatively strong. When asked about why lending is not growing at a more robust pace, one banker reported that because of government uncertainty, customers are moving back to the sidelines. Another contact said that although the economic environment is positive, it is not yet strong. Some bankers mentioned their uncertainty about how much of their market share is being captured by non-bank lenders, especially for C&I loans. Credit quality was stable at a strong level.\nNonfinancial Services\nFreight volume generally increased beyond what can be accounted for by seasonal factors. Rail and trucking firms cited growth in manufacturing output and the energy sector and a need to deliver supplies for hurricane relief as driving stronger demand. There is concern about the industry's facing capacity constraints by year's end because of electronic logging device requirements and rebuilding from recent hurricanes.\nProfessional and business services firms saw moderate to strong gains in activity during the period. Engineering and architecture firms attributed the gains to clients' rising capital budgets. One architect reported a two-year backlog. An IT firm remarked that clients continue to migrate toward cloud-based solutions versus premise-based solutions as clients struggle to staff their own IT departments.\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/2017/2017-11-sl

"Beige Book Report: St Louis\nNovember 29, 2017\nSummary of Economic Activity\nEconomic conditions in the District have improved at a modest pace since our previous report. Labor market conditions remain tight as most firms reported raising starting wages and salaries as a way to attract new workers. Reports on consumer spending were somewhat weak, and reports from other nonfinancial service firms were mixed. Manufacturing contacts reported slight growth, and banking conditions improved moderately. The outlook among District firms surveyed in mid-November was generally optimistic. On net, 49 percent of contacts expect District economic conditions in 2018 to be better or somewhat better than 2017. This outlook was slightly weaker than the outlook from the mid-August survey, but it is a modest improvement from the outlook one year ago.\nEmployment and Wages\nEmployment has increased modestly since the previous report. Of the business contacts surveyed in early November, on net, one-third of contacts reported that employment was higher or slightly higher than a year ago. Of those hiring, over half expect to increase their firm's employment over the next year, while 40 percent expect to hire only to replace departing workers. Contacts cited growth of sales, a need for skills not possessed by their current staff, and overworked staff as the top factors for hiring. Contacts cited an inability to find workers with the required skills as a key factor restraining hiring plans, behind only a desire to keep operating costs low.\nContacts have reported moderate wage growth since the previous report, as tightness in the labor market has resulted in upward pressure on wages. On net, 61 percent of contacts reported wages were higher or slightly higher than a year ago, and 68 percent reported increases in labor costs. Nearly 80 percent of those hiring reported raising starting wages or salaries to attract new hires, while about two-thirds reported raising wages or salaries to retain existing employees.\nPrices\nPrice pressures have continued to increase modestly. Overall, prices charged to consumers increased slightly, but the pace of growth slowed during the fourth quarter. On net, 15 percent of business contacts reported that prices charged to customers were higher than a year ago. Conversely, growth in non-labor costs was moderate. On net, 45 percent of contacts reported that costs were higher than a year ago.\nMultiple contacts in Louisville reported rising construction costs, and a Memphis contact noted a significant increase in lumber prices. In the energy sector, coal prices increased moderately.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate consumer spending has slightly declined since our previous report. Although October real sales tax collections increased in Kentucky and Tennessee, they decreased in Missouri and Arkansas. Multiple auto dealers reported a decline in sales, which have failed to meet their expectations during 2017. Memphis and Louisville dealers noted a shift in demand away from used vehicles. Reports from hospitality contacts were mixed.\nManufacturing\nManufacturing activity has increased slightly since our previous report, although the pace of growth has continued to slow. In a recent survey, contacts reported that production and capacity utilization were unchanged in the fourth quarter relative to one year ago, while a slight majority on net reported an increase in new orders. The results are down from this time last year, when over half of contacts on net reported increases in production and capacity utilization and over one-fourth reported increases in new orders. Contacts are also less optimistic about the next quarter, with only around 10 percent on net expecting increases in production, capacity utilization, and new orders, compared with over three-fourths expecting increases in all three areas at this time last year. Despite the weaker outlook, several companies reported new capital expenditure and facility expansion plans, including firms that manufacture transportation equipment and food products. In addition, some contacts reported supply disruptions as a result of hurricanes, and other contacts expressed concern about a slowdown in the auto industry.\nNonfinancial Services\nConditions in the service sector weakened from the previous period, but remain positive on net. Reports of fourth-quarter sales were mixed. About one-third of contacts reported higher dollar sales in the current quarter than this time last year; however, one-third reported lower dollar sales. Despite mixed sales reports, about two-thirds of transportation and service contacts reported that sales met or exceeded expectations. Over half of contacts expect sales to be higher in the next quarter than they were last year. Firms that provide information technology services reported plans to expand facilities and hire employees. Reports from the healthcare sector indicate modest growth since the previous period. Healthcare contacts report that heightened uncertainty surrounding policy decisions over the past year has become an operating norm, and some providers are moving forward with small capital expansions.\nReal Estate and Construction\nResidential real estate activity has remained unchanged since the previous report. Seasonally adjusted home sales for September were flat relative to the previous month across the District's four largest MSAs. Local contacts continued to report that shortages in inventory have hindered sales; on net, about one-quarter of contacts reported that sales have fallen short of expectations halfway through the fourth quarter.\nResidential construction activity improved modestly. September permit activity increased moderately relative to the prior month. However, few contacts indicated that construction activity has increased compared with a year ago. Local contacts continued to report that a shortage of labor is preventing homebuilders from meeting demand.\nCommercial real estate activity has improved modestly since the previous report. Contacts reported relatively strong demand for most property types, particularly office and industrial. These trends are expected to continue into the first quarter of 2018.\nCommercial construction activity remained flat. Several Memphis contractors continued to report optimism regarding future projects. New multifamily construction continued, and contacts indicated that the level of activity has been the same relative to a year ago. New hotel development also continued in the major MSAs. Similar to residential markets, contacts reported labor shortages negatively impacting activity.\nBanking and Finance\nBanking conditions have improved at a moderate pace since the previous report. Banking contacts reported overall loan demand increased moderately relative to last year; however, the pace of loan growth continues to steadily slow. Demand for auto loans declined for a second straight quarter, though bankers anticipate that auto lending standards could loosen modestly next quarter. Mortgage demand expanded at the fastest rate among major loan categories, while demand for business lending was unchanged relative to year-ago levels. After trending up the past few quarters, delinquencies declined moderately across all loan types. District banks are expanding the geographic market areas they serve as competitive pressures from other lenders continue to increase.\nAgriculture and Natural Resources\nAgriculture conditions have improved moderately since the previous reporting period, although farmers continue to struggle with low crop prices. Expected yields for corn, cotton, rice, and soybeans were all higher in mid-November than they were in mid-October. The mid-November expectations were also higher than realized levels in 2016. Expected corn yields saw the largest improvement, with November expectations 3 percent above October expectations. Contacts concurred with the projections for all four crops, noting that there will be record yields in a lot of areas.\nNatural resource extraction conditions declined slightly from September to October, with seasonally adjusted production declining a half a percent. October production was also down 3 percent from a year ago.\nFor more information about District economic conditions, visit: www.research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2017/2017-11-da

"November 29, 2017\nSummary of Economic Activity\nThe Eleventh District economy continued to expand at a moderate pace over the past six weeks. Manufacturing output strengthened, and activity in nonfinancial services increased. Retail sales growth continued but at a slower pace as the post-hurricane auto sales rush abated somewhat. Home sales rose during the reporting period. Loan demand was flat, and energy activity was largely unchanged. Crop conditions remained mostly favorable. Employment, wages and prices continued to increase, and widespread reports of a tight labor market persisted. Outlooks remained positive overall, and generally a bit more optimistic than in the prior reporting period.\nEmployment and Wages\nOverall employment growth remained solid, and upward wage pressure persisted at slightly elevated levels. Hiring picked up in the service sector, continued at about the same robust pace in manufacturing, and abated slightly in the energy sector. Labor market tightness carried on in most industries. Worker shortages were reported throughout the oil and gas supply chain and in construction, with contacts saying the scarcity of labor was driving up wages for certain types of workers. Similar reports came from manufacturing (particularly high-tech), airlines, and health care. Some banks reported that labor was becoming a bigger issue than regulatory compliance. Looking ahead, roughly two-thirds of contacts expect to increase employment over the next twelve months, largely citing an expectation of high sales growth as the impetus. Several firms said that the inability to find workers with the required skills was the main restraint for hiring plans.\nPrices\nPressure on selling prices remained elevated over the past six weeks. A pickup in price growth was noted among nonfinancial services, retail and construction firms. However, an airline noted falling ticket prices due to increased competition. New home prices were mostly flat, with some builders offering discounts and/or incentives on higher-end houses due to push back from buyers at that price point. Oil and diesel prices rose over the reporting period, while gasoline prices exhibited mixed movements--falling from post-hurricane highs then rebounding in early November.\nManufacturing\nThere was further pickup in the robust expansion in the manufacturing sector. A rebound in output growth for nondurable goods was seen in October, driven largely by chemical and food production. Strength continued in durable goods manufacturing, led by increases in transportation equipment production. Output growth among firms closely tied to energy was weaker than overall manufacturing in October. While refinery and chemical plants were largely back to normal operating rates after Hurricane Harvey, contacts said the storm caused a setback of one to two quarters of construction time for new facilities along the Gulf Coast. Refining margins were healthy, and sentiment was bullish through next year. For Texas manufacturing overall, growth in new orders picked up and outlooks remained highly positive.\nRetail Sales\nRetail sales continued to expand, albeit at a slower pace than in the prior reporting period. Auto sales decreased from the initial post-hurricane surge but remained high. A clothing retailer noted that Houston-area stores benefited from the Astros playoff and World Series excitement, as well as some additional spending by flood victims. Along the border, several contacts noted ongoing concerns regarding a decline in demand for American goods by Mexican customers. Outlooks among retailers in general remained quite positive.\nNonfinancial Services\nDemand for nonfinancial services continued to expand moderately over the past six weeks. There were scattered reports of lingering effects from Hurricane Harvey, but for the most part business had returned to normal. Transportation services were a key driver of faster growth this period. Rail cargo volumes were up, particularly for frac sand and building products. Volumes for air cargo as well as containers and trailers also rose. Staffing services firms noted increased demand and broad-based strength. In North Texas, logistics, manufacturing, health care, call centers, and IT exhibited particularly strong demand for placements. Revenues in the leisure and hospitality sector rebounded in October after declining in the wake of Hurricane Harvey in September, but there were some businesses still recovering. Overall, outlooks were optimistic and improved from six weeks ago, although concerns remained. Some contacts noted that uncertainty surrounding federal tax reform, health care, and government regulation was making it difficult to plan for 2018.\nConstruction and Real Estate\nHome sales rose during the reporting period, although the pace of growth varied across regions. Contacts in Houston generally noted a rebound in sales activity following Hurricane Harvey, but there were some reports of weakness in areas affected by flooding. Respondents in Austin and Dallas-Fort Worth (DFW) reported slowing in the pace of sales growth, which some contacts in DFW attributed to buyers concerned about changes to immigration policy.\nThe apartment market was slowly returning to a normal pace of growth following a few years of above-average expansion, according to contacts. While overall conditions have improved in Houston's apartment market following Hurricane Harvey, one contact said rent concessions have slowly started to creep back in some areas where there is a plethora of new supply.\nThe office market remained mostly weak in Houston, despite a decline in sublease inventory and a pickup in investment sales activity. Office demand was solid in Dallas, and industrial market activity was reported to be stable in both metros.\nFinancial Services\nDemand for loans was flat over the past six weeks. According to contacts, loan volumes increased, but the pace of growth continued its downward trend over the past three reporting periods. The slowdown in loan volume growth was seen in commercial and residential real estate, while commercial and industrial loan growth edged up. Contacts again reported a slight decline in consumer loan volumes. Core deposit volumes increased, as did interest rates paid on them. Financial industry contacts noted improvement in general business activity over the past six weeks, and also expressed higher levels of optimism for the six-months-ahead horizon.\nEnergy\nEnergy activity was largely unchanged from six weeks ago, despite an increase in oil prices. Drilling activity declined as the Texas rig count fell, but well completion and production activities increased. Demand for oilfield services in the Permian Basin remained healthy, and declining activity outside the Permian Basin may stabilize with the stronger oil prices, according to contacts. Outlooks for 2018 remained conservative, but were more optimistic than the last reporting period.\nAgriculture\nCrop harvesting continued at a normal pace, with generally favorable crop conditions. An estimate from Texas A&M University puts agricultural losses from Hurricane Harvey at $200 million, which is not as high as expected and far less than what was seen from Hurricane Ike in 2008 and Hurricane Irma. Texas corn and sorghum production is expected to be down in 2017 largely because of fewer acres planted, while cotton production is expected to be up more than 10 percent this year, according to the USDA. There was still financial stress in the farming sector, with producers primarily concerned about low crop prices across the board. On the livestock side, pasture conditions were fair to good and cattle prices increased sharply over the last six weeks largely in response to strong domestic demand and booming exports.\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/2017/2017-11-sf

"Beige Book Report: San Francisco\nNovember 29, 2017\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of October through mid-November. Overall price inflation was flat. Conditions in the labor market tightened further, and upward wage pressures intensified. Sales of retail goods grew moderately, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector remained solid, and activity in the agriculture sector was flat. Contacts reported that residential real estate market activity remained robust and conditions in the commercial real estate sector were strong. Lending activity grew at a moderate pace.\nEmployment and Wages\nConditions in the labor market tightened further, and upward wage pressures intensified. Shortages of skilled IT professionals in the technology, financial services, and manufacturing industries further intensified upward wage pressures. Wages in the construction industry climbed higher as post-hurricane rebuilding efforts in the Southeast worsened existing labor shortages. Contacts in the Mountain West observed very low unemployment levels in nearly every industry. Producers of manufactured pharmaceuticals reported intensified competition for new hires, increasing wage pressures notably. Major film releases during the holiday season and preparation for the upcoming awards season are expected to boost seasonal employment in the entertainment and related industries. Demand for labor in the commercial airline industry declined somewhat as manufacturers reported a slowdown in new orders.\nPrices\nOverall, price inflation was flat over the reporting period. Prices for some building materials jumped as reconstruction efforts in the Southeast pushed up demand sharply. Airfare inflation picked up modestly due to a jump in fuel prices. Prices for transportation services are expected to increase over the holiday season as a large transportation company is expected to institute a holiday surcharge. Except for all but a small number of niche products, price growth for apparel was flat. Increased competition in the retail pharmaceutical industry slowed overall drug price growth, and contacts continued to report modest deflation in generic drug prices. Continued strong production slowed price growth for many agricultural commodities. Prices of mobile devices continued to decline on a 12-month basis.\nRetail Trade and Services\nGrowth in retail sales remained moderate over the reporting period. Sales of beverage products were strong, and contacts noted a shift in consumer preference towards smaller noncarbonated beverages. While e-commerce sales growth in the apparel industry continued to outpace sales declines at brick-and-mortar retailers, contacts noted that overall sales remain weak, given the favorable overall economic conditions.\nOn balance, holiday sales are expected to increase modestly relative to last year's holiday season due in part to an extra shopping day between Thanksgiving and Christmas. However, some industry surveys suggested there will be less in-store foot traffic on Black Friday this year as consumers have become accustomed to year-round discounting. Holiday sales of technology products are expected to increase relative to last year. Automobile sales during the holiday season are expected to be solid, but down from last year's strong pace. Elevated inventories and soft demand are expected to fuel strong discounting at apparel retailers during the holiday sales season.\nActivity in the consumer and business services sector continued to grow at a strong pace. Demand for air travel reached its highest level in a decade, and revenue growth in the industry remained strong. Sales of technology services picked up as demand for cloud computing and security software remained robust, and infrastructure investment in data centers ramped up further. Wildfires in Northern California temporarily reduced shipping volumes in the region. However, shipping volumes are expected to increase to record levels during the holiday season, and contacts reported increased investment in automated warehouse technology to meet peak demand. After declines in the early fall, same-store sales in the restaurant industry have picked up modestly.\nManufacturing\nConditions in the manufacturing sector remained solid. Demand for semiconductors continued to be strong. Production of steel and manufactured metals picked up further, and rebuilding efforts in the Southeast are expected to buoy normally soft year-end sales. However, capacity utilization rates in the steel sector remained below long-run levels. Deliveries of commercial aircraft reached peak levels, but new orders slowed somewhat. Production of manufactured pharmaceuticals slowed somewhat from its pace over the first half of the year.\nAgriculture and Resource-Related Industries\nOn balance, activity in the agriculture sector was flat. Exports of some processed manufactured milk products were strong. Excess supply of wheat put downward pressure on prices and hampered profitability of growers in Eastern Washington. Harvest yields of potatoes in Idaho were slightly below long-run averages. Contacts emphasized that energy producers focused capital investments on improving existing infrastructure.\nReal Estate and Construction\nActivity in real estate markets picked up to a robust pace. Construction activity in the residential market remained robust and was slowed only by shortages of land and labor. Low inventory levels and strong demand pushed up house prices and rents. Contacts reported that affordability remained a concern as price increases continued to outpace wage growth in much of the District. Commercial construction activity picked up to a strong pace. Contacts in Seattle noted continued strong demand for commercial office space, driven mainly by demand from large technology companies. Permits for commercial storage space are expected to surge in Eastern Washington and Idaho. Over the next 10 years, contacts expect that a significant number of large retail spaces will be repurposed for storage.\nFinancial Institutions\nLending activity grew at a moderate pace over the reporting period. Loan demand remained moderate. Demand for deposits outpaced growth, pushing up deposit rates. Loan underwriting standards softened slightly. Delinquencies remained low, but contacts in some rural areas noted an uptick in nonperforming loans. Contacts reported that regulatory compliance continued to push up overall costs, particularly for community banks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2017/2017-11-mi

