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 (https://www.federalreserve.
U.S. Summary: Economic activity continued to expand in late January and February, with ten Districts reporting slight-to-moderate growth, and Philadelphia and St. Louis reporting flat economic conditions…. Residential construction activity was steady or slightly higher across most of the U.S., but residential home sales were generally lower.
Employment and Wages: Employment increased in most Districts, with modest-to-moderate gains in a majority of Districts and steady to slightly higher employment in the rest. Labor markets remained tight for all skill levels, including notable worker shortages for positions relating to information technology, manufacturing, trucking, restaurants, and construction. Contacts reported labor shortages were restricting employment growth in some areas…. Wages continued to increase for both low- and high-skilled positions across the nation, and a majority of Districts reported moderately higher wages. In addition, contacts in about half of the Districts noted rising non-wage forms of employee compensation, including bonuses, relocation assistance, vacation time, and flexible work arrangements.
Prices: Prices continued to increase at a modest-to-moderate pace, with several Districts noting faster growth for input prices than selling prices. The ability to pass on higher input costs to consumers varied by region and industry, and a few Districts noted that demand and the level of industry competition played a role in this variance. A few Districts continued to report upward price pressures from tariffs on certain goods and services. However, several Districts noted that the price of steel, which has been impacted by tariffs, had stabilized or fallen recently. In addition, energy costs, including fuel, declined in some areas.
Fourth District: Economic activity in the Fourth District grew at a modest pace since our last report. Professional and business services saw moderate demand growth. Home sales increased slightly because of a drop in mortgage rates. Retailers noted a slight softening in demand after the holiday season, while banking conditions improved modestly after seasonal slowness. Seasonal factors weighed on growth in nonresidential construction and transportation. Manufacturers gave mixed reports, as some saw a pickup in demand, while others reported slowness and uncertainty in the global economy weighed on growth. Employment in the District increased modestly, with much of the growth coming from nonfinancial services and from manufacturing. Wages rose moderately across many sectors and occupations. District companies increased their selling prices moderately. Construction companies passed on strong input cost increases. By contrast, manufacturers’ prices remained more stable as the input cost pressures they had been facing in prior periods abated. Transportation companies raised prices, but retailers did not raise prices to cover transportation cost increases.
Employment and Wages: Construction companies added some office staff but, because of the winter weather, did not hire field workers. They expect to resume increasing field staff in the spring…. A couple of construction companies granted large retention-focused merit increases to office staff, but other companies mentioned that they tended to grant raises during busier seasons.
Prices: Upward cost pressures were strong for construction firms, which reported higher concrete prices. Nonresidential builders, and to a lesser extent homebuilders, raised their selling prices to maintain their margins. Upward cost pressures in manufacturing eased, as a number of producers reported stable or even lower steel prices after the tariff-driven steel price escalation in 2018. Because manufacturers did not see the same cost pressures as construction firms, they did not raise their prices to the same extent. Some producers actually cut their prices because of the lower steel prices.
Real Estate and Construction: Demand for residential real estate and construction improved slightly, as lower mortgage rates spurred home sales. Homebuilders and real estate agents expressed optimism that conditions will improve in the next few months, though they attributed this expectation primarily to warmer weather. Real estate agents reported that homeownership, relative to renting, rose in the region. Nonresidential construction remained steady, as negative seasonal effects countered underlying demand growth. Nonresidential builders noted that they believed normal seasonal variation caused the pause in demand growth, and they expected growth to resume once winter ends. Nonresidential builders’ backlogs increased, as the stable and strong demand outpaced their ability to work through it during the winter. Builders acquired more public projects than private work.