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Beige Book – April 17, 2019

April 18, 2019 / Source: FRB

Beige Book – April 17, 2019



Full ReportNational Summary

This report was prepared at the Federal Reserve Bank of St. Louis based on information collected on or before April 8, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Overall Economic Activity
Economic activity expanded at a slight-to-moderate pace in March and early April. While most Districts reported that growth continued at a similar pace as the previous report, a few Districts reported some strengthening. There was little change in the outlook among contacts in reporting Districts, with those expecting slight-to-modest growth in the months ahead. Reports on consumer spending were mixed but suggested sluggish sales for both general retailers and auto dealers. Reports on tourism were generally more upbeat. Reports on loan demand were mixed, but indicated steady growth. Reports on manufacturing activity were favorable, although contacts in many Districts noted trade-related uncertainty. Most Districts reported stronger home sales, although some Districts noted low demand for higher-priced homes. Among reporting Districts, agricultural conditions remained weak, with contacts expressing concerns over the impact of current and future rainfall and flooding.

Employment and Wages
Employment continued to increase nationwide, with nine Districts reporting modest or moderate growth and the other three reporting slight growth. While contacts reported gains across a variety of industries, employment increases were most highly concentrated in high-skilled jobs. However, labor markets remained tight, restraining the rate of growth. A majority of Districts cited shortages of skilled laborers, most commonly in manufacturing and construction. Contacts also reported some difficulties finding qualified workers for technical and professional positions. Many Districts reported that firms have offered perks such as bonuses and expanded benefits packages in order to attract and retain employees. This tight labor market also led to continued wage pressures, as most Districts reported moderate wage growth. Wages for both skilled and unskilled positions generally grew at about the same pace as earlier this year.

On balance, 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. The ability of firms to pass increased input costs on to consumers was mixed. Changes in material costs were likewise mixed, with several Districts noting increases in metal prices and decreases in lumber prices. Construction firms across most Districts nevertheless reported net increases in material costs, with several also reporting passing those costs on to their customers. Some Districts noted increasing fuel prices, while others noted increasing oil prices and decreasing natural gas prices. Crop price pressures generally remain historically low, but price changes since the last report have varied by commodity.

Highlights by Federal Reserve District

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.

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.

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.

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.

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.

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.

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.

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.

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