"November 29, 2017\nSummary of Economic Activity\nThe Ninth District economy grew modestly overall since the last report. Employment grew modestly, with solid hiring demand dampened by tight labor. Wage and price pressures were both moderate. The District economy showed varying growth in consumer spending, services, residential construction, commercial and residential real estate, manufacturing, energy, and mining. But commercial construction dipped slightly, and agriculture remained weak.\nEmployment and Wages\nEmployment grew modestly since the last report. Hiring demand remained solid overall. Two employers in western Wisconsin announced immediate hiring of 100 workers. A regional health system with facilities in multiple District states noted that it had 1,100 regular openings. October online job openings in North Dakota were flat compared with a year earlier, but that was a notable improvement compared with the previous six months. Two separate surveys showed that hiring sentiment in South Dakota turned modestly positive in October after months of negative sentiment, and sentiment in Minnesota and North Dakota remained positive. Labor markets remained tight. District initial unemployment claims in October were 17 percent lower than a year earlier. A southern Minnesota manufacturer had 100 openings and could open two more lines of production \"but can't find workers,\" according to a local contact. Figures from Montana Jobs Services showed that active job seekers there were roughly one-third lower in October than a year earlier. A Minnesota staffing contact said current hiring demand was 5 percent higher than last year, but turnover remained high, and \"we continue to see fewer candidates.\" However, there were notable signs of softness in some regional markets. In Minnesota, a printing plant, a papermaker, and a food processor all announced plant closures, including layoffs of 335, 150, and 200, respectively.\nWages rose moderately overall since the last report, though accounts varied. A Minneapolis-St. Paul staffing contact said his firm was seeing \"a ton of wage pressure this year,\" with increases of 5 percent to 7 percent. A small ad hoc survey of Minnesota firms found that wages were expected to rise 2 percent to 3 percent in the coming year. A Montana contact said employers \"across the board\" were raising wages to attract employees. A North Dakota workforce source said wages there were \"trickling up.\" A rural Wisconsin banker noted that tight labor was pushing up starting wages, but longer-term employees were seeing smaller increases similar to previous years. A northern Minnesota firm said it was freezing wages after a poor quarter.\nPrices\nPrice pressures were moderate since the last report. Building materials prices have increased steeply in recent months, according to several industry sources, in part due to the impact of post-hurricane rebuilding. Retail fuel prices in District states as of mid-November were slightly higher than the previous reporting period. A recent forecast of home heating costs for the coming winter projected natural gas prices to increase 2 percent over last year, while heating oil costs were expected to rise 10 percent. Prices received by farmers for corn, wheat, hay, milk, hogs, chickens, and eggs increased in September compared with a year earlier; prices for soybeans, cattle, and turkeys decreased.\nConsumer Spending and Tourism\nConsumer spending showed modest growth since the last report. Despite the closure of four large discount/department stores across the District, the retail sector in many District metros saw expansion and was experiencing low vacancy rates. Year-over-year gross sales in South Dakota in September and October turned positive after six consecutive months of decline. A November survey found that Minnesota shoppers expected their holiday spending to increase by 3.5 percent over last year.\nHunting dominates fall tourism in much of the District, and reports varied. South Dakota saw a decline in pheasant hunters, thanks largely to low pheasant numbers stemming from severe drought in the state. Deer licenses in North Dakota were up slightly from last year, but down about 2 percent in Minnesota. Hunters in northwestern and south-central parts of Montana were also down from last year, due in part to wildfires. A survey in Montana found that one-quarter of Montana tourism businesses, and 13 percent of outfitters and guides, had to cancel an event due to this year's wildfires.\nServices\nActivity in the professional services industry increased moderately since the last report. An accounting firm with business across the District reported steady growth recently. A contact in the financial services industry noted an increase in start-up activity, particularly among information technology and biotech firms. However, a web marketing company was cutting staff amid restructuring.\nConstruction and Real Estate\nCommercial construction was down slightly since the last report. A slow September was followed by a flat October across most of the District, according to industry figures on construction spending. Commercial permitting activity in October was mixed among District metros, and a count of new and active construction projects also declined over the most recent six-week period (ending in early November) compared with a year earlier. The construction outlook received a boost in several District states from strong referendum results for school improvements, including $1.3 billion in capital bonding in Minnesota. Residential construction was up moderately. Permitted single-family units in October rose in a number of metros, while multifamily units saw a notable uptick in Minneapolis-St. Paul.\nCommercial real estate grew modestly since the last report. In Minneapolis-St. Paul, industrial leasing activity has been strong, pushing vacancy rates below 7 percent. Industrial projects planned or under construction were also described as healthy, though below last year's levels. Office vacancy rates, on the other hand, have seen an uptick this year, and lease concessions have started to appear. Demand for retail space continued, with vacancy rates remaining steady and asking rents rising modestly. Residential real estate was modestly higher. October home sales grew compared with a year earlier in Bozeman and Missoula (Mont.) and in western and northern Wisconsin. Sales also grew slightly in Minnesota. But decreased sales were seen in Great Falls and Helena (Mont.) and Sioux Falls, S.D.\nManufacturing\nDistrict manufacturing activity increased moderately since the last report. An ad hoc survey of Minneapolis-St. Paul inventory managers indicated that recent business activity had increased relative to the same period a year ago and that sales for the remainder of the year were expected to accelerate. An index of manufacturing conditions indicated increased activity in October compared with a month earlier in Minnesota and the Dakotas. A radiator plant in Minnesota and a furniture producer in Wisconsin announced expansions. In contrast, a paper producer shut down a production line at a mill in Minnesota.\nAgriculture, Energy and Natural Resources\nDistrict agricultural conditions remained weak overall, as good harvests were not expected to offset low prices. Early reports from harvests indicated solid production in District states, though corn and soybean production in the Dakotas was expected to decrease from last year. Respondents to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions indicated that farm income and capital spending decreased relative to a year earlier, with further declines expected for the remainder of the year. Activity in the energy and mining sectors increased moderately since the last report. District oil and gas exploration as of mid-November was up slightly from a month earlier, though North Dakota recently approved or renewed a substantial number of drilling permits. September shipments of iron ore on the Great Lakes increased 23 percent from a year earlier.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2017/2017-11-su

"Beige Book: National Summary\nNovember 29, 2017\nThis report was prepared at the Federal Reserve Bank of St. Louis based on information collected on or before November 17, 2017. 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 increase at a modest to moderate pace in October and mid-November, according to anecdotal reports from contacts across the 12 Federal Reserve Districts. There was a slight improvement in the outlook among contacts in reporting Districts. Pre-holiday reports of consumer spending on retail and autos were mixed but largely flat; still, the outlook for holiday sales was generally optimistic. Many Districts highlighted growth in the transportation sector, although the New York District reported a slight softening and the San Francisco District noted that Northern California wildfires temporarily reduced shipping volumes. Residential real estate activity remained constrained, with most Districts reporting little growth in sales or construction. By contrast, nonresidential activity was consistent with previous reports of slight growth. Loan demand was steady to moderately stronger. All Districts reported that manufacturing activity expanded during the reporting period, with most describing growth as moderate. Among reporting Districts, manufacturing contacts predominantly expected activity to continue to pick up, although the Philadelphia and St. Louis Districts noted signs of a slowdown.\nEmployment and Wages\nEmployment growth has increased since the previous report, with most Districts characterizing growth as modest to moderate. Reports of tightness in the labor market were widespread. Most Districts reported employers were having difficulties finding qualified workers across various skill levels, and several Districts reported that an inability to find workers with the required skills was a key factor restraining hiring plans. Wage growth was modest or moderate in most Districts. Wage increases were most notable for professional, technical, and production positions that remain difficult to fill. Many Districts reported that employers were raising wages as well as increasing their use of signing bonuses and other nonwage benefits to retain or attract employees.\nPrices\nPrice pressures have strengthened since the last report. Most Districts reported modest to moderate growth in selling prices and moderate increases in non-labor input costs. In particular, construction-material costs rose in most regions, with many Districts citing increased lumber costs and/or increases in demand for materials due to hurricane rebuilding efforts. Residential real estate prices generally increased as well. There were also reports of increases in costs in the transportation sector. Additionally, several Districts noted input cost increases in manufacturing. In many cases, these increases in transportation and manufacturing were passed through to consumers. Fuel prices also rose, with multiple Districts reporting upward pressure on oil and natural gas prices. However, agricultural price pressures remain mixed.\nHighlights by Federal Reserve District\nBoston\nEconomic activity continued to expand at a modest to moderate pace according to responding manufacturers, retailers, and staffing services firms. Labor markets remained tight and some employers reported modest wage increases. Price changes, if any, were limited. Respondents' outlooks continued to be positive.\nNew York\nEconomic activity continued to expand moderately, while labor markets have remained tight. Input prices continued to rise moderately, and selling prices rose modestly. Housing markets and commercial real estate markets have been mixed but generally stable.\nPhiladelphia\nOverall, economic activity continued at a modest pace of growth, in particular for manufacturing, nonfinancial services, and tourism. Residential and nonresidential construction and real estate activity increased slightly, while auto sales and non-auto retail sales declined slightly. On balance, wages and prices continued to grow modestly, while employment resumed a modest pace of growth.\nCleveland\nBusiness activity increased from that of the previous reporting period, but the overall pace of growth was moderate. Upward pressure increased further on wages, non-labor input costs, and selling prices. Retailers noted a boost in store traffic. Capacity constraints in freight transportation tightened. The first-time home-buyer market may be negatively impacted by rising costs and low inventory.\nRichmond\nThe regional economy continued to grow at a moderate rate, overall. Manufacturing and transportation activity remained strong. Retailers were optimistic about the upcoming holiday shopping season. Residential home sales rose only modestly due to low inventories. Labor markets tightened further, which drove up wages for some workers. Price growth remained modest, overall.\nAtlanta\nEconomic conditions modestly improved since the previous report. Tightness in the labor market persisted and wages grew modestly. Non-labor costs remained little changed. Retail sales increased across most of the District. Tourism activity was mostly positive. Home sales were flat to down, and home prices improved slightly. Manufacturers indicated that activity modestly increased. Credit was available.\nChicago\nEconomic activity increased slightly. Employment and manufacturing production increased modestly, while consumer spending, business spending, and construction and real estate activity increased slightly. Wages rose modestly and prices rose slightly. Financial conditions were little changed. Crop yields were below last year's records.\nSt. Louis\nEconomic conditions have improved at a modest pace since our previous report. Labor market conditions remain tight, as most firms reported raising starting wages and salaries as a way to attract new workers. The outlook among firms surveyed in mid-November was generally optimistic. Though slightly weaker than the outlook from our mid-August survey, it is a modest improvement from the outlook one year ago.\nMinneapolis\nEconomic activity in the Ninth District grew modestly. Employment continued to grow, though constrained by tight labor and some isolated softness, including plant closures. Several indicators suggested that conditions in South Dakota were improving. Manufacturing remained upbeat, and commercial and residential real estate saw growth. Agriculture continued to struggle, as strong harvests were not expected to offset low commodity prices.\nKansas City\nEconomic activity in the Tenth District increased moderately. Manufacturing and other business services expanded at a strong to moderate pace, and energy activity continued to increase modestly. Consumer spending was mostly flat, with moderate growth expected. Agricultural conditions weakened but at a slower pace, and many respondents noted increased hiring plans.\nDallas\nEconomic activity grew moderately, and business had mostly returned to normal after Hurricane Harvey. The manufacturing sector remained a bright spot, and nonfinancial services activity continued to expand. Growth in the energy sector subsided, but there was increased optimism for 2018. Retail sales remained strong and auto sales were still elevated, but the initial post-hurricane surge had begun to recede. Labor shortages persisted, and there were widespread reports of increased wages.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods grew moderately, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector remained solid. Activity in residential real estate markets remained robust, while conditions in the commercial sector were strong. Lending activity grew at a moderate pace.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2017/2017-11-ph

