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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
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
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
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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
** MNI Washington Bureau (202) 371-2121 **