Economic activity increased at a slight to moderate pace in 11 of 12 Federal Reserve districts in late May and June, while one district reported no change, according to the Federal Reserve’s Beige Book of economic activity.
The Beige Book is released eight times a year and discusses US economic activity and changes from the last report.
OVERALL ACTIVITY
The pace of growth was quite close to that of last period, when activity expanded in 10 districts, was flat in one, and down in one.
Consumer spending edged up as higher prices, particularly for fuel, dampened sales in other categories. Several districts reported declines in spending on discretionary items or trading down to more affordable varieties.
Tourism was up, with some districts receiving a boost from World Cup visitors. Auto dealers reported little change in sales, but spending on repairs grew as consumers held onto vehicles for longer.
Agricultural conditions deteriorated because of lower commodity prices, higher input costs and tighter credit.
In the energy sector, oil and gas drilling increased.
Manufacturing production grew modestly to moderately in most districts, led by stronger orders from the data center, machinery and defense sectors. Manufacturers in several districts said supply chain issues were more common.
Construction and real estate activity increased slightly overall, with several districts noting growth in data center building.
Financial conditions were stable on net, and commercial and consumer loan volumes were up modestly. Commercial loan quality was stable, but consumer loan quality ticked down.
Transportation activity increased modestly amid ongoing supply chain changes related to higher tariffs and the conflict in the Middle East.
Overall, activity in other service industries also was up modestly, with districts highlighting growth in health care and professional services. Social service providers were adjusting to funding declines while demand for basic supports — housing, food, health care — remained high.
Contacts generally expected the economy to continue to expand in coming months, but several districts reported elevated uncertainty in the outlook for fuel costs.
LABOR MARKETS
Employment rose on balance, with five districts showing modest, moderate or solid gains in employment and with seven districts experiencing little to no change. In the previous report, only one district had modest, moderate or solid employment gains.
Employment rose in a variety of industries, including manufacturing, construction and retail. Skilled employees were difficult to find in a range of fields, notably technicians and trades people. Though there were reports of lower employment in a couple of districts, the declines were small.
Wage growth was modest to moderate in most districts, though two saw only slight wage increases. Some wage increases were attributed to increased competition for skilled employees. A few districts noted firms had increased their usage of AI, either in the hiring and screening of potential employees or to boost productivity.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $248.66 per cwt to $256.91, compared with last week’s range of $254.99 to $258.00 per cwt. FOB dressed steers and heifers went for $390.72 per cwt to $400.86, compared with $400.75 to $407.21.
The USDA choice cutout Wednesday was down $2.67 per cwt at $371.28 while select was off $5.23 at $359.18. The choice/select spread widened to $12.10, from $9.54 with 104 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $460.49 per cwt, and 50% beef was $169.92.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.40 a bushel over the Sep corn contract, which settled at $4.47 1/2 a bushel, up $0.09.
The CME Feeder Cattle Index for the seven days ended Tuesday was $369.07 per cwt, down $1.25. This compares with Wednesday’s Aug contract settlement of $349.95, up $1.15.