"November 29, 2017\nSummary of Economic Activity\nAggregate business activity in the Third District continued at a modest pace of growth during the current Beige Book period. Manufacturing, nonfinancial services, and tourism grew modestly, while new home construction, existing home sales, nonresidential construction, and leasing appeared to grow slightly. Auto sales and nonauto retail sales appeared to decline slightly, after growing and remaining steady, respectively, during the prior period. On balance, employment resumed a modest pace of growth, and wages and prices continued to grow modestly. Overall, firms appear to anticipate continued growth over the next six months, but with a somewhat smaller percentage of firms expecting growth.\nEmployment and Wages\nEmployment resumed a modest pace of growth during the current Beige Book period following a lull during the prior period. Reports of net additions to staff rose for both manufacturing and nonmanufacturing firms. Average hours worked changed little over the period for manufacturing firms but dipped a bit among nonmanufacturers. Retailers reported little change to their typical hiring plans in preparation for the holidays.\nOn balance, wage growth held steady at a modest pace, with about 40 percent of nonmanufacturing firms reporting increases. Numerous firms have reported a lack of qualified labor for skilled positions or that they are offering a somewhat higher entry-level wage to attract labor. Staffing firms continued to report difficulties filling job orders and noted that an inordinate amount of their business is refilling positions due to turnovers, including quits by recent placements.\nPrices\nOn balance, price levels continued to rise modestly. Across all contacts, the percentage of firms reporting increases in prices received for their own goods and services was lower during the current period than the prior period. For prices paid, the percentage of manufacturing firms reporting increases changed little, while the percentage of nonmanufacturing firms rose. A majority of contacts indicated no change in prices paid and received.\nRetailers and banking contacts continued to report no signs of inflationary pressure, while homebuilders, reported increases for a broadening array of construction materials, including lumber and products containing petroleum. Overall, existing home prices continued to edge up, with some variance across markets and price categories.\nLooking ahead one year, firms anticipate a 2.1 percent increase in prices received for their own goods and services--a bit lower than one quarter prior. Firms also reported expectations of about 2.4 percent annual inflation for consumers--also lower than earlier in the fall.\nManufacturing\nOn balance, manufacturing activity continued at a modest pace of growth, but signs of a slowdown emerged. The percentage of firms reporting increases in new orders and shipments fell compared with the prior period.\nThe makers of paper products, chemicals, primary metal products, fabricated metal products, and industrial machinery continued to note gains in new orders and shipments; firms in the lumber and electronic equipment sectors reported declines in activity.\nGenerally, manufacturing contacts continued to expect growth over the next six months. The percentage of firms expecting future increases for general activity dipped somewhat but remains above 50 percent. However, the percentage of firms expecting increases held mostly steady regarding future capital expenditures and rose a bit for future employment.\nConsumer Spending\nOn balance, nonauto retail sales may have fallen slightly, essentially little changed from the prior Beige Book period. Mall and outlets operators noted that unseasonably warm weather depressed sales of winter apparel. An outlets operator reported that overall October sales were flat compared with last year. Convenience store contacts reported that business remained soft, as customers chase value and competition expands.\nAuto dealers reported slight declines overall in year-over-year sales this period, a retreat from the modest increases during the prior period. Dealers were hopeful for stronger sales at year end, beginning with Black Friday, to boost 2017 totals. Manufacturers continued to provide incentives for dealers to sustain sales.\nTourism contacts generally indicated a continuation of modest growth. A Philadelphia analyst reported that overall travel demand remains stronger than in the prior year period, locally and nationally. In September, Atlantic City's casino revenues resumed a modest rate of growth relative to the prior year and sustained that growth in October. A Delaware shore hotel operator noted some weakening of rooms booked, room rates, and overall levels of spending at area stores and restaurants; however, the prior year had been very strong.\nNonfinancial Services\nService-sector firms have continued to report modest growth in general activity since the prior Beige Book period; however, new orders and sales softened somewhat, as did reports of general activity. Expectations about future growth have lessened somewhat since the prior Beige Book period but remained positive, with about 50 percent of the firms anticipating increased activity.\nFinancial Services\nFinancial firms reported modest growth of overall loan volumes (excluding credit cards)--similar to the prior Beige Book period. Loan volumes grew modestly in most categories, including mortgages, commercial real estate, commercial and industrial loans, and other consumer loans. Growth in auto loan volumes was stronger, while home equity lines were flat over the period. Credit card volumes--which are highly seasonal--changed little over the Beige Book period, which is similar to the same period last year.\nBanking contacts tended to describe economic growth as slow and steady. On balance, loan portfolios were described as healthy, with low delinquencies and no significant signs of concern.\nReal Estate and Construction\nAfter little change through the summer and early fall, homebuilders generally reported a slight pickup in activity during the current period, particularly in the early weeks of November. In one area where single-family home construction remained weak, a builder noted that demand for remodeling work was strong.\nOn balance, brokers in Third District housing markets reported that ongoing weak inventory levels have slowed existing home sales to a slight pace of growth in the current period. Vacation home markets are an exception due to a recent resurgence of second home purchases.\nNonresidential real estate contacts continued to report slight growth at high levels in construction activity. Architecture and engineering contacts reported record years, with particularly strong demand for institutional and energy-related projects. Industrial/warehouse markets throughout the Third District are generally characterized by rising rates and ongoing strong demand for new construction. Leasing activity also appeared to grow slightly, although markets vary significantly by sector and geography.\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

/beige-book-reports/2017/2017-11-ny

"Beige Book Report: New York\nNovember 29, 2017\nSummary of Economic Activity\nEconomic activity in the Second District continued to grow at a moderate pace in the latest reporting period, and the labor market has been steady and tight. Input prices continued to increase moderately, and selling prices continued to rise modestly. Manufacturers reported that growth slowed to a moderate pace, while businesses engaged in wholesale trade, leisure & hospitality, and professional & business services reported brisk growth. However, contacts in health & education services and transportation noted slight softening in activity. Consumer spending was generally steady since the last report, as was consumer confidence. Housing markets have been mixed, with particular weakness at the high end of both the sales and rental markets. Commercial real estate markets were steady, on balance. New residential development and office construction have slowed, but new industrial development has picked up. Finally, banks reported a pullback in demand for home mortgage loans and ongoing declines in delinquency rates across all loan categories.\nEmployment and Wages\nThe labor market has been steady and tight. Employment agencies generally report that labor market conditions have been little changed. Still, one major New York City agency notes that hiring activity has been busy for this time of year. Businesses have reported ongoing difficulty finding qualified workers, particularly in manufacturing.\nBusiness contacts across most industries indicated that they continue to increase staffing levels modestly. Similarly, hiring plans for the months ahead have remained moderately positive, on net, with particularly strong hiring expected in the finance sector. A contact in upstate New York noted that some retailers plan less seasonal hiring this year.\nOverall, contacts indicated that wages have continued to rise modestly. Further, businesses in a broad range of industries said they plan to raise wages in the months ahead--most notably in the leisure & hospitality, education & health, transportation, and trade sectors.\nPrices\nInput prices have continued to rise moderately in most industry sectors, with the exception of retail, where contacts reported more significant cost increases.\nSelling prices overall continued to rise modestly, though contacts in the leisure & hospitality industries noted stronger price increases. But within that sector, for example, price increases have varied: while hotel room rates have been essentially flat, Broadway theater ticket prices have accelerated and were up more than 15 percent from a year earlier. In general, retail prices have been stable, though some general merchandise stores noted increased discounting. Looking ahead, the only sectors in which businesses planned any noticeable price hikes were in wholesale trade and transportation.\nConsumer Spending\nRetail contacts reported that sales have been steady in recent weeks. Retailers in upstate New York indicated that both traffic and sales activity remained steady. Contacts in the New York City area gave a mixed assessment, but overall sales were little changed. Retail businesses were mildly optimistic about the near-term outlook, and inventories were said to be in good shape.\nAuto sales have been mixed but, on balance, steady since the last report. Dealers in upstate New York reported that demand for new vehicles remained fairly robust in October but not quite on par with September's brisk levels. However, scattered increases were reported in used vehicle sales. Vehicle inventories were said to be a bit on the high side but mostly at satisfactory levels. Retail and wholesale credit conditions have remained favorable, according to dealers.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA), held steady at a high level in October.\nManufacturing and Distribution\nManufacturers reported continued growth in business activity in recent weeks, though to a lesser degree than in recent months. Contacts in the wholesale trade sector noted a further acceleration in business, whereas transportation firms reported some pullback in activity. Looking ahead, manufacturers continued to express widespread optimism about the near-term outlook, while wholesale distributors and transportation firms were moderately optimistic.\nServices\nService-sector firms noted some pickup in growth. Contacts in leisure & hospitality and professional & business services reported fairly widespread increases in activity, while information industry firms indicated modest improvement. Education & health service providers indicated that activity was flat to slightly lower, on balance. Service sector businesses were generally optimistic about the near-term outlook--particularly those in business & professional services.\nNew York City hotels reported brisk business, though an expanding supply of hotel rooms, largely in a moderate price range, has held room rates down. Broadway theaters reported that attendance was flat to somewhat lower in October and early November and down from a year earlier. An authority on New York City's tourism industry noted that domestic tourism has been increasingly robust, while tourism from overseas has receded, though by less than had been expected.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, stable. Real estate contacts in upstate New York report that sales volume has receded somewhat but remains quite strong, while prices have continued to climb, driven by sturdy demand and low inventories. Housing markets across New York State have exhibited a similar pattern, with prices statewide running about 6 percent ahead of a year ago. Northern New Jersey's market, in contrast, has seen sales volume growing but prices generally flat. Similarly, sales of New York City co-ops and condos have picked up, while prices have been mixed but overall flat--rising modestly at the low to middle range of the market but declining at the high end. One contact noted that some newly-developed high-end properties have recently sold for roughly 25 percent below the initial asking price.\nRental markets have been steady to softer. Rents across New York City have edged down overall, again led by the high end of the market, where landlord concessions have remained steady at high levels. Manhattan's rental vacancy rate, though still quite low, has reportedly risen for three straight months.\nCommercial real estate markets have been mixed. Office availability rates have climbed modestly in New York City and Long Island but have remained essentially flat across the rest of New York State, southwestern Connecticut and northern New Jersey. Asking rents have risen in Manhattan and upstate New York but remained flat elsewhere. The market for industrial space has remained fairly strong. In upstate New York, industrial rents have continued to rise at a nearly 10 percent pace, while vacancy rates have declined to multi-year lows. Industrial rents have risen at a more than 5 percent rate in downstate New York and northern New Jersey, while vacancy rates in those areas remain steady near multi-year lows. Retail vacancy rates have continued to rise across New York City.\nNew multi-family construction has wound down throughout the District, though a good deal of residential space remains under construction. New commercial development has slowed as well. New office development has picked up in Long Island but has largely ground to a halt elsewhere. New industrial development, on the other hand, has picked up in New York City's outer boroughs and in upstate New York and remains at a fairly brisk level in northern New Jersey.\nBanking and Finance\nSmall to medium-sized banks in the District reported lower demand for residential mortgages, higher demand for commercial mortgages and C&I loans, and steady demand for consumer loans. Bankers also reported that refinancing activity decreased, on balance, for all types of loans. Credit standards were reported to be unchanged across all loan categories. Bankers noted lower loan spreads for C&I loans, and unchanged spreads across all other loan categories. Finally, banks reported lower delinquency rates in 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"

Chicago

/beige-book-reports/2017/2017-11-ch

"November 29, 2017\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly in October and early November, but contacts expected growth to accelerate to a moderate pace over the next 6 to 12 months. Employment and manufacturing production increased modestly, while consumer spending, business spending, and construction and real estate activity increased slightly. Wages rose modestly and prices rose slightly. Financial conditions were little changed. Crop yields were below last year's record.\nEmployment and Wages\nEmployment growth continued at a modest pace over the reporting period, and contacts expected it to continue at that rate over the next 6 to 12 months. Contacts continued to indicate that the labor market was tight and reported difficulty filling positions at all skill levels. A manufacturing firm reported turning down business because it was unable to find qualified workers. To address the challenge of finding qualified workers, firms reported that they were raising compensation, increasing advertising for positions, and training less-qualified new hires. Hiring was focused on professional and technical, sales, and production workers. That said, a staffing firm that primarily supplies manufacturers with production workers reported little change in billable hours. Wage growth remained modest overall. Contacts raising wages were more likely to do so for select roles than for all workers. Wage increases were more prevalent for professional and technical, sales, and production workers. There was also a notable increase in the number of firms reporting wage increases for management positions.\nPrices\nOverall, prices increased slightly in October and early November. Retail prices were little changed for most categories of spending. A number of contacts again reported increases in costs for raw materials, particularly construction materials. Most firms reported rising benefits costs.\nConsumer Spending\nConsumer spending increased slightly over the reporting period. Non-auto retail sales were up slightly, with gains reported in the furniture, electronics, entertainment, and food and beverage sectors, but declines reported in the apparel sector. A contact noted that Halloween sales were stronger than expected and that this was a positive indicator for the holiday season. New light vehicle sales in the District moved down. One dealer indicated that the decline was concentrated in the high-end segment. Used vehicle sales were little changed.\nBusiness Spending\nBusiness spending increased slightly in October and early November. Retail and manufacturing contacts indicated that inventories were generally at comfortable levels. Capital spending increased slightly, and contacts expected spending to increase modestly over the next six to twelve months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures, though there was again an increase in the number of contacts reporting spending for capacity expansion. Demand for residential, commercial, and industrial energy was flat, as a slight increase in the number of commercial hook-ups was offset by improvements in customers' energy efficiency. Demand for transportation services increased moderately.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly on balance over the reporting period. Residential construction edged higher. In the low-priced single-family segment, contacts indicated that few large-scale developments were in progress, and that only large developers with good credit were undertaking these projects. Home sales were flat in recent weeks as low inventory levels in the starter home segment continued to constrain sales. There were reports that starter homes were receiving multiple offers and closing well above asking prices. In contrast, sales of high-priced homes lagged. Home prices edged higher overall, but varied by price level: prices increased noticeably for homes under $250,000, modestly for homes between $250,000 and $500,000, and were down slightly for homes over $500,000. Nonresidential construction increased slightly, with growth spread across market segments. Commercial real estate activity also increased slightly and was at a strong level. That said, demand for large brick and mortar retail space continued to fall from an already low point. Commercial rents and vacancy rates edged lower, but the availability of sublease space edged higher.\nManufacturing\nGrowth in manufacturing production continued at a modest pace in October and early November. Activity in the auto and aerospace sectors picked up slightly. Steel production was little changed but remained at a healthy level. Demand for heavy machinery increased steadily, with growth spread across the construction, mining, and utilities sectors. One contact indicated that exports to Canada were artificially high as stricter regulations on emissions that begin in 2018 pulled sales into late 2017. Order books for specialty metals manufacturers increased modestly, with growth spread across a wide variety of sectors. Manufacturers of construction materials continued to report slow but steady increases in shipments, in line with the pace of improvement in construction.\nBanking and Finance\nFinancial conditions were little changed on balance over the reporting period. Market participants noted that volatility continued to be low. Business loan volume was flat and loan quality was unchanged. Consumer loan volume was also little changed on balance. Demand for both home and auto loans edged down, with contacts noting an uptick in delinquencies in auto loan payments. An auto dealer reported that credit had tightened noticeably for buyers with credit scores at the lower end of the subprime category. Credit card volume increased slightly and quality was unchanged.\nAgriculture\nCrop yields in the District were below last year's record. Widespread rains slowed the harvest, but helped areas that had been experiencing drought conditions. With both corn and soybean prices lower than a year ago, farm revenues were expected to be down. Contacts indicated that some crop operations would be unable to cover their expenses, which led to a deterioration in agricultural credit conditions and spurred sales of assets to cover losses. In some cases, higher livestock income helped offset crop losses. Hog and cattle prices moved up during the reporting period, leading to plans for expanded production. Milk prices were lower, but cheese prices stayed high.\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"

