Beige Book Comments Relevant to US Construction and in OH, Western PA, Eastern KY and Part of WV

The “Beige Book” is a compilation of informal soundings of business conditions in each of the 12 Federal Reserve Districts, which are referenced by the name of their headquarters cities. The latest Beige Book , issued Dec. 5, is based on information collected from mid-October through late November and included these comments relevant to construction:

U.S. Summary: Most of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November, though both Dallas and Philadelphia noted slower growth compared with the prior Beige Book period. St. Louis and Kansas City noted just slight growth….New home construction and existing home sales tended to decline or hold steady, while construction and leasing of nonresidential structures tended to rise or remain flat.

On balance, prices rose at a modest pace in most Districts, although a few noted moderate increases. Nearly all reported that input costs rose faster than final goods prices. Reports of tariff-induced cost increases have spread more broadly from manufacturers and contractors to retailers and restaurants.

Fourth District:

Employment and Wages: Staff levels at construction firms were stable….One construction contact reported that starting salaries for new graduates was significantly higher this year than it was last year.

Prices: Nonlabor input costs rose strongly in all industries. Higher metals prices because of import tariffs continue to be a pain point for manufacturers and construction firms, although an increasing number of contacts in these industries have been reporting stable prices in recent survey rounds. There were a number of reports of tariffs leading to higher prices further down the supply chain….In addition to higher metals prices, contacts noted fuel, transportation, food, and polyresin cost increases….Some nonresidential builders were able to raise prices enough to increase their margins.

Real Estate and Construction: Business conditions improved modestly for nonresidential construction firms. Both private- and public-sector demand improved recently, with particular strength coming from industrial and education customers. Backlogs remained strong and trended upward. Real estate developers were split about their characterizations of market conditions. Developers that experienced weaker market conditions cited closures of retail stores as leading to weaker demand. However, other developers noted stable or even slightly better demand because of strong business confidence.