Beige Book Comments Relevant to US Construction,OH and Western PA

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 May 30, is based on information collected from mid-April through May 21 and included these comments relevant to construction:

 

U.S. Summary: Economic activity expanded moderately in late April and early May with few shifts in the pattern of growth… Homebuilding and home sales increased modestly, on net, and nonresidential construction continued at a moderate pace. Contacts noted some concern about the uncertainty of international trade policy. Still, outlooks for near term growth were generally upbeat.

 

Fourth District:

Business activity in the Fourth District (Ohio and Western Pennsylvania) expanded at a moderate pace as customer demand held steady and confidence remained high. Hiring improved slightly, though it remained moderate. Contacts continue to report difficulty finding qualified candidates in a broad array of occupations. Employers are raising wages to attract talent, but the increments are moderate and in line with recent trends in the District. Rising commodity prices, especially for lumber and steel, are pressuring goods producers. Construction firms and transportation companies were generally successful at raising their selling prices… Housing and commercial real estate markets remained strong, although builders are increasingly concerned about rising input costs.

 

The nonresidential construction sector was a standout, as high project volumes motivated the majority of builders to add workers. Overall, contacts reported continued difficulty finding qualified candidates across a broad array of occupations.

 

Input price increases gained momentum, especially for construction materials. Builders widely noted ongoing lumber cost increases. Also, the threat of tariffs was reported as having led to hikes in steel prices. To a lesser extent, cement price increases were also noted. … an increasing share of construction contacts were able to pass along their increased costs, thanks to strong demand and higher backlogs.

 

Business conditions for nonresidential builders improved from what was an already strong environment. Contacts noted decreased uncertainty and pent-up demand as supporting activity and leading to increased backlogs. One contact noted his company had a record month for contracts because of manufacturing and distribution projects. Another contact noted a recent uptick in demand for speculative lease products.