Richmond

/beige-book-reports/2017/2017-11-ri

"November 29, 2017\nSummary of Economic Activity\nThe Fifth District economy grew at a moderate rate since our last Beige Book report. Manufacturers noted a moderate rise in new orders and shipments, and they generally expected strong growth over the next six months. District ports continued to see high volumes, particularly for imports. Trucking firms reported robust growth, in part due to relief shipments being sent to hurricane-affected areas. Retailers were optimistic ahead of the holiday shopping season. Tourism remained robust as mild weather helped boost activity. Residential home sales rose modestly and the inventory of houses for sale remained low. Commercial real estate leasing increased moderately. Residential loan demand was little changed in recent weeks, while commercial, small business, and agriculture lending picked up. Nonfinancial services firms reported moderate revenue growth. The demand for labor increased moderately in recent weeks while wage increases remained modest. Prices continued to grow at a modest pace.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks as employment agencies reported growth in new job openings across all industries and anticipated continued high demand for the rest of the year. Employers continued to report a tight labor market with limited supply of qualified candidates. Executives noted difficulty finding skilled mechanics, electricians, engineers, information technology specialists, hospitality workers, nurses, truck drivers, construction managers, and construction workers. Additionally, retailers had difficulties finding extra seasonal help. Wage increases remained modest, overall, but contacts continued to suggest that wage pressures increased. In particular, wages reportedly rose for airport workers, truck drivers, and for some nonfinancial services workers that were in high demand.\nPrices\nSince our previous report, prices continued to grow at a moderate rate. According to our latest surveys, manufacturing input prices rose moderately while final goods prices rose more modestly. There were reports of manufacturers paying higher prices for plastics, lumber, copper, electricity, and freight. Additionally, a paper manufacturer noted a substantial increase in pulp prices. In the service sector, price growth remained modest overall, with some instances of larger price increases. For example, an IT service provider noted that it was able to raise prices considerably in recent months without losing any customers. Likewise, an elevator servicing firm was raising prices substantially across all lines of business (routine service, repair, and modernization). Food services firms reported modest price increases across many food categories. Both manufacturing and services firms commented on rising health insurance costs.\nManufacturing\nOn balance, manufacturing firms reported moderate growth in new orders and shipments in recent weeks. Manufacturers of plastic, rubber, paper, and transportation equipment noted strong growth in new orders. Also, electrical and medical equipment producers saw increased sales. Contacts experienced longer vendor lead times, and some businesses continued to report delayed customer shipments due to Hurricane Irma and Hurricane Harvey. Expectations were more upbeat, as producers anticipated strong increases in new orders and shipments for the next six months.\nPorts and Transportation\nDistrict ports reported increases in shipments in recent months, driven mainly by growth in imports. One District port noted that it handled more volume in October than in any month on record. Ports remained optimistic that shipments would remain high in the near future.\nTrucking companies in the District saw robust business growth in recent months. Firms continued to report increased demand and higher prices as relief shipments were sent to hurricane affected areas. A shortage of drivers has persisted in the District, even as firms raised wages, leading some trucking companies to turn away business.\nRetail, Travel, and Tourism\nReports on retail sales were somewhat positive in recent weeks. Many District retailers noted moderate growth in sales so far this year and were optimistic heading into the holiday season. A Virginia home decor store reported customer traffic above the seasonal norm and strong sales even as prices rose. On the downside, some small clothing stores saw slightly weaker sales. A South Carolina auto dealer reported robust growth. However, a Virginia auto dealer reported a drop in sales of high-end vehicles.\nTourism has remained robust since our previous report. Hotels across the District reported that bookings were up over last year, and a South Carolina hotel had record revenues in October. A Virginia resort attributed recent increases in bookings and golfing to good weather. Conversely, visits to D.C. museums and monuments fell slightly.\nReal Estate and Construction\nResidential real estate firms indicated modest growth, overall. District agents reported steady levels of buyer traffic, although home sales rose only modestly due to very limited inventory. Home prices continued to rise modestly. Average days on the market decreased since the previous report, as most contacts stated that homes were on the market for about 45 days. In some markets, brokers said that they have seen more appraisals coming in under contract price due to limited comparable home sales. Although new home sales continued to improve modestly, new home construction remained subdued.\nCommercial real estate leasing rose moderately in recent weeks. Contacts reported increased leasing activity for large industrial space and small retail space, while office leasing rose modestly for urban class A space. Vacancy rates remained low across all sub-markets. In particular, brokers said that large industrial and distribution spaces were in high demand, but limited supply. Rental rates increased moderately for retail and industrial spaces, and some executives reported modest increases for urban office space. Commercial construction increased for several types of structures, including industrial, class A office, grocery-anchored shopping centers, and medical projects. Brokers indicated that the number of newly announced multifamily construction projects decreased across the District.\nBanking and Finance\nOn the whole, loan demand increased modestly since our previous report. Residential mortgage demand was generally characterized as stable. A lender in Virginia reported an increase in mortgage loans, but attributed it to more advertising and concessions on closing costs. Meanwhile, a banker in North Carolina said the low inventory of homes for sale was restraining mortgage loan growth. Commercial lending activity rose moderately in recent weeks. A banker in Baltimore saw an increase in commercial real estate lending for multi-family and senior housing facilities. Small business and agriculture lending rose modestly, according to contacts in Virginia and North Carolina. On balance, interest rates and net interest margins increased slightly in recent weeks. Credit quality remained strong while credit standards were generally unchanged.\nNon-Financial Services\nDistrict services firms reported moderate growth in revenues in recent weeks. The strongest reports came from wholesalers, telecom firms, performing arts centers, vehicle repair services, and utilities. A contact from a Maryland utility company said business was growing week after week. Likewise, a Virginia natural gas utility reported that revenues were growing as temperatures were falling in recent weeks. Business also picked up for legal firms, accounting firms, defense contractors, and IT service providers across the District.\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"

Atlanta

/beige-book-reports/2017/2017-11-at

"November 29, 2017\nSummary of Economic Activity\nReports from Sixth District business contacts described economic conditions as modestly improving since the previous report. Most businesses continue to expect slow and steady growth for the remainder of the year. District firms continued to describe a tight labor market as many faced difficulty finding workers. Wage growth remained modest. On balance, nonlabor input costs were stable. Retail sales, including auto, increased across most of the District. Reports from the hospitality sector were mostly positive. Residential real estate contacts noted that home sales were flat to down, although home prices improved modestly from the previous report. Commercial real estate contacts continued to report that the pace of construction had picked up from a year ago. Manufacturers indicated that activity grew at a modest pace since the previous report. Bankers reported that ample credit was available.\nEmployment and Wages\nThe District, specifically Florida, incurred notable payroll losses in September because of Hurricane Irma. Contacts continued to cite challenges filling highly skilled/specialized and low-skilled/entry-level positions. Several firms noted broadening their geographical search for candidates, and some expanded their physical presence to new locations where they expected more abundant labor supply. In a survey of business contacts, most respondents indicated that they planned to increase employment over the next 12 months as a result of expected sales growth, a need for skills not possessed by current staff, and to mitigate concerns about current staff being overworked. The top factors restraining hiring plans were challenges finding workers with required skills and a desire to keep operating costs low. Amidst these challenges, in an effort to attract workers, most respondents reported that they raised wages, signing bonuses, or total compensation offered.\nContacts continued to report some wage growth, with acceleration in highly skilled/specialized positions or in highly competitive geographic labor markets. Firms continued to use non-wage mechanisms to attract and to retain talent and keep wages down. Business contacts continued to describe efforts to enhance and modernize their corporate culture in order to encourage people to join the firm and to build loyalty among existing employees. Staffing agencies shared that from the job seeker's perspective, these non-wage mechanisms were increasing in importance as compared with compensation.\nPrices\nWhile the majority of non-labor input cost changes reported were modest, several contacts mentioned a recent uptick in costs, most notably in transportation. Contacts also reported little pricing power. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.7 percent in October. Survey respondents also indicated that they expect unit costs to rise 1.8 percent over the next twelve months.\nConsumer Spending and Tourism\nMost District retailers reported that sales levels rose modestly since the last report. The outlook remains optimistic for the upcoming holiday season. Post Hurricane Irma, automobile dealers noted an increase in the momentum of auto sales.\nDistrict contacts noted that Florida tourism activity bounced back after Hurricane Irma with the exception of the Florida Keys. Marketing efforts across various cities emphasized that the state was open for tourism. Georgia and Louisiana contacts reported continued growth in business, leisure, and group travel. Year to date, Mississippi casino gaming revenues decreased compared to a year ago. The outlook among most contacts for the first quarter of 2018 remains optimistic.\nConstruction and Real Estate\nRelative to a year-ago, District brokers and builders indicated home sales were flat to down in September. Most builders reported that buyer traffic was flat to down, while brokers gave mixed reports. Builders cited flat to higher inventory levels, while most brokers noted lower inventories. Most builders and brokers reported that home prices increased in September. Builder reports on construction activity came in mixed. The majority of builders reported labor cost increases from year-ago levels and most said material costs had increased over the same period. Over the next three months, many contacts expect home sales to be flat and construction activity to hold steady or increase slightly. The majority of builders and half of broker respondents indicated that Irma had an impact on their business and that they faced higher material prices, a shortage of materials in some cases, tighter than normal labor markets, less buyer traffic, and activity and sales delays.\nMany commercial real estate contacts reported improvements in demand that resulted in rent growth and continued to caution that improvement varied by metropolitan area, submarket, and property type. The majority of contractors indicated that the pace of nonresidential construction activity had increased from one year ago; most reported healthy backlogs. Commercial construction contacts' expectations for the pace of nonresidential construction were mixed, while their outlook for the pace of multifamily construction continued to level off.\nManufacturing\nManufacturers reported that business activity expanded at a modest pace compared with the previous period. Contacts indicated that production levels decreased, while new orders and finished inventory levels remained relatively flat. Hiring activity increased at a healthy pace and supplier delivery times were reported to be slightly longer than in the previous report. Purchasing managers stated that input prices continued to increase. Contacts' outlooks for future production were relatively unchanged from the previous period, with about half expecting higher production levels over the next six months.\nTransportation\nOn balance, transportation activity in the District was relatively unchanged since the previous report. Year to date, total rail traffic was down compared with year earlier levels, as shipments of grain, petroleum and petroleum products, and metallic ores declined by double digits. These were only slightly offset by modest increases in movements of pulp and paper products, non-metallic minerals, and coal. Intermodal traffic continued to improve. Port contacts reported sustained growth in container trade. Truck freight volumes accelerated further and increased shipments of rebuilding supplies to Texas and Florida contributed to capacity constraints in the aftermath of Hurricanes Harvey and Irma. Logistics contacts reported that they anticipate considerable year-over-year increases in e-commerce shipments during the holiday season.\nBanking and Finance\nCredit remained readily available for most qualified borrowers, although some contacts faced challenges obtaining financing for long-term residential developments. Credit tightened somewhat for energy-related industries. Liquidity was plentiful, but some banking contacts reported pressure to increase deposit rates. Some bankers noted increased competition for loans.\nEnergy\nOverall, energy contacts reported a steady pace of activity. They noted that the new natural gas pipeline capacity that came online was facilitating the demand for export of liquid natural gas. Both crude oil and gasoline inventories continued to decrease; however, levels were higher than the average range. Contacts reported that industrial and commercial utility usage remained flat. Broadly, utility contacts indicated they are preparing for a colder winter than the previous year.\nAgriculture\nAgriculture conditions across the District were mixed. Most of the District remained drought free although parts of Alabama, Georgia, Louisiana, and Mississippi were classified as abnormally dry or in moderate drought conditions. Initial assessments of Hurricane Irma's damage to Florida's agriculture industry indicated that citrus growers felt the biggest impact; nursery crops, sugarcane, vegetable and non-citrus fruit, cattle, and dairy also reported losses. Compared to last year, District crop production forecasts were up for soybeans, peanuts, cotton, and sugarcane, and down for rice and pecans. On a year-over-year basis, prices paid to farmers in September were up for corn, rice, oranges, broilers, and eggs and were down for cotton, soybeans, and beef.\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"

Boston

/beige-book-reports/2017/2017-11-bo

"November 29, 2017\nSummary of Economic Activity\nBusiness activity in the First District continued to expand at a modest to moderate pace in recent weeks. With a few exceptions, contacted retailers and manufacturers cited positive growth in sales or revenues. Most responding staffing firms also realized revenue gains, even in the face of limited available labor. Commercial real estate markets were said to be largely unchanged, with growth sectors and levels of activity varying across metro areas in the District. Most residential real estate markets in the region continued to be constrained by low inventories of homes for sale; meanwhile, median sales prices rose in five of the six New England states. Retailers and manufacturers retained positive outlooks about the US economy and customer demand.\nEmployment and Wages\nRespondents said hiring has generally been modest, partly because of short supplies of labor, and wage increases were becoming somewhat more widespread. A couple of retail contacts expected to offer 2018 merit raises on the order of 2 percent to 3 percent; retailers were hiring only in connection with new store openings. Only two manufacturing contacts reported significant hiring, both in semiconductor-related markets. A maker of testing equipment said that they were hiring mostly outside the United States; another indicated that salaries were rising significantly only for engineers who remain difficult to hire and retain. At staffing firms, bill rates and pay rates have reportedly begun to rise at a faster pace, and clients were offering more generous signing bonuses, paid leave, and other perks to attract talent.\nPrices\nBusiness respondents indicated little change in prices or pricing practices. Retail contacts reported that selling prices mostly remained steady, though some items saw moderate 1 percent to 3 percent increases. None of our manufacturing contacts reported notable pricing strength or weakness.\nRetail\nRetailers reported that sales in October through mid-November remained even or grew by mid-single-digit percentages compared to a year earlier. These increases principally came from new store openings or new business ventures, as year-over-year comparable-store sales were characterized by low single-digit decreases or growth of less than 1 percent. A couple of retailers said that weather conditions, both the hurricanes in the southeastern United States and warmer-than-usual fall weather in the Northeast, contributed to these modest comparable-store results. However, they also said the results were indicative of larger shifts in the US retail environment, along with changing demographics: Baby Boomers are now at ages when they spend less on consumer goods like clothing and housewares, while younger adults are more apt to shop online rather than in stores. A competitive retail environment has also taught consumers to wait for sales, such as the discounts offered on Black Friday and pre-Black Friday promotions.\nThe holiday season is expected to help bolster year-end revenues so that final fiscal year results show positive growth in the low single digits. Despite the challenging US retail environment that is prompting at least one contact to take a more conservative stance in 2018, most respondents said the US economy is strong and this factor, combined with high employment and healthy labor markets, will encourage consumer spending.\nManufacturing and Related Services\nOf the eight firms we contacted this cycle, six reported year-on-year sales growth in the most recent quarter. The two exceptions were a furniture company which suspected that the weakness was largely seasonal and a paper manufacturer which said that sales were flat and that significant marketing was required to avoid declining sales. Three semiconductor-related firms reported strength. One of our contacts in that industry said that demand growth had previously been confined to the auto industry but that in recent months, other parts of their market expanded. A manufacturer of testing equipment said that most of their demand growth came from Europe, especially Germany, and that US growth was slowed by the hurricanes. A manufacturer of veterinary supplies said that people were willing to spend more and more on their pets. Two firms reported upward revisions to their capital spending plans, but both described them as idiosyncratic to the firm.\nAll the manufacturing respondents were optimistic about 2018. A maker of semiconductor equipment said that the industry may reach the peak of its cycle relatively soon.\nStaffing Services\nNew England staffing firms reported mixed results in year-over-year revenue growth, with the majority of respondents achieving positive growth. All firms remarked heavily on the sparse supply of labor and increased search cost in locating talent while noting that labor demand remains very strong across the board. Health and tech jobs were reportedly particularly difficult to fill. Several also noted that increasing options for job seekers were resulting in more declined job offers and putting pressure on hiring firms to improve their packages for prospective employees. Most are devoting resources to improving their recruitment, both in technological efficiency and increased advertising, looking for new ways to reach potential hires. Contacts expressed some concern over uncertainty in health insurance markets, local minimum wage increases, and potential changes in the federal tax code, and what these would mean for the labor market.\nAll respondents expected tight labor market conditions to continue into 2018, and most saw a more challenging market for staffing firms with increased competition for the remaining labor supply.\nCommercial Real Estate\nAccording to contacts, commercial real estate fundamentals in the First District were mostly flat in recent weeks amid mixed leasing activity. Office leasing activity stayed light in Hartford and Portland and moderate in Providence, while robust activity was seen in downtown Boston. Class A office space has become quite scarce in Providence, resulting in competition among tenants and upward pressure on rents. Buyer demand for warehouse and industrial space remained strong throughout the region, but (except for one large transaction) sales were restrained by lack of inventory. There were signs of an uptick in condominium development activity in greater Boston, along with further moderation in apartment construction. Investment sales demand in Boston held steady or softened slightly, and prices for prime properties held steady. Office construction remained limited in New England, while construction by medical and educational institutions continued to strengthen, and in the Portland area hotel construction increased further. Most contacts expect either steady or improving fundamentals moving forward, but the outlook remained weaker for Hartford than for other major metro areas in the District.\nResidential Real Estate\nResidential real estate markets in the First District continued to struggle with dwindling inventory and appreciating home prices (September prices constitute the most recent data in five of the seven areas, while New Hampshire and Vermont reported October-to-October changes). Closed sales for single family homes decreased in all areas but Maine and Vermont. For condos, closed sales were down in Massachusetts, Boston, and Connecticut, and up elsewhere.\nAs usual, many contacts cited upward pressure on prices as an issue resulting from the shortage of inventory. For single family homes, the median sales prices were up in all areas but Connecticut. Condo prices displayed a similar upward trend, except in Boston and Vermont.\nResidential contacts expressed concern about the possible impact of the tax reform bill in Congress, which they feared could increase the cost of buying a home and disrupt the housing 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"

