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(Z1) Bearish Trend Condition


(Z1) Bearish Price Sequence


(Z1) Off Recent Highs


(Z1)‌‌ Support Appears Exposed

--Significant Impact From Harvey, Irma in 3 Districts
--Input Costs Rising; Pass-Through To Selling Prices Still 'Limited'
--Labor Markets Tight; Wage Pressures Rising in Particular Industries
By Jean Yung     
     WASHINGTON (MNI) - A destructive hurricane season caused 
significant disruptions along the Gulf Coast and the southeastern United 
States but businesses remained optimistic about growth over the medium 
term, the latest Federal Reserve Beige Book survey showed Wednesday. 
     Despite "major disruptions" from Hurricanes Harvey and Irma in the 
Richmond, Atlanta and Dallas districts, contacts from all 12 Fed banks 
reported modest or moderate economic growth in September and early 
October, same as the previous period, the Beige Book said. 
     Most businesses in the affected districts said they did not expect 
a significant long-term impact but that labor shortages in already-tight 
job markets may become more acute as the recovery effort continues. 
     The survey -- which informs the Federal Open Market Committee at 
its Oct. 31-Nov. 1 meeting -- was conducted by the Minneapolis Fed 
before Oct. 6. 
     With all districts reporting favorable growth conditions, the 
survey signals the economy remains on a path of expansion in line with 
expectations among Fed policymakers. Many officials have said it would 
be appropriate to raise the fed funds rate once more before the end of 
the year barring any negative economic shocks, and market expectations 
are centering on the December FOMC meeting as the likely venue for the 
     Manufacturing activity continued to grow in most districts along 
with nonfinancial services, the survey said. Retail spending rose slowly 
while auto sales and tourism increased. Both commercial and residential 
real estate construction rose and loan demand was stable to modestly 
     However, price pressures "remained modest" since the previous 
report with several districts noting increased manufacturing input costs 
"weren't passed through to selling prices."
     The hurricanes lifted some prices more rapidly, particularly in the 
transportation, energy and construction materials sectors, the survey 
said. Supply-chain disruptions drove some raw material prices higher in 
the Richmond district while construction businesses in the Atlanta Fed 
district said they expected already-rising costs to increase 
significantly due to rebuilding efforts. 
     Policymakers have said they expect the storms to drive inflation 
higher but that the effect would be temporary. The lack of broader 
pricing pressures are of bigger concern for them as they weigh a third 
rate hike this year. 
     The survey noted "widespread labor tightness" but that the majority 
of district reported "only modest to moderate wage pressures." However, 
there were signs of stronger pressures in certain sectors such as 
transportation and constructions, as well as reports of a growing use of 
nonwage compensation such as sign-on bonuses and overtime to attract and 
retain workers, the survey said.  
     A chamber of commerce executive in the Cleveland Fed district said 
firms are incentivizing workers with bonuses and higher wages in order 
to avoid turnover, which has resulted in the narrowing the gap between 
low- and middle-wage workers, the survey said. 
     Businesses continued to cite difficulty in filling positions at a 
range of skill levels. Growing demand for transportation services was 
pushing up wages for truckers even as companies struggled to find 
drivers, several Fed districts reported. 
     In the San Francisco district, labor shortages and increased unit 
labor costs in the agriculture sector "fueled investments in automated 
technology," the regional Fed bank reported. Technological gains and 
favorable tax conditions also spurred investment in entertainment 
services while investments in cloud computing and data analytics boosted 
sales at large technology companies in the district. 
     Districts hit hard by the hurricanes reported concern over 
skilled-worker shortages and increases in labor costs in the aftermath 
of the storms. In the Dallas district, where the manufacturing sector 
reported robust expansion, some firms said difficulty finding workers 
was impeding their growth. 
--MNI Washington Bureau, +1 202-371-2121; email: 
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