The Federal Reserve Bank’s Beige Book reported Wednesday that across the 12 Federal Reserve districts economic activity declined slightly since the previous report in April.
Half of the Federal Reserve districts reported slight to moderate declines in activity, three districts reported no change, and three districts reported slight growth. All districts reported elevated levels of economic and policy uncertainty, which led to hesitancy and a cautious approach to business and household decisions.
Manufacturing activity declined slightly. Consumer spending reports were mixed, with most Federal Reserve districts reporting slight declines or no change. However, some districts reported increases in spending on items expected to be affected by increased tariffs.
Residential real estate sales were little changed, and most district reports on new home construction indicated flat or slowing construction activity. Reports on bank loan demand and capital spending plans were mixed.
Activity at ports was robust, while reports on transportation and warehouse activity in other areas were mixed.
On balance, the outlook remained slightly pessimistic and uncertain, unchanged relative to the previous report. However, a few district reports indicated the outlook deteriorated while a few others indicated an improved outlook.
LABOR MARKETS
Employment was little changed since the April report. Most Federal Reserve districts described employment as flat, three reported slight-to-modest increases, and two districts reported slight declines.
Many districts reported lower employee turnover rates and more applicants for open positions. Comments about uncertainty delaying hiring were widespread.
All districts described lower labor demand, citing declining hours worked and overtime, hiring pauses and staff reduction plans. Some districts reported layoffs in certain sectors, but these layoffs were not pervasive.
Two districts noted that, for many of their contacts, hiring plans had not changed since the start of the year.
Wages continued to grow at a modest pace, although many districts reported a general easing in wage pressures. A few districts indicated that higher costs of living continued to push wages.
PRICES
Prices increased at a moderate pace since the previous report. There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few districts described these expected cost increases as strong, significant or substantial.
All district reports indicated that higher tariff rates were pushing costs and prices. However, contacts’ responses to these higher costs varied, including increasing prices on affected items, increasing prices on all items, reducing profit margins and adding temporary fees or surcharges.
Contacts that planned to pass along tariff-related costs expected to do so within three months.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $223.72 per cwt to $230.21, compared with last week’s range of $220.00 to $231.49 per cwt. FOB dressed steers, and heifers went for $349.46 per cwt to $357.98, compared with $348.05 to $365.35.
The USDA choice cutout Wednesday was down $0.28 per cwt at $365.16 while select was up $0.20 at $356.72. The choice/select spread narrowed to $8.44 from $8.92 with 103 loads of fabricated product and 20 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $385.56 per cwt, and 50% beef was $128.00.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.15 to $1.25 a bushel over the Jul corn contract, which settled at $4.38 3/4, up $0.00 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $303.52 per cwt, up $2.04. This compares with Wednesday’s Aug contract settlement of $303.87, up $2.65.