FEDERAL RESERVE BEIGE BOOK: Economic Activity continues to Expand at Moderate Pace

*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY EXPANDED IN ALL REGIONS;
WAGE PRESSURES ARE REPORTED IN SECTORS WITH SKILL SHORTAGES

Reports from the twelve
Federal Reserve Districts indicated that economic activity has expanded since
the previous Beige Book report; however, none
of the Districts pointed to a distinct shift in the overall pace of growth. 

The New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco
Districts characterized their growth rates as moderate; Philadelphia, Atlanta,
St. Louis, and Kansas City reported modest growth. Boston reported that
business activity appeared to be improving, and Richmond reported further
strengthening. 

Philadelphia, Atlanta, Chicago, Kansas City, and Dallas
explicitly reported that contacts in their Districts generally remained optimistic about future growth; most of the other
Districts cited various examples of ongoing optimism from specific sectors.

General consumer spending grew in most Districts
at rates ranging from slight to moderate, with few changes in the pace
of growth compared with the last Beige Book. Most Districts reported a
continued expansion of auto sales, noting record-high levels for several
markets within the Philadelphia and Dallas Districts; however, in some parts of
the New York and Philadelphia Districts sales began to fall back from their
relatively high levels. Tourism activity was reported to have increased across
much of the nation, with many Districts reporting higher hotel booking and
occupancy rates.

Activity among nonfinancial
service sectors improved overall. District reports on manufacturing were
mixed–divided almost evenly into one of three characterizations of the
sector’s activity: expanding, contracting, or unchanged. Among Districts
reporting on their firms’ near-term expectations, the manufacturing outlook
remained generally upbeat, with New York, Philadelphia, Richmond, and Atlanta
reporting increased optimism.

Since the previous Beige
Book, residential real estate
activity, particularly sales of existing homes and construction of new homes,
generally expanded or held steady in about half of the Districts. About
half of the Districts also reported some growth in construction and in sales or
leasing of nonresidential properties.

Overall, loan demand rose in eight Districts and
held steady in one. Credit standards were largely unchanged. Six
Districts reported improving credit quality, falling delinquency rates, or
both.Reports regarding farm products were mixed; for some crops, high
anticipated harvests have put downward pressure on prices and expected farm
incomes. Generally, oil and gas production and demand for related activities
continued to edge up from already high levels, while total coal production
mostly held steady.

Trends in employment, wages, and prices were
relatively unchanged in the Federal Reserve Districts, with greater wage pressures reported in sectors
where shortages of skilled labor persisted.

Overall, price pressures remained largely
unchanged. Input prices
were described as modest, stable, or benign in reports from Boston, Cleveland,
Atlanta, and Kansas City. Chicago noted that prices fell for corn, soybeans,
hogs, and cattle but rose for milk during the current Beige Book period. San
Francisco cited higher building supply prices, Minneapolis cited higher prices
for some metals, and Chicago noted that energy prices generally remained
elevated. Cleveland District contacts in the manufacturing and freight
transportation sectors noted some ability to pass higher input prices through
to customers with little pushback.

By contrast, only a few
companies in the Atlanta District noted plans to increase prices over the
remainder of the year and expressed confidence that any increases would stick.– SourceTradeTheNews.com