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 (https://www.federalreserve.gov/monetarypolicy/beigebook201910.htm), issued October 17, is based on information collected from September through October 7 and included these comments relevant to construction (bolding added):

U.S. Summary: The U.S. economy expanded at a slight to modest pace since the prior report as business activity varied across the country. Reports from Districts representing states in the southern and western U.S. generally were more upbeat than Districts representing the Midwest and Great Plains….Business contacts mostly expect the economic expansion to continue; however, many lowered their outlooks for growth in the coming 6 to 12 months.

Employment and Wages
On balance, employment rose slightly amid reports of persistent worker shortages. Labor market tightness across skill levels and occupations was widely cited as a factor restraining hiring….Wages rose moderately in most Districts, with upward pressure noted for lower-skill workers in the retail and hospitality industries and for higher-skill professional and technical workers. A number of smaller firms reported difficulty matching pay offers from larger firms. Broadly, employers continued to use nonwage approaches such as bonuses and benefits to attract and retain talent.

Prices
Most Districts characterized the recent pace of price increases as modest. Both retailers and manufacturers noted rising input costs, often for items subject to new tariffs, but retailers had relatively more success passing through these cost increases to their customers. Despite a recent increase in fuel costs, some reports suggested that shipping rates remained lower than they were earlier this year.

Federal Reserve Bank of Cleveland

Summary of Economic Activity
Overall economic activity in the District was stable on balance, though reports varied by sector…. Nonresidential construction remained strong, while residential construction softened modestly.

Employment and Wages
Employment was generally stable in the Fourth District, although there were scattered reports of softer demand for labor. Firms in the professional and business services sector continued to add staff in response to robust demand. Most apparel and general merchandise stores held headcounts steady, as did construction contractors… most construction contractors did not raise wages in this period.