Dallas

/beige-book-reports/2017/2017-10-da

"October 18, 2017\nSummary of Economic Activity\nThe Eleventh District economy continued to expand at a moderate pace over the past six weeks, and most contacts do not expect significant long-term disruption due to Hurricane Harvey. Manufacturing output strengthened, and activity in nonfinancial services increased. Retail sales growth continued to accelerate, with a surge in auto sales to replace vehicles damaged by the hurricane. Homes sales weakened during the reporting period and prices were flat. Growth in the financial services and energy sectors continued but at a slower pace, and crop conditions remained mostly favorable. Employment, wages and prices increased, particularly in manufacturing. Outlooks remained positive overall.\nEmployment and Wages\nOverall employment rose, and upward wage pressure persisted. Hiring picked up in manufacturing, continued at about the same modest pace in services, and abated slightly in the energy sector. Reports of labor shortages persisted, spanning most industries. Some manufacturers said the difficulty finding workers was impeding their growth, and some services firms said it was driving up overtime costs. More than a quarter of firms expect that the impact of Hurricane Harvey will make finding and hiring workers more difficult over the next six months. In construction, builders were concerned that once post-hurricane repair and rebuilding work begins, there likely will be skilled-worker shortages and increases in labor costs. Other contacts noted that they also pull from a labor pool that is likely to be in higher demand in the aftermath of the storm.\nPrices\nSelling prices increased at the same or faster pace over the past six weeks, and contacts noted upward pressure on input costs. Prices and costs rose at a faster clip in the manufacturing and energy sectors, while upward pressure was largely unchanged on the services side. New home prices were mostly flat, but there is continued pushback from buyers on pricing at the higher end. Some builders were offering discounts and/or incentives to entice buyers, particularly on inventory homes. Gasoline and diesel prices rose over the reporting period, as did oil prices.\nManufacturing\nRobust expansion in the manufacturing sector continued, despite some disruption among Texas Gulf Coast producers in the wake of Hurricane Harvey. Output growth picked up further for durable goods in September, led by increases in computer and electronic product manufacturing. Fabricated metals production rebounded, and output among energy-related firms overall continued to exhibit strength. Meanwhile, nondurable goods production slowed. A majority of chemical producers noted production held steady or declined over the reporting period, with a number of executives saying Hurricane Harvey had a negative impact on logistics like transportation and availability of raw materials. Refinery capacity hampered by the storm was ramping back up quickly, with little damage to infrastructure. While it may take some time for supply chains to recover, the storm's impact on the refining and petrochemical industry are projected to be transitory. For Texas manufacturing overall, outlooks were positive and more optimistic than during the prior reporting period.\nRetail Sales\nRetail sales growth continued to accelerate despite Hurricane Harvey, according to firms surveyed three weeks after the storm. Nearly two-thirds of stores along the Texas Gulf Coast said they were negatively impacted by the hurricane, and on average those stores were shut down for about four days and experienced a reduction in revenue for about 10 days. Auto sales surged, partly due to increased demand for replacement vehicles after the storm. An auto dealer in Houston said sales were incredibly strong, noting that several hundred thousand vehicles had been flooded, and another dealer expects elevated demand to last about six months. For the broader retail sector in Houston, rebuilding efforts were fueling a rise in retail sales and demand for warehouses in the area from building supply companies. Outlooks for business in general were quite positive, an improvement from the mixed outlooks during the prior reporting period.\nNonfinancial Services\nDemand for nonfinancial services continued to expand moderately over the past six weeks. There were some reports of Hurricane Harvey disrupting business, with those contacts noting the impact lasted one to two weeks on average. About a third of firms expect a net negative impact on revenues over the next six months from the storm, while nearly half expect no change on net and the balance anticipate an increase. Some staffing services contacts have seen a rise in demand for accounting and data entry positions related to the hurricane damages, as well as for call center employees and insurance adjusters. Staffing contacts generally think business activity will return to normal (pre-hurricane) by year's end, and an oil and gas staffing firm noted that \"things are close to normal again\" in Houston already.\nStrength in the nonfinancial services sector was led by professional and technical services, with firms generally noting stronger revenue gains over the past six weeks, as well as transportation services. The healthcare industry remained rather weak, with contacts saying they were continuing to struggle with lower demand and rising costs. Leisure and hospitality also exhibited weakness over the past six weeks, particularly along the Gulf Coast and Mexican border.\nConstruction and Real Estate\nOverall, home sales weakened during the reporting period. However, contacts in Austin and Dallas\u2013Fort Worth (DFW) noted continued strength in sales of low- to mid-priced homes. In Houston, storm damage to single-family homes was reported to be much more extensive compared with other property types. Contacts expect new home starts and closings in Houston to be behind schedule for the remainder of the year.\nApartment demand was generally disappointing in the third quarter, following a solid second quarter. Rent growth slowed and was below average in some large metros. In Houston, however, apartment leasing activity picked up, occupancy rose and rent concessions have diminished following Hurricane Harvey. The office market was generally characterized as solid in DFW and San Antonio, but still weak in Houston.\nFinancial Services\nLoan demand continued to increase over the past six weeks, albeit at a more sluggish pace than during the prior period. Growth was led by commercial real estate loans, where volumes continued to rise at a moderate pace. Volume growth abated for commercial and industrial loans as well as for residential real estate loans, and consumer loan volumes declined slightly. Credit standards and terms tightened. Core deposit volumes grew again and net interest margins continued to increase. Outlooks in the financial sector remained optimistic.\nEnergy\nEnergy activity continued to expand, but at a slightly slower clip in the third quarter. Drilling activity in the Eagle Ford Shale and offshore has resumed normal operations after the hurricane. Overall growth in oil and gas production continued, but oilfield services firms noted weaker demand growth. Drilling activity is expected to decline slightly by the end of 2017, and demand for oilfield services is softening outside of the Permian Basin. However, six-month outlooks for 2018 were more optimistic relative to the last reporting period, and uncertainty has moderated.\nAgriculture\nCrop conditions remained favorable, although Hurricane Harvey hampered agriculture in the Coastal Plains. The extent of the impact is not yet known, but some livestock were lost and a small portion of the Texas cotton crop was damaged. Some rice and soybeans were also affected, but likely minimally. Overall, grain production was strong, with particularly robust yields in Northeast Texas. There is good moisture for planting winter wheat, but while wheat prices are higher than a year ago they are still generally below breakeven levels. Agricultural producers remain concerned about low crop prices, NAFTA negotiations, and the configuration of the next farm bill.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

/beige-book-reports/2017/2017-10-cl

"October 18, 2017\nSummary of Economic Activity\nEconomic activity in the Fourth District expanded at a moderate pace since our last report. Labor markets expanded broadly, with employers looking for low- and high-skilled workers. Wage pressures were felt primarily in the construction and nonfinancial services industries. Upward pressure on prices paid increased across industry sectors; however, producers and service providers found it challenging to raise selling prices. Consumer spending at retail establishments was little changed, while new motor vehicle sales strengthened. Manufacturing output grew at a modest pace overall, but production at District motor vehicle assembly plants trended lower. Nonfinancial services and freight transport firms saw moderate gains in activity. Year-to-date residential real estate sales stayed above year-ago levels. Base prices for new homes rose. Activity in the commercial real estate market remained elevated.\nEmployment and Wages\nThe past two months saw a boost in hiring across all reporting industries, with the strongest activity seen in construction, banking, and nonfinancial services. Many of our contacts reported creating new jobs during the current cycle, and a majority said that they have replaced departed workers. Greatest demand was for high-skilled workers, such as engineers and those in the building trades, and for low-skilled workers. Demand for the latter group was attributed to difficulties in retaining employees. A building contractor reported that his firm recently hired 15 newly graduated engineers and has openings for 10 additional entry-level engineers, but the firm has difficulty attracting qualified candidates. A chamber of commerce executive said that in order to avoid employee turnover, firms are incentivizing workers with bonuses and higher wages. This strategy has resulted in narrowing the wage gap between low- and middle-wage workers, drawing criticism from middle-wage workers. Competitive market conditions were cited as the primary factor for increasing wages, particularly in the construction and nonfinancial services sectors.\nPrices\nUpward pressure on prices paid increased moderately across industry sectors since our last report. The share of contacts who cited rising input prices is at its highest level since early in the second quarter and was most widespread in the manufacturing and construction sectors. Several manufacturers reported rising prices for ferrous metals, increases which they attributed in part to domestic trade policies. For the most part, these higher input prices were passed through to the end user. Prices for natural and synthetic fabrics used in apparel manufacturing remain at a relatively low level. Selling prices rose slightly overall during the current cycle, and the share of companies increasing prices for their products or services was lower than in the first half of 2017. Several manufacturers and service providers reported that close scrutiny by customers' procurement officers combined with global competition is making it difficult for them to raise their selling prices.\nConsumer Spending\nRetailers reported little change in consumer spending during the period. Department store chains are seemingly performing better than their specialty counterparts. One department store chain cited increased demand, which was qualified by citing an increase in traffic. A fast food chain reported much better results because of the introduction of new products and technology. An apparel retailer believes the removal of the border-adjustment tax proposal from the federal tax reform debate has eliminated an element of uncertainty and risk to the retail industry. Year-to-date unit sales through August of new motor vehicles rose almost 3 percent compared to those of a year ago. Auto dealers were concerned about above-normal new-vehicle inventory, which they attributed to an imbalance in supply and demand.\nManufacturing\nActivity in the manufacturing sector picked up from that of the previous reporting period; however, the overall pace of growth was modest. Several of our contacts cited confidence in the economy on the part of customers as the primary contributor to a rise in new orders. Other factors cited as contributing to the expansion in output include a strong housing market and strengthening in the oil and gas and primary materials industries. A few contacts reported an increase in orders for capital goods. Demand for consumer packaged products remained below projections. Year-to-date production through August at District auto assembly plants declined about 18 percent when compared to that of the same period a year earlier. Much of the decline can be attributed to retooling for three next-generation vehicles. The pickup in spending for structures and product development that began in the second quarter has weakened. However, contacts reported increased spending on IT equipment and services. Many manufacturers remain bullish in their outlook for the economy.\nReal Estate and Construction\nYear-to-date unit sales through August of new and existing single-family homes increased almost 2 percent compared to those of a year earlier. The average sales price rose 5 percent. Demand for new homes is stable across price points. Upward pressure on base prices is increasing because of rising development costs and rising prices for labor and materials. Builders are concerned that rising base prices may force some first-time buyers out of the market. Year-to-date estimates of single-family construction starts thru August are about 10 percent higher compared to those of a year earlier.\nNonresidential construction activity remains at elevated levels. Property development was broad based except for retail, for which demand continued to be weak. Backlogs were relatively stable, although three contacts described their backlogs as very strong and higher than projected. That said, contacts reported a downturn in inquires beginning in the third quarter. One general contractor observed that companies that do site work are seeking jobs. As site preparation is the first phase of a project, this situation is a leading indicator of a potential slowdown in construction activity. Another builder said that in his industry things just sometimes calm down unexpectedly for no particular reason. Office vacancy rates remain stable, and asking rents are slowly rising. A strong increase was reported in selling prices for office properties during the first half of 2017 compared to those of a year ago, while selling prices of industrial properties were stable. Apartment rental increases were moderate.\nBanking\nOn balance, business lending grew slightly over the period. Community bankers were more upbeat in their assessment of credit markets than were their counterparts at large banks. A few large bankers reported that loan demand is softening because of political uncertainty, with customers taking a wait-and-see approach. Consumer lending was largely stable. Fixed-rate purchase mortgages were in high demand, while credit card lending has softened, a situation one banker attributed to seasonal factors. Bankers reported improving loan quality. Loan application standards were little changed other than some easing in auto lending.\nNonfinancial Services\nFreight volume generally increased beyond what can be accounted for by seasonal factors. Two carriers described intermodal as very strong. Other contacts reported increased volume because of a surge in e-commerce and an expansion in the oil and gas industry. There is concern about the industry's facing capacity constraints by year's end because of electronic logging device requirements and rebuilding from recent hurricanes.\nProfessional and business services firms reported moderate gains in activity during the period. Strongest demand was seen by management consulting and IT services firms. A majority of our contacts reported that their customers are bullish on the economy and as a result are willing to invest more in technology.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2017/2017-10-su

"Beige Book: National Summary\nOctober 18, 2017\nThis report was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before October 6, 2017. 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\nReports from all 12 Federal Reserve Districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate. The Richmond, Atlanta, and Dallas Districts reported major disruptions from Hurricanes Harvey and Irma in some areas and sectors, including transportation, energy, and agriculture. Manufacturing activity and nonfinancial services expanded modestly to moderately in most Districts. Retail spending rose slowly, while vehicle sales and tourism increased in most Districts. Residential construction continued to increase, and growth in commercial construction was up slightly on balance. Low home inventory levels continued to constrain residential sales in many areas, while nonresidential real estate activity increased slightly overall. Loan demand was generally stable to modestly higher. Growth in the energy sector eased slightly. Agricultural conditions were mixed; while some regions were reporting better-than-expected harvests, low commodity prices continued to weigh down farm incomes.\nEmployment and Wages\nEmployment growth was modest on balance, with most Districts reporting flat to moderate increases. Labor markets were widely described as tight. Many Districts noted that employers were having difficulty finding qualified workers, particularly in construction, transportation, skilled manufacturing, and some health care and service positions. These shortages were also restraining business growth. Firms in several Districts reported that scarcity of labor, particularly related to construction, would be exacerbated by hurricane recovery efforts. Despite widespread labor tightness, the majority of Districts reported only modest to moderate wage pressures. However, some Districts reported stronger wage pressures in certain sectors, including transportation and construction. Growing use of sign-on bonuses, overtime, and other nonwage efforts to attract and retain workers were also reported.\nPrices\nPrice pressures remained modest since the previous report. Several Districts noted increased manufacturing input costs, but in most cases these weren't passed through to selling prices. Retail prices generally increased slightly. Transportation, energy, and construction materials prices increased more rapidly, with some Districts citing effects from hurricanes.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest to moderate pace since August, according to contacts. Respondents in manufacturing, retailing, and software and IT services said revenues continued to increase year over year. Commercial and residential real estate market conditions were mostly unchanged. Looking forward, business contacts remained upbeat about the outlook.\nNew York\nThe District's economy has continued to expand at a moderate pace since the last report, while labor markets have been tight. Input prices continued to rise moderately, while selling prices rose more modestly. Housing markets have strengthened somewhat, on balance, but commercial real estate markets have been flat.\nPhiladelphia\nOverall, economic activity continued at a modest pace of growth. Most sectors, including manufacturing and nonfinancial services, continued to grow modestly. Non-auto retail sales showed slight improvement, and auto sales grew modestly after declining in the previous period. On balance, employment changed little, while wages and prices continued to grow modestly.\nCleveland\nBusiness activity increased from that of the previous reporting period, but the overall pace of growth was moderate. After slowing during the summer months, hiring picked up across industries. Input price pressures outpaced selling price pressures. Retail store spending was flat; auto sales rose. Nonresidential construction remains healthy, but there are signs the industry may be slowing.\nRichmond\nThe economy expanded moderately. Manufacturing and port activity picked up, retail sales rose, and tourism remained strong. Commercial real estate leasing and lending activity increased modestly. Labor markets strengthened and wage pressures broadened. Prices rose moderately, partially due to supply chain disruptions from the hurricanes.\nAtlanta\nEconomic conditions improved modestly since the last report. Tightness in the labor market continued with few reports of wage pressures. Input cost pressures were subdued. Non-auto retailers cited steady sales growth. Tourism, energy, and agriculture were impacted by Hurricane Irma. Home sales and prices increased. New orders and production rose. Credit was available to most borrowers.\nChicago\nGrowth continued at a modest rate. Employment, business spending, and manufacturing increased modestly, while consumer spending increased slightly. Construction and real estate activity was little changed, as were financial sector conditions. Wages and prices rose modestly. Contacts expected the District's corn and soybean harvests to be close to trend.\nSt. Louis\nEconomic conditions have continued to improve at a modest pace since our previous report. The District continues to see relatively stronger growth in both manufacturing and banking sectors, although growth in both sectors has decelerated somewhat since the beginning of the year.\nMinneapolis\nEconomic activity grew modestly. Despite employer demand, job growth suffered from a lack of available workers. Tourism saw growth, but consumer spending overall showed some signs of weakness. Home construction rose, while home sales fell due to tight inventories. Commercial construction continued to lag. Manufacturing and mining activity picked up.\nKansas City\nEconomic activity in the Tenth District continued to expand modestly, and expectations for future growth were positive in most sectors. Retail sales increased modestly, the manufacturing sector expanded moderately, and transportation and wholesale trade firms noted strong sales. However, growth in the energy sector eased, and the agricultural sector continued to soften.\nDallas\nEconomic activity grew moderately. The impact from Hurricane Harvey varied by location and industry, and most contacts do not expect significant long-term disruption. The manufacturing sector exhibited notable strength with stronger output, increased hiring, and a pickup in price inflation. Auto sales surged in response to the loss of storm-damaged vehicles, and labor market shortages persisted and may become more acute as hurricane recovery continues.\nSan Francisco\nEconomic activity continued to expand at a moderate pace. Overall price inflation was flat and remained low, while upward wage pressures strengthened somewhat and conditions in the labor market tightened further. Sales of retail goods picked up, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector improved. Activity in the residential real estate market was strong.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2017/2017-10-mi

