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     WASHINGTON (MNI) - The following is the text of the summary section 
of the Federal Reserve's summary of economic conditions report, or Beige 
Book, released Wednesday: 
     Overall Economic Activity 
     Economic activity increased in most of the U.S., with eight of 
twelve Federal Reserve Districts reporting modest to moderate growth. 
Nonauto retail sales grew modestly, as several Districts reported more 
holiday traffic compared with last year. Auto sales were flat on 
balance. The majority of Districts indicated that manufacturing 
expanded, but that growth had slowed, particularly in the auto and 
energy sectors. New home construction and existing home sales were 
little changed, with several Districts reporting that sales were limited 
by rising prices and low inventory. Commercial real estate activity was 
also little changed on balance. Most Districts reported modest to 
moderate growth in activity in the nonfinancial services sector, though 
a few Districts noted that growth there had slowed. The energy sector 
expanded at a slower pace, and lower energy prices contributed to a 
pullback in the industrys capital spending expectations. The 
agriculture sector struggled as prices generally remained low despite 
recent increases. Overall, lending volumes grew modestly, though a few 
Districts noted that growth had slowed. Outlooks generally remained 
positive, but many Districts reported that contacts had become less 
optimistic in response to increased financial market volatility, rising 
short-term interest rates, falling energy prices, and elevated trade and 
political uncertainty. 
     Employment and Wages 
     Employment increased in most of the country, with a plurality of 
Districts reporting modest growth. All Districts noted that labor 
markets were tight and that firms were struggling to find workers at any 
skill level. Minneapolis indicated that construction firms had turned 
down business because they could not find workers, and Atlanta reported 
that a few contacts were either actively overstaffing or retaining 
employees through lulls in demand in anticipation of future growth. 
Wages grew throughout the country, with the majority of Districts 
reporting moderate gains. Wages increased across skill levels, and 
numerous Districts highlighted rising entry-level wages as firms sought 
to attract and retain workers and as new minimum wage laws came into 
effect. 
     Prices 
     The majority of Districts reported modest to moderate increases in 
prices. Most Districts indicated that firms input costs had risen, but 
reports were mixed on whether they could pass the higher costs on to 
customers. Reports often cited rising materials and freight prices as 
sources of cost increases, and a number of Districts said that higher 
tariffs were also a factor. While prices of most inputs were up, several 
Districts noted that fuel costs had gone down. A number of Districts 
reported rising home prices, while prices for commercial and industrial 
space either increased or were flat. Prices for agricultural commodities 
were generally somewhat higher. 
     * Prepared at the Federal Reserve Bank of Chicago based on 
information collected on or before Jan. 7. 
     Highlights by Federal Reserve District 
     Boston 
     Business contacts reported continued year-over-year growth in 
revenues even as they cited signs of a some-what slower pace. Selected 
labor markets (occupations, locations) remained tight and wage increases 
were moderate. Some retailers and manufacturers raised selling prices. 
Most respondents said their outlook was positive, although somewhat less 
certain than earlier. 
     New York 
     Regional economic activity leveled off in the latest re-porting 
period, while labor markets remained tight and wage growth picked up 
somewhat. Input costs and sell-ing prices rose at a steady pace. Holiday 
season sales were a bit on the sluggish side but still up from a year 
ago. Tourism remained brisk, but most other sectors saw activity flatten 
out or decline slightly. Banks reported a dip in loan demand. 
     Philadelphia 
     Economic activity maintained a modest pace of growth, although 
further slowing occurred among service sectors and some real estate 
activity declined. Lack of qualified labor continued to constrain hiring 
and raise wage pres-sures. Price increases remained modest. 
Nevertheless, firms remained generally positive about the six-month 
outlook. 
     Cleveland 
     Economic activity in the Fourth District increased slightly. Hiring 
increased at a moderate pace. Upward pressure on costs and selling 
prices continued. Retailers reported slightly increased demand. 
Manufacturing and banking contacts noted a seasonal slowdown. 
Nonresidential construction continued to be strong and housing demand 
stabilized. Professional services firms reported increased activity 
driven by demand for information technologies. 
     Richmond 
     The regional economy expanded at a modest rate, on balance, in 
recent weeks. While many service sector industries saw positive growth, 
manufacturers reported a decline in shipments and orders and faced 
higher input costs due to tariffs. Loan demand increased and Fifth 
District ports experienced robust growth. Overall, labor demand and 
wages increased modestly while price growth remained moderate. 
     Atlanta 
     Economic activity improved at a moderate pace. The Districts labor 
market remained tight and wages in-creased, on average. Nonlabor input 
costs picked up; however, reports of firms ability to pass along 
increases were mixed. Holiday sales were solid. Home sales were subdued. 
Manufacturers noted a decrease in new orders and production. Bankers 
noted steady activity. 
     Chicago 
     Economic activity grew at a modest pace. Employment, consumer 
spending, and business spending increased modestly; manufacturing 
increased slightly; and construction and real estate activity was 
little changed. Wages and prices rose modestly and financial conditions 
deteriorated slightly. Prospects for farm income improved as corn, 
soybean, and wheat prices moved higher. 
     St. Louis 
     Reports from contacts indicate that economic conditions have 
continued to improve, although the pace of growth has slowed since our 
previous report. District banking contacts reported positive but slower 
growth in loan volumes during the fourth quarter. 
     Minneapolis 
     Ninth District economic activity grew moderately. Labor demand has 
ebbed slightly but remained healthy overall, while labor markets 
remained very tight. Price pressures were modest. District manufacturers 
indicated that business conditions were strong and generally expected 
to continue, with upbeat outlooks for the year to come. Holiday retail 
spending was strong. 
     Kansas City 
     Economic activity was flat since the previous survey, but 
expectations were generally positive. District agricultural conditions 
remained weak, and activity in the energy sector eased slightly as the 
outlook for oil prices declined. However, retail sales were strongly 
above year-ago levels, and manufacturing, wholesale trade, and 
professional and high-tech sectors continued to expand. 
     Dallas 
     While economic activity remained healthy, growth abated to a more 
modest pace. A broad-based deceleration was seen across manufacturing, 
services, retail, and energy. Hiring continued, and widespread labor 
shortages further elevated wages. Price pressures eased slightly. 
Out-looks were markedly less optimistic than the previous report. 
     San Francisco 
     Economic activity in the Twelfth District continued to expand at a 
moderate pace. Labor market conditions remained tight, and price 
inflation was flat. Sales of retail goods expanded moderately, and 
activity in the consumer and business services sectors was solid. 
Conditions in the manufacturing sector strengthened modestly. Activity 
in real estate markets was solid on balance. Lending activity ticked 
down. 
     ** MNI Washington Bureau (202) 371-2121 ** 
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