Most Fed districts see modest to moderate growth, says latest Beige Book

Signs of continued economic growth – with eight of 12 Federal Reserve districts reporting modest to moderate growth – were noted in the Fed’s latest Beige Book report.

“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,” the Fed’s report summary notes.

The report, released Wednesday, is based on information received before Jan. 7 via contacts outside the Federal Reserve System. The report notes that, among other things, lending volumes grew modestly overall, though some districts noted that growth had slowed.

Following are highlights from the 12 districts:

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 reporting period, while labor markets remained tight and wage growth picked up somewhat. Input costs and selling 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 pressures. Price increases remained modest. Nevertheless, firms remained generally positive about the six-month outlook.

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 District’s 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.

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.

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.

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. Outlooks 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.

Federal Reserve Beige Book (Jan. 16, 2019)