"October 18, 2017\nSummary of Economic Activity\nThe Ninth District economy grew modestly since the last report. Employment fell since the last report, but hiring demand remained strong, held back by tight labor markets. Wage pressures were moderate, while price pressures were modest overall. The District economy showed growth in services, manufacturing, commercial real estate, residential construction, and energy. Consumer spending saw only slight growth, and commercial construction was flat; agriculture improved, but remained weak overall, and residential real estate slowed.\nEmployment and Wages\nEmployment fell since the last report, but hiring demand remained strong, held back by tight labor markets. Seasonally adjusted August employment levels fell across the District, continuing an up-and-down pattern in recent months. However, a staffing contact in southeastern Minnesota said hiring \"is still robust. I have no issue getting clients. If I had 100 people, I could put them all to work.\" A Minnesota labor contact said worker demand in hospitality was \"stronger than usual going into the winter season\" for both union and nonunion businesses. A large Minnesota entertainment and hospitality firm said it had 150 job openings on a steady basis at two locations. A Montana source said booth registrations at recent career fairs were up 7 percent, \"indicating more employers are looking to hire.\" Two September business conditions indexes showed strong hiring sentiment in Minnesota and North Dakota, but some softness in South Dakota. In Montana, the number of job seekers visiting state workforce centers in September fell compared with August figures, while the number of open job positions grew. A September survey of South Dakota retailers by the Minneapolis Fed found that more than half were hiring, but most often to fill turnover. Contacts in hospitality and construction also noted an increase in overtime for workers.\nWages rose moderately since the last report, with some mixed signals, but overall showing signs of strengthening. A staffing contact said one client has raised starting wages three times since June. A South Dakota construction contact estimated wage increases of 3 percent to 5 percent over last year and expected similar increases in the coming year. A Minnesota labor union source in the services industry reported increases of 3 percent \"in most of our units.\" In a survey by the Minneapolis Fed, 40 percent of South Dakota retailers reported wages rising between 1 percent and 3 percent over the past year, but with equal percentages above and below those levels. Said a Minnesota workforce contact, \"I get very mixed signals. I hear that wages are going up, but when I press, I still see a lot of wage increases in the 2 percent to 3 percent range.\"\nPrices\nPrice pressures remained modest since the last report. After spiking in late August, retail fuel prices in District states decreased over the following month, but remained slightly higher than the previous reporting period. A survey of Minneapolis-St. Paul home builders indicated increased price expectations for building materials and land. Prices received by farmers for corn, wheat, hay, milk, hogs, and eggs increased in August compared with a year earlier; prices for soybeans, cattle, chickens, and turkeys decreased.\nConsumer Spending\nConsumer spending rose slightly overall since the last report. Automotive sales were reportedly solid, and a Minnesota dealer announced a major expansion of dealerships in Minneapolis-St. Paul and nearby Wisconsin markets. Despite recent closures, especially among legacy retailers, new retail stores continued to open. Tourism also saw growth. Among the 14 national parks in District states with significant summer attendance, total August visitors were up 8 percent over a year earlier, to more than 3 million\u2014the third consecutive month of a visitor increase of at least 5 percent. August hotel demand in Minnesota increased by 1 percent from a year earlier, with Rochester and Minneapolis-St. Paul growing by 4 percent and 2 percent, respectively.\nHowever, there were some signs of softness. A September survey of North Dakota and South Dakota retailers by the Minneapolis Fed showed generally softer sales over the previous two months compared with the same period a year earlier. Gross sales were softer this summer in Wisconsin and South Dakota compared with last year, and the total August handle at South Dakota casinos fell by about 3 percent.\nServices\nActivity in the professional services industry increased moderately since the last report. A biotech firm broke ground on a large research facility in Minnesota. A consultant noted a growing backlog of work related to merger and acquisition activity in the second half of the year. Freight rail contacts reported that shipments had grown slightly but consistently during this year. August shipments from Great Lakes ports increased from a year earlier; iron ore shipments increased 10 percent.\nConstruction and Real Estate\nCommercial construction was flat since the last report. An industry database of construction spending showed no growth over the latter half of summer compared with a year earlier. Industry tracking of new construction projects showed lower levels over the most recent six-week period (end of September) compared with a year earlier. A South Dakota contact said construction there was \"a little slower\" compared with last year, especially outside of metro areas. Limited figures on commercial construction permits in September showed activity was higher in Sioux Falls, S.D., but considerably lower in Billings, Mont. August permit figures were mixed. Residential construction was up modestly overall. Limited September data on residential construction showed activity was higher in Minneapolis-St. Paul and Billings compared with a year ago, but slightly lower in Sioux Falls. August permitting was generally flat to lower across the District compared with a year ago, with the notable exception of Minneapolis-St. Paul.\nCommercial real estate grew modestly since the last report. In Minneapolis-St. Paul, office vacancies have risen slightly, while retail vacancies fell slightly after rising in previous quarters. Most metros continue to see multifamily development in light of low vacancy rates. Minneapolis-St. Paul maintained one of the tightest vacancy rates in the nation despite 5,000 units coming online in the past 12 months. Residential real estate slowed, with closed sales lower across the District. Thanks to low inventories, median prices were universally higher, including a 14 percent year-over-year increase in Bozeman, Mont. A contact there said real estate agents \"are not seeing any slowdown in buying. They feel it's only a matter of time before the markets slow, simply because of the lack of available inventory.\"\nManufacturing\nDistrict manufacturing activity increased moderately since the last report. An index of manufacturing conditions produced by Creighton University indicated increased activity in September compared with a month earlier in Minnesota and North Dakota; the index for South Dakota indicated a slight decrease in activity. Several firms noted an increase in demand for equipment related to oil and gas extraction. A lubrication equipment producer reported an increase in orders from the military. A producer of hydraulic cylinders said sales were up over last year and current orders were solid.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions improved slightly since the previous report, but remained weak overall. Though drought conditions eased, large areas of Montana and the Dakotas remained exceptionally dry, and much of the damage to crops had already been done. Early indications were that the wheat harvest might be better than expected in these areas, but still well below average. Areas not affected by drought were generally expecting good yields, but saw harvests delayed by rains. Activity in the energy and mining sectors increased slightly since the last report. District oil and gas exploration as of late-September was roughly unchanged from a month earlier. Output at District iron ore mines was up substantially from a year earlier.\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/2017/2017-10-kc

"Beige Book Report: Kansas City\nOctober 18, 2017\nSummary of Economic Activity\nEconomic activity in the Tenth District continued to increase at a modest pace in September, and contacts in most sectors expected gains in the coming months. Retail, restaurant, and tourism activity picked up since the last survey, but auto sales fell modestly. The manufacturing sector continued to increase moderately, and capital spending plans were positive. Contacts in the transportation and wholesale trade sectors noted a strong increase in sales, while professional and high-tech firms reported a modest rise in overall activity. Residential real estate activity was mostly flat, with steady home sales and construction activity. The Tenth District's commercial real estate sector continued to expand modestly. Banking respondents reported steady overall loan demand, unchanged loan quality and credit standards, and stable deposit levels. Growth in energy activity in the Tenth District eased since the last survey period, and abundant supply in the natural gas sector continued to weigh on prices and profitability. The agricultural sector continued to soften in the District since the last survey.\nEmployment and Wages\nDistrict employment and employee hours continued to rise at a slight pace in September, and contacts expected additional improvement in the months ahead. Respondents in the manufacturing, energy, wholesale trade, professional services, real estate, health services and restaurant sectors noted an increase in both employment and employee hours compared to the previous survey period, while respondents in the retail trade, auto sales, and tourism and hospitality sectors noted a decrease. Expectations for employment remained positive in all sectors except the auto sales and tourism sectors. The majority of respondents noted it was difficult to find qualified workers, and several contacts noted a shortage of commercial drivers, salespeople, and services workers.\nWages rose modestly in most sectors, and moderate wage growth was anticipated in the coming months.\nPrices\nInput prices rose modestly in most sectors compared to the previous survey period, while selling prices were either flat or slightly higher. In the retail sector, both input and selling prices increased slightly, but at a slower pace than in the prior survey. Restaurant contacts reported modest rises in input prices and steady selling prices, and expectations were for steady selling prices moving forward. Transportation input prices were up strongly, and transportation selling prices edged up. Prices in the construction sector rose moderately, with continued moderate increases anticipated in the coming months. Manufacturers reported modest rises in prices for finished goods, while raw material costs continued to edge higher. Manufacturers expected moderate growth in both finished goods and raw material prices in the next few months.\nConsumer Spending\nOverall consumer spending activity was mixed as retail sales, restaurant sales, and tourism activity increased, while auto sales fell further. Consumer spending was expected to increase slightly in the months ahead. Retail sales improved modestly in September and were similar to year-ago levels. Several retailers noted an increase in sales for upholstery and furniture items, while luxury products sold poorly. Contacts in the retail sector anticipated sales to rise moderately in the next few months, and inventory levels were expected to increase slightly. Auto sales continued to fall at a moderate pace and were below year-ago levels. Dealer contacts anticipated a further modest slowdown in sales moving forward, and auto inventories were expected to rise slightly. Restaurant sales increased slightly since the last survey, and were well above year-ago levels. District tourism activity increased slightly, but remained lower than a year ago. Tourism contacts expected activity to improve further this fall.\nManufacturing and Other Business Activity\nManufacturing activity continued to expand at a moderate pace in September, and the majority of other business contacts reported moderate sales increases. Manufacturers reported sustained moderate growth in production and shipments, particularly for chemicals, plastics, and machinery products. New orders and order backlogs grew at a modest pace, and activity was considerably higher than a year ago. Manufacturers' capital spending plans remained favorable, and firms were increasingly optimistic about future activity.\nOutside of manufacturing, transportation and wholesale trade firms reported strong sales increases, while professional and high tech firms noted a more modest rise in activity. All firms expected sales to rise considerably in the next six months. Professional, high-tech, and wholesale trade firms reported strong capital spending plans, while transportation firms anticipated a slight decrease in capital expenditures heading forward.\nReal Estate and Construction\nDistrict real estate activity continued to rise at a slight pace as residential real estate conditions were flat and commercial real estate activity expanded modestly. Residential home sales were steady since the previous survey, and were moderately above year-ago levels. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential home prices increased modestly, while residential inventories decreased. Residential construction activity was flat, with no change in sales of construction supplies, new home starts, and traffic of potential home buyers. Activity in the commercial real estate sector continued to expand at a modest pace, as absorption, completions, construction underway, sales, and prices rose, while vacancy rates declined. Commercial real estate activity was expected to continue to increase at a modest pace in the coming months.\nBanking\nBankers reported steady overall loan demand since the previous survey, with a majority of respondents indicating stable demand for commercial and industrial, commercial real estate, residential real estate and consumer installment loans. Most bankers reported that loan quality was unchanged compared to a year ago, and expected loan quality to remain essentially the same over the next six months. Credit standards also remained largely unchanged in all major loan categories. Finally, a majority of respondents reported stable deposit levels.\nEnergy\nGrowth in Tenth District energy activity eased since the last survey period, while expectations for future activity remained solid. The number of active oil and gas drilling rigs was little changed across the District, and contacts expected them to stay near current levels in the coming months. Respondents projected a modest increase in future oil prices and hence higher profits over the next six months. The abundant supply of natural gas was expected to keep weighing on prices and profitability in that sector. Firms surveyed expected Hurricane Harvey to have low to medium impacts on the oil and gas industry. Contacts, on average, estimated the effects on offshore production, trade, and refineries to last five, six and nine weeks, respectively, from the start of Harvey.\nAgriculture\nThe District farm economy continued to soften, but showed some signs of stabilization since the previous reporting period. Farm income in the District was lower than a year ago, but some agricultural commodity prices rebounded slightly. Soybean prices increased modestly from the previous reporting period, and yield expectations remained strong. Wheat prices remained flat, but were higher than a year ago. Corn prices declined slightly amid strong production expectations, but District contacts expected strong crop yields to offset some weakness in prices. Cattle and hog prices declined slightly from the previous reporting period, but also remained higher than a year ago. Farmland values declined modestly in some regions, but generally remained steady in areas with strong crop production.\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

