‘Beige book’ cites continued, modest growth as of early April, results mixed on lending; trade, flooding remain concerns

An informal survey of trends throughout the Federal Reserve districts showed continued, slight-to-modest growth in economic activity, a somewhat tight labor market and modest price increases during March and early April, according to the Fed’s Beige Book report released Wednesday.

The Beige Book summarizes comments received from outside the Federal Reserve System, the Fed notes, and combines input received on or before April 8. The report says that while most of the Fed’s 12 districts reported that growth continued at a similar pace as the previous report, a few districts reported some strengthening. Reports on consumer spending were mixed, the Fed said, but suggested sluggish sales for both general retailers and auto dealers. Results for loan demand were mixed but indicated steady growth.

The Fed said employment continued to increase nationwide, with nine Districts reporting modest or moderate growth and the other three reporting slight growth. But labor markets remained tight, restraining the rate of growth. On balance, it said, prices have risen modestly since the previous report. Input costs increased in the modest-to-moderate range. Tariffs, freight costs, and rising wages were often cited as key factors driving this trend.

Below are highlights according to Fed district.

Boston: Economic activity continued to expand, although manufacturers cited a slowing pace. Even as labor markets remained tight, wage increases were moderate. Price increases were mostly modest, although some contacts said they continued to fear the impact of tariffs. Aside from manufacturers, outlooks remained positive.

New York: Economic activity grew slightly in the latest reporting period. Labor markets remained exceptionally tight and wage growth was steady. The pace of both input price and selling price increases slowed considerably. Consumer spending and tourism were somewhat weaker. Rental markets for both residential and commercial real estate picked up. Banks reported somewhat stronger loan demand and no change in delinquency rates.

Philadelphia: On balance, business activity resumed a slight pace of growth during the current Beige Book period following a brief pause in the prior period. Weak global demand and trade uncertainty constrained expansions, while a tight labor market constrained hiring and spurred wage increases. Inflation remained modest, and firms remained positive about the six-month outlook.

Cleveland: Economic activity in the District increased modestly. Residential and nonresidential construction and professional and business services firms saw the greatest demand growth. Other sectors saw muted demand change. Firms expanded employment moderately. Wages climbed moderately for a wide range of industries and occupations. Selling prices rose moderately despite a deceleration of materials cost increases.

Richmond: The regional economy grew moderately, overall, with expansion reported across most industry sectors. Trucking companies saw demand return to a strong level after a slow start to the year. On the whole, manufacturing and nonfinancial service firms saw modest growth. Tourism was strong in recent weeks; however, some retailers reported sluggish conditions.

Atlanta: Economic activity in the District grew modestly. The labor market remained tight and wages increased, on balance. Nonlabor input costs were mostly subdued. Retail sales grew slightly, and tourism remained robust. Home sales improved, and commercial real estate activity accelerated. Manufacturers noted increases in new orders, and production and inventories improved. Banking activity was stable.

Chicago: Economic activity increased slightly on balance. Employment increased modestly; business spending and construction and real estate increased slightly; and consumer spending and manufacturing were little changed on balance. Wages and prices rose modestly, and financial conditions improved slightly. Farmers continued to be challenged by low crop prices.

St. Louis: Economic activity has improved slightly since the previous report. Reports from District bankers indicated a moderate increase in loan volumes. Retailers noted increasing price pressures that they expect to pass along to their customers. Farmers expressed concerns over recent flooding of the Mississippi Valley.

Minneapolis: Ninth District economic activity grew modestly, with many sectors hampered by worse-than-normal winter weather. Labor demand remained healthy, but signs of weakness surfaced. Residential construction and real estate were soft, but were expected to rebound with warmer weather and declining interest rates. However, flooding in parts of the District was a concern for an already weak farming sector.

Kansas City: Economic activity continued to expand slightly, and contacts expected additional growth in the months ahead. Consumer spending was little changed, manufacturing activity rose modestly, and real estate activity expanded slightly. Energy activity held steady, while District farm conditions weakened in part due to severe weather. Bankers noted lower overall loan demand, although residential loan demand rose.

Dallas: Economic activity expanded moderately, with a pickup in demand seen in the housing and financial services sec-tors. Retail sales were flat, and growth in nonfinancial services slowed. Hiring continued at a moderate pace, and wage pressures remained elevated. Outlooks stayed positive or improved except for the nonfinancial services sector.

San Francisco: Economic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was unchanged on balance. Sales of retail goods increased modestly, and activity in the consumer and business services sectors increased moderately. Conditions in the manufacturing sector improved modestly. Activity in residential real estate markets expanded moderately, and commercial activity was robust. Lending activity was mixed.

Fed Beige Book April 17, 2019