US economic activity grew at a modest to moderate rate in the period from Sep. 8 to Oct. 8, according to the majority of Federal Reserve districts and reported in the Beige Book Wednesday.
Several districts noted, however, that the pace of growth slowed, constrained by supply chain disruptions, labor shortages and uncertainty around the Delta variant of COVID-19.
A majority of districts indicated positive growth in consumer spending, although auto sales declined in many areas because of low inventories and rising prices.
Travel and tourism activity varied by district with some seeing continued or strengthening leisure travel, while others saw declines that coincided with rises in COVID cases and the start of the school year.
Manufacturing grew moderately to robustly in most parts of the country, as did trucking and freight. Growth in nonmanufacturing activity ranged from slight to moderate for most districts.
Loan demand generally was reported flat to modest.
Residential real estate activity was unchanged or slowed slightly, but the market remained healthy. Reports on nonresidential real estate varied across districts and market segments.
Agriculture conditions were mixed, and energy markets were little changed.
Outlooks for near-term economic activity remained positive, overall, but some districts noted increased uncertainty and more cautious optimism.
EMPLOYMENT AND WAGES
Employment increased at a modest to moderate rate as demand for employees was high, but labor growth was dampened by a low supply of applicants. Transportation and technology firms saw particularly low labor supplies, while many retail, hospitality and manufacturing firms cut hours or production because they did not have enough employees.
Firms reported high turnover as employees left for other jobs or retired. Child-care issues and vaccine mandates were cited widely as contributing to the problem, along with COVID-related absences.
Many firms offered increased training to expand the candidate pool, while some increased automation to help offset labor shortages.
The majority of districts reported robust wage growth. Starting wages grew to attract talent, and wages for existing employees rose to retain them. Many also offered signing and retention bonuses, flexible work schedules or increased vacation time.
PRICES
Most districts reported significantly elevated prices, fueled by rising demand for goods and raw materials. Reports of input cost increases were widespread.
Price pressures also arose from increased transportation and labor constraints as well as commodity shortages. Prices of steel, electronic components and freight rose markedly.
Many firms raised selling prices indicating a greater ability to pass along cost increases to customers amid strong demand. Expectations for future price growth varied.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $123.44 to $125.24 per cwt, compared with last week’s range of $123.12 to $125.00. FOB dressed steers and heifers went for $193.78 to $196.35 per cwt, versus $193.39 to $196.04.
The USDA choice cutout Wednesday was down $0.85 per cwt at $280.03, while select was up $1.27 at $262.80. The choice/select spread narrowed to $17.23 from $19.35 with 96 loads of fabricated product and 32 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were up $0.05 to $0.07 at $1.15 to $1.27 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.39 1/4 a bushel, up $0.09.
No live cattle contracts were tendered for delivery against Oct Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $154.03 per cwt down $0.07. This compares with Wednesday’s Oct contract settlement of $155.92 per cwt, up $0.82.