/beige-book-reports/2017/2017-10-at

"October 18, 2017\nSummary of Economic Activity\nAside from hurricane effects, Sixth District business contacts described economic conditions as improving at a modest pace from mid-August through September. The outlook among firms remained optimistic with the majority of contacts expecting growth to be slightly above current levels for the remainder of the year. Most firms continued to cite labor market tightness, but with few reports of wage pressures. Overall input cost pressures were muted. Most merchants cited steady sales growth since the previous reporting period; however, automobile dealers continued to note softening sales. Hospitality, energy, and agriculture contacts reported that activity was greatly affected by Hurricane Irma. Residential real estate contacts suggested that home sales and prices were slightly ahead of last year's levels. Manufacturers indicated that new orders and production increased. Bankers noted that credit continued to be available.\nEmployment and Wages\nDistrict business contacts reported that job growth was steady since the previous report, though challenges filling construction, information technology, finance, transportation, and nursing positions persisted. Energy sector contacts experienced ongoing difficulties filling skilled craft positions. Firms continued to develop and utilize internal and external training programs to help produce qualified workers. Commercial and residential construction industry contacts further indicated that labor shortages were restraining growth. Businesses continued to engage in partnerships with the educational and workforce development community to fill specific industry or individual firms' skill gaps. Broadly, businesses continued to use non-wage mechanisms to attract and retain workers. While it is early to gauge the impact of Hurricanes Harvey and Irma on southeastern labor markets, some contacts expect the hospitality, retail, and construction industries to be the most impacted, particularly in Florida and Louisiana.\nWage growth remained steady, with the exception of continued wage pressures for some high-skilled positions and increased reports of rising wages in the construction industry. Business plans for future compensation, on balance, continued to be reported as modest for the coming year.\nPrices\nFirms reported that overall input costs were mostly flat. Although there were reports of limited pricing power, most businesses have been able to pass along commodity input cost increases. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.7 percent in September. Survey respondents also remarked that they expect unit costs to rise 1.9 percent over the next twelve months. Early reports from Florida construction contacts indicated that costs, which were already rising, were expected to increase significantly due to hurricane rebuilding efforts.\nConsumer Spending and Tourism\nOverall, retail sales growth was unchanged since the last report, although contacts in Florida reported an increase in retail sales of building materials in preparation for and following Hurricane Irma. Auto dealers continued to report a slow-down in momentum of auto sales compared to a year ago, though some expect sales to increase from replacement activity due to the hurricanes.\nTourism in Florida was heavily impacted by Hurricane Irma, although it is too soon to gauge the full extent of the impact. Hotels and restaurants remained closed due to power outages and downed trees for up to three weeks on the west coast of Florida while the remainder of the state was functional within a week. Reports from the Florida Keys indicated that some major hotels and resorts may take up to six months to rebuild. Georgia and Louisiana experienced an uptick in visitors displaced from Florida. In spite of hurricane related set backs, contacts from the tourism and hospitality sector remain optimistic for the remainder of the year.\nConstruction and Real Estate\nReports from residential real estate contacts in August signaled modest growth prior to Hurricane Irma's landfall. Builders said construction activity was slightly up from the year-ago level. Many brokers and builders indicated home sales were up slightly relative to the year-ago level. The majority of contacts noted that buyer traffic was flat to slightly down and inventory levels were down from the year-ago level. Both builders and brokers continued to report gains in home prices. Many builders expect home sales to be flat over the next three months relative to the same period last year, while the majority of brokers anticipate slightly higher sales. Most builders expect that construction activity will match or marginally surpass the current pace over the next three months.\nMany commercial real estate contacts reported improvements in demand that resulted in rent growth, but cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. The majority of commercial contractors indicated that the pace of nonresidential construction activity had increased from one year ago; most reported healthy backlogs. Several reports noted that the pace of multifamily construction matched or exceeded the year-ago level. Commercial construction contacts' expectations for the pace of nonresidential construction were mixed, while their outlook for the pace of multifamily construction leveled off. Florida contacts suggested that construction activity will increase significantly due to hurricane rebuilding efforts.\nManufacturing\nManufacturing contacts indicated that the pace of overall activity increased since the last report. Purchasing managers noted a rise in new orders and production levels, as well as an increase in the pace of hiring. Supplier delivery times were reported as getting longer and finished inventory levels increased somewhat. The overall outlook was relatively unchanged from the previous report, with close to half of firms surveyed expecting higher production over the next six months.\nTransportation\nTransportation firms reported varying levels of activity since the previous report. Ports experienced continued growth in container trade and roll-on/roll-off cargo. Railroads reported that total rail traffic was down compared with the same period last year as shipments of grain, farm products, petroleum and petroleum products, and non-metallic minerals saw double-digit declines. Intermodal traffic, however, was up moderately. Trucking contacts cited considerable increases in freight volume month-over-month. While Hurricane Irma caused temporary disruptions for Florida transportation contacts, most reported a return to normalcy within a week after the storm.\nBanking and Finance\nCredit remained readily available for most qualified borrowers, although some small and minority-owned businesses experienced difficulty obtaining credit. Liquidity was plentiful, but competition restrained lending at some banks. Auto dealer contacts described a slowdown in auto lending due to slowing sales and rising interest rates. Credit remained widely available to businesses seeking operating and expansion capital.\nEnergy\nContacts indicated that inventories decreased as a result of Hurricanes Harvey and Irma. Retail demand continued to put pressure on supply to affected areas, particularly those without pipeline access. Refineries resumed production a few days after the hurricane hit. Utility companies restored power within two weeks to areas affected with the exception of significantly wind damaged locations in the Keys. Overall, contacts reported that utilities continued to experience a decline in residential and industrial sales and commercial sales remained flat.\nAgriculture\nAgriculture conditions across the District were mixed. Although damage assessments are still being made, Irma's heavy rains and high winds resulted in significant damage to Florida's agriculture industry as well as crop damage in parts of Georgia and Alabama. Tennessee's corn harvest closely tracked the five-year average. The District's cotton harvest and the soybean harvests in Mississippi and Tennessee were mostly on par with five year averages. Both the Louisiana and Mississippi rice harvests were ahead of their five-year averages. On a year-over-year basis, prices paid to farmers in August were up for corn, broilers, and eggs but were down for cotton, rice, soybeans, and beef.\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

/beige-book-reports/2017/2017-10-ny

"Beige Book Report: New York\nOctober 18, 2017\nSummary of Economic Activity\nEconomic activity in the Second District continued to expand at a moderate pace in the latest reporting period, and labor markets have remained steady and tight. Input prices continued to increase moderately, while selling prices were up only modestly. Manufacturers reported continued brisk growth in activity, and businesses engaged in wholesale trade and information noted a pickup in activity since the last report. However, contacts in professional & business services and health & education services generally characterized business activity as flat. Consumer spending was generally steady since the last report, while consumer confidence edged up. Housing markets have been mixed but, on balance, a bit stronger, though the high end of the market has been soft. Commercial real estate markets were mostly steady. New residential construction activity has slowed further, while commercial construction has been steady to weaker. Finally, banks reported a pickup in demand for home mortgage loans and lower delinquency rates across all loan categories.\nEmployment and Wages\nThe labor market has remained tight. One major employment agency in New York City and another in upstate New York both described the job market as tight but steady, with only modest upward pressure on wages in most industries. Businesses continued to report difficulty finding qualified workers.\nBusiness contacts in manufacturing and in most service-sector industries reported that they have added jobs on net, though to a modest degree. Similarly, hiring plans for the months ahead are subdued but positive, on net.\nOverall, wages have continued to rise at a modest pace, though contacts in education & health, leisure & hospitality, and real estate report somewhat more widespread wage hikes.\nPrices\nBusinesses generally indicated that input prices continued to rise moderately, though contacts in retail, real estate, and education & health noted more widespread increases.\nSelling prices overall continued to rise modestly, though contacts in the retail and leisure & hospitality industries noted increasingly widespread price increases in the latest reporting period. One noteworthy example has been ticket prices at Broadway theaters, which have been running about 12 percent ahead of comparable 2016 levels. On the other hand, prices of used vehicles have softened, and some general merchandise retailers have recently become more aggressive with price discounting and promotional activity. Education & health firms reported moderate increases in prices received, while contacts in other industries generally reported that selling prices were steady.\nConsumer Spending\nRetail contacts reported that sales have been mixed but, on balance, flat in recent weeks. Retailers in upstate New York indicated that both traffic and sales activity have been steady and little changed from a year earlier. A general merchandise chain indicates that sales in the District have picked up and were ahead of plan but still down slightly from a year earlier. Retail inventories were generally reported to be steady and at satisfactory levels.\nAuto sales, on the other hand, have remained solid. Dealers in upstate New York reported that demand for new vehicles was fairly robust in September and that sales were up from a year earlier, led by strong leasing activity. New auto sales across upstate have been near record highs. Used vehicle sales have been steady to modestly stronger. Vehicle inventories were said to be at satisfactory levels. Retail and wholesale credit conditions have remained favorable, according to dealers.\nConsumer confidence in the Middle Atlantic states (NY, NJ, PA), which was already at a fairly high level, edged up further in September.\nManufacturing and Distribution\nManufacturers reported continued brisk growth in business activity in recent weeks. Contacts in the wholesale trade sector noted a pickup in growth, while those in the transportation industry continued to report modest growth. Looking ahead, manufacturers and wholesalers remained broadly optimistic about the near-term outlook, while transportation firms have grown considerably less optimistic.\nServices\nService-sector firms generally reported sluggish growth. Contacts in both professional & business services and education & health services noted that activity was flat, on balance, while firms in the information and leisure & hospitality industries noted a pickup in growth. Service sector businesses remained mildly optimistic about the near-term outlook, except in the professional & business services industry, where contacts were considerably less upbeat than in recent months.\nBroadway theaters reported that attendance and revenues were fairly strong through the first half of September but have tapered off in recent weeks, with attendance falling below comparable 2016 levels.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, moderately stronger. Real estate contacts in upstate New York report that sales volume has been hampered by a lack of inventory, while prices have continued to climb, with homes often selling for above the asking price. In the suburbs around New York City, home sales volume has been strong and prices have accelerated somewhat, though the high end of the market continues to lag, reflecting excess supply. New York City's condo and co-op market has strengthened modestly; home prices have continued to rise moderately in Brooklyn and Queens but have risen only slightly in Manhattan. Across the city, the high end has continued to lag; sellers have become more negotiable and this has boosted activity somewhat.\nRental markets have also been mixed. Rents in and around New York City have been rising moderately for smaller apartments but declining for larger and pricier units. Landlord concessions have leveled off but remain fairly widespread.\nCommercial real estate markets have mostly remained steady. The market for office space has softened further in upstate New York, Long Island and Brooklyn but has been steady to slightly stronger in Manhattan and northern New Jersey. Vacancy rates for industrial space, which had been declining steadily in recent years, have leveled off in and around New York City, though they have continued to decline in upstate New York. Industrial rents have continued to rise at a brisk pace throughout the District.\nSingle-family home construction has been sluggish--particularly for low and mid-priced homes--and appears to have tapered off somewhat since the last report. New multi-family construction starts have picked up further in northern New Jersey but have remained lackluster across the rest of the District. Still, there continues to be a good amount of ongoing multi-family construction in progress throughout the District. Similarly, new commercial development--of both office and industrial space--has strengthened further in northern New Jersey but has been increasingly sluggish across the rest of the District.\nBanking and Finance\nSmall to medium-sized banks in the District reported higher demand for residential mortgages but no change in demand for consumer loans, commercial mortgages, or commercial & industrial loans. Bankers also reported that refinancing activity decreased, on net. Contacts reported tighter credit standards for commercial mortgages, and unchanged credit standards across all other loan categories. Banks reported higher loan spreads overall, largely reflecting higher spreads on commercial mortgages. Respondents also reported an increase in the average deposit rate. Bankers reported lower delinquency rates 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"

St Louis

/beige-book-reports/2017/2017-10-sl

"Beige Book Report: St Louis\nOctober 18, 2017\nSummary of Economic Activity\nReports from contacts suggest economic conditions have continued to improve at a modest pace since our previous report. Labor markets remain tight, with positions remaining unfilled; employment was little changed. Contacts report moderate growth in wages, while broader price pressures remain modest. Reports on consumer spending improved since our previous report, although reports from auto dealers remain mixed. The District continues to see relatively stronger growth in both the manufacturing and banking sectors, although growth in both sectors has decelerated somewhat since the beginning of the year.\nEmployment and Wages\nAnecdotal evidence suggests little change in employment since the previous report. Contacts continued to report difficulties finding experienced or qualified employees. A construction contact in Little Rock noted that high levels of real estate activity have created a shortage of skilled workers, and a transportation contact reported that the shortage of truck drivers worsened. Several contacts reported that potential employees' lack of transportation to and from work has posed a challenge to hiring.\nContacts have reported moderate growth in wages since the previous report. A contact in Little Rock reported increasing compensation as part of an effort to retain staff, while another contact reported moderate increases for both hourly and salaried employees throughout the area.\nPrices\nPrice pressures have increased modestly since the previous report. Residential real estate prices continued to rise moderately throughout most of the District. Non-residential real estate price pressures were mixed: A contact in Little Rock reported a decrease in industrial rents, while a contact in Memphis reported an increase. Construction costs declined slightly. Steel prices fell slightly, and a contact in Little Rock reported that wood product prices continued to decrease modestly. Due to low water levels, barge rates along the Mississippi and Illinois rivers increased significantly.\nEnergy prices increased moderately since the previous report. In Illinois and Kentucky, coal prices rose modestly. In Arkansas, Mississippi, and Tennessee, Hurricane Harvey caused relatively strong increases in gasoline prices compared with national prices. Cotton, rice, soybean, and wheat prices increased moderately, while sorghum prices were flat and corn prices decreased modestly.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate consumer spending has grown modestly since our previous report. Although August's real sales tax collections decreased in Arkansas and Kentucky relative to a year ago, they increased in Missouri and Tennessee. Consumer confidence increased substantially in West Tennessee, as households indicated their willingness to spend more in the next few months relative to a year ago. Reports from auto dealers were mixed; although some dealers in the Memphis area indicated strong sales, dealers in Little Rock noted slower foot traffic and are less optimistic that 2017 sales will exceed last year's. Hospitality contacts in Missouri and Tennessee indicated that business activity has increased and exceeded expectations since our previous report.\nManufacturing\nManufacturing activity has increased moderately since our previous report. Manufacturing production, inventories, and employment growth were all stronger than one month earlier in both Arkansas and Missouri. However, new manufacturing orders grew at a slower rate in both states.\nContacts in several industries across the District reported increased sales, including industrial pipe manufacturing and plastic manufacturing. However, a contact in the plastic product manufacturing industry noted a drop in requests for quotes from new customers. A contact in the wood product manufacturing industry reported that production has outpaced demand.\nNonfinancial Services\nThe nonfinancial services sector has expanded at a modest pace since the previous report. Firms that provide transportation and logistics services are reporting plans to increase employment and renovate existing structures. Demand for commercial trucking from firms headquartered in the District is up from Hurricane Harvey relief efforts and expected to remain elevated during rebuilding efforts. Several firms that provide professional business and information services are reporting plans to expand and increase employment. Reports from healthcare firms remain mixed. Employers continue to streamline operations in an uncertain environment, with one major employer shifting jobs from low-profit to high-profit areas.\nReal Estate and Construction\nThere was little change in residential real estate activity since the previous report. Seasonally adjusted home sales for August ticked up slightly relative to the previous month across the District's four major MSAs, and year-to-date sales remained in line with those from a year ago. Local real estate contacts continued to report that significant shortages in inventory have hindered sales, particularly for median-priced housing.\nResidential construction activity improved slightly. August permit activity within District MSAs increased modestly relative to the previous month. Local contacts reported that lot scarcity and a shortage of labor continue to limit new construction.\nCommercial real estate activity was unchanged from the previous report. Contacts largely indicated that demand remained steady for most property types. A central Arkansas banker reported strong demand for commercial real estate loans.\nCommercial construction activity was mixed. August nonresidential construction starts dropped slightly within the District relative to the previous month, and multifamily permits were below levels from a year ago. However, local contacts generally reported a robust level of new multifamily construction underway or being planned, and several Memphis contractors continued to report optimism regarding future projects.\nBanking and Finance\nLending activity in the Eighth District improved moderately. According to a survey of 84 small and mid-sized District banks, outstanding loan volumes grew by 8 percent relative to year-ago levels. Loan growth in the District has been gradually slowing since the start of 2017, but it continues to exceed the national rate. Commercial and industrial loan growth has stabilized at 9 percent after decelerating through the first half of 2017. Meanwhile, consumer and commercial real estate lending grew the fastest among all loan categories, rising by 11 and 10 percent, respectively.\nAgriculture and Natural Resources\nDistrict agriculture conditions improved modestly from the previous reporting period. Reports from farmers indicated that they have been impressed by their harvest numbers so far. Production and yield forecasts improved from August to September for corn, cotton, and soybeans. For rice expected yields ticked up from August to September, while expected production ticked down after downward revisions to rice acreage estimates. Relative to 2016, District cotton and soybean production levels were projected to be higher, while those for corn and rice were projected to be lower.\nNatural resource extraction declined slightly from July to August, with seasonally adjusted coal production declining 3 percent. However, August production was 10 percent above the level from one year ago.\nFor more information about District economic conditions, visit: www.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

