US economic activity was little changed since the previous report on Oct. 15, according to most of the 12 Federal Reserve districts, though two districts noted a modest decline and one reported modest growth.
The Federal Reserve Bank’s Beige Book, a periodic summary of economic activity, went on to say overall consumer spending declined further, while higher-end retail spending remained resilient.
SOME REACTION TO GOVERNMENT SHUTDOWN
Some retailers noted a negative effect on consumer purchases from the government shutdown, and auto dealers saw declines in EV sales following the expiration of the federal tax credit, the Beige Book said. Reports of travel and tourism activity reflected little change in recent weeks, with some contacts noting cautious discretionary spending among consumers.
Manufacturing activity increased somewhat, according to most districts, though tariffs and tariff uncertainty remained a headwind, the Beige Book said. Revenues in nonfinancial services were mostly flat to down, and reports of loan demand were mixed.
Some districts reported declines in residential construction, while others said it was unchanged, and home sales activity varied, the Beige Book said. A few districts noted ongoing recovery in the office real estate market.
AGRICULTURE, ENERBY LARGELY STABLE
Conditions in the agriculture and energy sectors were largely stable, though some contacts cited challenges from the low-price environment for oil and for some crops, the Beige Book said. Community organizations saw increased demand for food assistance, partly because of disruptions in SNAP benefits during the government shutdown.
Outlooks were largely unchanged overall, the Beige Book said. Some contacts noted an increased risk of slower activity in coming months, while some optimism was noted among manufacturers.
LABOR MARKETS
Employment declined slightly over the current period with around half of districts noting weaker labor demand, the Beige Book said. Despite an uptick in layoff announcements, more districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring, and attrition than through layoffs. In addition, several employers adjusted hours worked to accommodate higher- or lower-than-expected business volume instead of adjusting the number of employees. A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring.
Across most districts, employers had an easier time finding employees, but there still were pockets of difficulty related to certain skilled positions and fewer immigrant employees.
Wages generally grew at a modest pace. However, some sectors such as manufacturing, construction and health care experienced more moderate wage pressure because of a tighter labor supply, the Beige Book said. Furthermore, rising health insurance premiums continued to push labor costs.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $216.36 per cwt to $228.00, compared with last week’s range of $225.92 to $232.00 per cwt. FOB dressed steers and heifers went for $351.99 per cwt to $356.88, compared with $353.46 to $362.66.
The USDA choice cutout Wednesday was down $1.81 per cwt at $368.28 while select was off $0.42 at $355.51. The choice/select spread narrowed to $12.77 from $14.16 with 138 loads of fabricated product and 37 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $402.12 per cwt, and 50% beef was $174.09.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.05 to $1.20 a bushel over the Dec corn contract, which settled at $4.31 3/4, up $0.08 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $329.88 per cwt, down $2.09. This compares with Wednesday’s Jan contract settlement of $315.12, up $8.05.