Beige Book Summary: Growth Moderate/Modest; Dallas Strong-Text>

--Report Prepared by the Boston Federal Reserve Bank

--Responses Collected Before July 9, 2018

     WASHINGTON (MNI) - The following is an excerpt from the summary of 

the Federal Reserve's report on Current Economic Conditions, known as 

The Beige Book, released Wednesday

Overall Economic Activity 

     Economic 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. 

Employment and Wages 

     Employment 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. 

Prices 

     Prices 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. 

--MNI Washington Bureau;tel: +1 202 371-2121                       

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