Softer Price Pressures & Growth But Still Tight Labor Market – Beige Book

Treasuries have cheapened very slightly post the Beige Book release, with 2YY +0.5bp higher but still -12bps on the day after a string of weaker data. Select excerpts:

• Weak growth outlook: “Overall economic activity was relatively unchanged since the previous report. Five Districts reported slight or modest increases in overall activity, six noted no change or slight declines, and one cited a significant decline. On balance, contacts generally expected little growth in the months ahead.”
• Softer price pressures: "Many retailers noted increased difficulty in passing through cost increases, suggesting greater price sensitivity on the part of consumers. In addition, some retailers offered more discounts and promotions than they had a year ago in order to move merchandise and clear out excess inventories. On balance, contacts across Districts said they expected future price growth to moderate further in the year ahead."
• But firms wary of laying off staff amidst tight labor market: "Many firms hesitated to lay off employees even as demand for their goods and services slowed and planned to reduce headcount through attrition if needed. With persistently tight labor markets, wage pressures remained elevated across Districts, though five Reserve Banks reported that these pressures had eased somewhat. Some employers noted they have continued to offer bonuses and enhanced benefits to attract and retain workers."