/beige-book-reports/2017/2017-10-ri

"October 18, 2017\nSummary of Economic Activity\nThe Fifth District economy grew at a moderate pace since our previous report, with some respondents attributing increased activity to the recent hurricanes. Manufacturing firms continued to report moderate growth in new orders and shipments. Ports and trucking companies saw robust growth in cargo movements, which was partially due to ships being rerouted to district ports from areas affected by hurricanes. Retail sales picked up slightly, overall, including those for building materials to support hurricane relief efforts. Tourism and travel activity remained strong. Commercial leasing rose modestly, on balance. Loan demand picked up moderately in recent weeks, driven by commercial activity. Services firms generally indicated moderate revenue growth. Labor demand strengthened moderately and wage pressures broadened. Prices rose at a moderate pace. Supply chain disruptions drove some input prices higher.\nEmployment and Wages\nLabor demand continued to strengthen moderately in recent weeks and labor markets remained tight. Although employment agencies reported a slight increase in new job openings, that increase was lower than expected going in to the fall recruiting season. They continue to anticipate an increase in openings in coming months. Wage increases remained modest, but more contacts noted increased wage pressures. Executives reported difficulty finding qualified machinists and machine operators, engineers, construction workers and contractors, executive assistants, mechanics, and nurses. Trucking companies continued to struggle finding drivers, despite an increase in drivers' wages across the industry.\nPrices\nOn balance, prices grew at a moderate pace since our previous report. According to our most recent surveys, manufacturing input prices increased moderately and continued to grow at a faster pace than final goods prices. Manufacturers said that supply chain disruptions from the recent hurricanes drove some raw materials prices higher, particularly for resins, lumber, and petroleum-based products. Services firms indicated that price growth decelerated slightly in recent weeks but remained at a modest level, overall. Agriculture commodity prices increased modestly for poultry, eggs, wheat, and sugar in recent weeks and were expected to rise further as a result of the recent hurricanes. A food manufacturer also expressed concerns about future price increases for plastic wrap. Prices continued to rise for transportation services, construction materials, and health insurance premiums. Coal and natural gas prices rose moderately.\nManufacturing\nOn balance, manufacturing firms reported moderate growth in new orders and shipments in recent weeks. Medical equipment producers and furniture manufacturers noted a recent pickup in new orders, while metal manufacturers continued to see improved business conditions. Additionally, a packaging manufacturer reported increased shipments with the opening of its new fulfillment center. Contacts generally experienced slightly longer vendor lead times. Expectations remained optimistic for the next six months, as producers anticipated increases in new orders and shipments.\nPorts and Transportation\nDistrict ports continued to see robust growth in shipment volumes in recent months and expected the strength to persist in coming months. In August, one District port reported its largest volume ever and another reported its second-largest on record. Ports continued to see stronger growth in imports than in exports. District ports reported seeing increased traffic as incoming ships were rerouted from hurricane affected areas. Trucking companies also reported strong business conditions, easily loading trucks to capacity. Firms noted that a portion of the recent uptick was a result of the recent hurricanes, as trucks brought relief shipments to affected areas.\nRetail, Travel, and Tourism\nRetail sales rose slightly, overall, since our previous report. Hardware and construction material providers saw an increase in demand resulting from the hurricane, which led to higher prices of hardware and lumber. An auto dealer in North Carolina reported a slight increase in sales and customer traffic but noted uncertainties about how the hurricanes would affect the used vehicle market. Meanwhile, a sporting goods company in West Virginia said that sales continued to slow as some manufacturers opted to sell directly to customers.\nThe Fifth District saw strong tourism in recent months. A West Virginia resort experienced bookings 12 percent to 15 percent above expectation. A Virginia outdoor adventure center credited strong business to early fall weather and visiting school groups. Coastal North Carolina witnessed tourism above the seasonal norm, and some businesses claimed it was the best season they have ever had. Some hotels reported an influx of people due to Hurricane Irma evacuations, but believed tourism might be depressed in the near future as hurricane victims might be less likely to travel later this year.\nReal Estate and Construction\nResidential real estate reports were more mixed compared to the previous report. Agents in Charlotte, Durham, and Washington D.C. reported modest sales growth, but elsewhere most brokers noted a modest decline in home sales as inventory remained low, particularly in the $200,000 to $400,000 price range. Home prices continued to rise modestly. Average days on the market were unchanged since the previous report, most contacts stated that homes were on the market for about 60 days. New home sales improved modestly in recent weeks. A broker said that new home communities in more desirable locations continued to have steady sales, while most builders were keeping standing inventory low.\nCommercial real estate leasing rose modestly in recent weeks, as brokers reported more demand in urban locations. Vacancy rates were unchanged from the previous report, with most contacts noting steady, low rates across markets. Rental rates were stable to increasing modestly. Commercial construction accounts were mixed. Office and warehouse construction increased in Raleigh and Charlotte, North Carolina and Charleston, South Carolina, while in Washington, D.C., retail development slowed somewhat. Multifamily construction continued at a steady pace in large urban markets but was limited elsewhere.\nBanking and Finance\nOverall, loan demand rose moderately in recent weeks. Reports on residential mortgage demand varied by location but was generally described as stable to increasing modestly. On the commercial side, real estate loan demand strengthened moderately, with a notable uptick reported in the greater Raleigh, North Carolina area. Business lending improved slightly, on balance. Deposits grew moderately as bankers reported growth in both CDs and checking accounts. Short term interest rates were reported as unchanged to up slightly. Competition among banks remained aggressive with some reports of extended term durations and non-recourse loans being offered, which led to concerns about softening credit standards. Credit quality remained stable at strong levels. Late payments and delinquency rates trended lower.\nNon-Financial Services\nServices firms indicated moderate revenue growth, according to our most recent surveys, and remained optimistic for demand to improve further over the next six months. The strongest reports came from construction related services, including civil engineering, home repair, maintenance, and contractor services. Telecommunication services, amusement facilities, and performing arts studios also indicated a pickup in business in recent weeks. A marketing firm in Virginia reported an extension to an existing contract but a lot of competition for new business. Health care service providers were less upbeat and one hospital system administrator expressed concerns over rising insurance costs.\nAgriculture and Natural Resources\nCoal production was little changed in recent weeks while natural gas production rose slightly. On the whole, agriculture conditions were unchanged as the growing season progressed; however, some farms in South Carolina were flooded by Hurricane Irma. A hardwood producer reported a moderate rise in export demand in the flooring market while cabinetry demand softened somewhat.\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

/beige-book-reports/2017/2017-10-ph

"October 18, 2017\nSummary of Economic Activity\nAggregate business activity in the Third District continued at a modest pace of growth during the current Beige Book period. Manufacturing, nonfinancial services, new home sales, and tourism grew modestly; nonresidential construction and leasing appeared to grow slightly; and nonauto retail sales and new home construction activity exhibited little change. Auto sales, which had declined modestly in the prior period, showed modest growth in the current period. On balance, wages and prices continued to grow at a modest pace, but employment flattened out. Overall, firms appear to anticipate continued modest growth over the next six months, with a larger percentage of firms expecting growth.\nEmployment and Wages\nEmployment changed little during the Beige Book period, slowing from a modest pace of growth in the prior period. Reports of net additions to staff were subdued for both manufacturing and nonmanufacturing firms, and most contacts reported no change in staff levels. Average hours worked decreased over the period for manufacturing firms but held steady among nonmanufacturers.\nOn balance, wage growth held steady at a modest pace. Staffing firms and other contacts generally reported steady wage growth and tight labor markets in certain areas and for certain occupations. One staffing firm noted strong order activity and a need to act quickly to fill positions.\nPrices\nOn balance, prices continued to rise modestly. Among manufacturing contacts, more firms reported increases, particularly in input costs, during the current period than the prior period; slightly fewer service-sector contacts reported input cost increases. A majority of contacts indicated no change in prices paid and received.\nRetailers and banking contacts generally noted no signs of inflation, while homebuilders reported further increases in lumber costs. Overall, existing home prices continued to edge up.\nManufacturing\nOn balance, manufacturing activity continued at a modest pace of growth and showed signs of improvement. Higher percentages of firms reported increases in new orders and shipments compared with the prior period.\nFirms in most sectors continued to note gains in both new orders and shipments, including makers of paper products, chemicals, fabricated metal products, industrial machinery, and electronic products.\nGenerally, manufacturing contacts continued to expect growth over the next six months. The percentage of firms expecting future increases for general activity rose, while it held mostly steady for future increases in capital expenditures and employment.\nConsumer Spending\nNonauto retail contacts reported little change in sales, on balance, similar to the prior Beige Book period. An outlets operator reported modest, but slowing, sales growth in August and September, with strength in shoes and jeans as well as housewares and furniture. Convenience store contacts indicated a slight pickup in traffic and spending in September, which they attributed more to favorable weather than to a shift in the sales trend.\nAuto dealers throughout the region reported modest increases in year-over-year sales this period, an improvement from the modest declines during the prior period. New Jersey dealers indicated that the pickup in sales was driven by incentives and wondered how manufacturers would alter incentives around a spike in demand following the recent hurricanes. Although sales remained generally in line with the high levels seen in 2016, dealers continued to face difficulty sustaining profitability.\nTourism contacts generally indicated a continuation of modest growth. Strong gains were reported from the Poconos and shore locations in Delaware and New Jersey. A New Jersey banking contact indicated that activity remained strong through the end of September, and the shore market had its best year in quite some time. Atlantic City's casino revenues were flat in August relative to the previous year, propped up by Internet gaming. A Philadelphia analyst noted stronger-than-expected hotel demand but year-over-year decreases in room rates because of fewer citywide conventions this year compared with last year.\nNonfinancial Services\nService-sector firms continued to report modest growth in general activity since the prior Beige Book period, and new orders and sales strengthened further, on balance. One large service-sector firm noted continued improvement in the payment performance of its customers. Expectations about future growth remained elevated, with nearly 60 percent of the firms anticipating increased activity.\nFinancial Services\nFinancial firms reported modest growth of overall loan volumes (excluding credit cards)--similar to the prior Beige Book period. Loan volumes grew modestly in most categories, including auto loans and other consumer loans, while commercial real estate loans grew slightly. Commercial and industrial loan volumes improved over the period, posting modest growth following declines over the prior Beige Book period. Credit card volumes--which are highly seasonal--continued to grow at a modest rate over the Beige Book period but outpaced growth in the comparable year-ago period. In general, banking contacts tended to describe economic growth as slow and steady.\nReal Estate and Construction\nHomebuilders generally reported little change during the current period, similar to the previous period. The current period covered weeks that are typically slow for traffic and contract signings; some builders reported no real pickup at the end of September following the expected slow period.\nBrokers in most major Third District housing markets continued to report modest growth of existing home sales, but no increase of inventories. One broker noted general slowing in pending sales and does not expect the supply of homes to significantly increase for some time.\nNonresidential real estate contacts continued to report slight growth in construction and leasing activity. Contractors reported that despite a slight softening over the summer, overall, labor hours have picked up in September, suggesting more new construction activity. This year has been the second most active year in the past five years (behind 2016), and contacts expect activity to keep up in 2018.\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"

San Francisco

/beige-book-reports/2017/2017-10-sf

"Beige Book Report: San Francisco\nOctober 18, 2017\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-August through September. Overall price inflation was flat and remained low, while upward wage pressures strengthened somewhat, and labor market conditions tightened further. Sales of retail goods picked up, and growth in consumer and business services remained strong. Conditions in the manufacturing sector improved, while activity in the agriculture sector was flat. Contacts reported continued strong activity in residential real estate markets, and conditions in the commercial real estate sector remained solid. Lending activity grew at a moderate pace.\nEmployment and Wages\nConditions in the labor market tightened further. Wage gains increased in a few sectors. Increased competition for warehouse employees in the retail industry boosted wages. One contact at a major logistics and delivery company noted rising demand for manual labor, with these jobs increasingly being filled by workers wanting to supplement their income with additional part-time hours. Continued elevated demand for skilled IT professionals in the technology, financial services, and health-care industries supported strong wage growth. Shortages of health-care workers in Eastern Washington worsened. Labor shortages and increased unit labor costs in the agriculture sector fueled investments in automated technology. In the retail grocery industry, the continued shift of consumer preferences towards online purchases further reduced labor demand.\nPrices\nOverall, price inflation was flat and remained low during the reporting period. Stronger demand for manufactured steel products boosted price growth relative to the same period last year. In the restaurant industry, contacts reported that rising input costs pushed up final sales prices. Elevated inventory levels pushed down prices for some agricultural commodities. Economies of scale continued to put downward pressure on prices of cloud computing and data storage services.\nRetail Trade and Services\nRetail sales picked up over the reporting period. Continued improvement in economic conditions and favorable weather nudged up sales of beverage products. Sales in the retail grocery industry were unchanged from their solid pace in the previous period. Contacts in the industry reported that online sales continued to more than offset declines at traditional brick-and-mortar outlets. One lender with a large national presence in the retail sector noted that same store sales at small merchants rebounded after slight declines following recent hurricanes. Growth in demand for legacy computing products slowed slightly to a moderate pace. Contacts expect these markets to experience a more modest growth environment in the future.\nActivity in consumer and business services generally grew at a strong pace. Accelerating investments in cloud computing and data analytics in the technology and financial services industries boosted sales at large technology companies. Additionally, demand for cybersecurity services is expected to be a major source of growth for the technology industry over the medium-term. Boosted by e-commerce sales, transport volumes expanded at a robust pace. Contacts noted that improving economic conditions fueled demand for high-end shipping services in particular. Demand for entertainment services was strong, and one contact reported that technological gains and favorable tax conditions spurred investment. Demand in the hospitality industry slowed slightly from its strong pace over the summer, and contacts expect hotel stays to soften a bit more over the remainder of the year. Restaurant sales declined in the late summer, due in part to less foot traffic at large retail centers.\nManufacturing\nOn balance, conditions in the manufacturing sector continued to improve. Production of semiconductors reached a 10-year high, driven primarily by demand for memory chips. Electricity usage by manufacturers in Eastern Washington picked up further. Deliveries of commercial aircraft dipped slightly, but new orders were up notably over the same period last year. Contacts expect strong overall demand for steel over the next few months as construction efforts in other parts of the country ramp up following recent hurricanes. Demand for manufactured steel products slowed from its moderate pace in the first half of the year as orders from automobile manufacturers waned somewhat.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector was flat. Harvest yields of grains and potatoes were down slightly due to a wet spring, but overall quality was up. Demand for pork products dipped slightly, and profitability in the industry remained challenging. Reduced input prices boosted profitability in the feedlot industry. Contacts noted that foreign demand for some agricultural goods remained solid, and they did not expect exchange rate movements to slow exports. In the energy generation sector, capacity increases continued to outpace demand growth, a trend that contacts expect to persist as more states adopt renewable energy generation targets.\nReal Estate and Construction\nReal estate market activity continued to grow at a strong pace. Residential construction activity remained robust throughout the District. However, disruptions from recent hurricanes exacerbated existing shortages of materials, somewhat slowing activity. Contacts in the Pacific Northwest reported construction delays of up to two months due to shortages of available land, labor, and materials. Strong demand for housing and continued low inventory levels pushed up prices further. Contacts in some metropolitan areas noted that the lack of affordable housing slowed growth of existing home sales to a moderate pace. On balance, commercial construction activity continued to expand at a moderate pace. In Eastern Washington, permits for commercial construction were up over the same period last year. Contacts in Southern California reported that construction of hotel and retail spaces were at an all-time high. Contacts noted that interest rate increases have not substantially slowed demand for residential or commercial real estate.\nFinancial Institutions\nLending activity continued to expand at a moderate pace over the reporting period. Overall loan demand remained moderate. One contact noted that demand from small- and medium-sized businesses slowed to a modest pace. Deposit growth inched up slightly. One contact in the Mountain West observed a slight uptick in deposit rates, indicating an increased demand for liquidity from lenders. Overall credit quality remained strong. However, one contact noted a decline in credit quality in the agriculture industry, as continuing price declines hampered profitability.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"