The Federal Reserve’s Beige Book, which discusses current economic conditions across the 12 Federal Reserve districts, said, “economic activity increased slightly, on balance, since early January.”
Eight districts reported slight to modest growth in economic activity, three others reported no change and one noted a slight softening, the publication said.
CONSUMER SPENDING EASED
Consumer spending, particularly on retail goods, inched down in recent weeks, the Beige Book said. Several reports cited heightened price sensitivity by consumers and noted households continued to trade down and to shift spending away from discretionary goods.
Activity in the leisure and hospitality sector varied by district and segment; while air travel was robust overall, demand for restaurants, hotels and other establishments softened because of elevated prices, as well as to unusual weather conditions in certain regions.
Manufacturing activity was largely unchanged, and supply bottlenecks normalized further, the Bank said. Nevertheless, delivery delays for electrical components continued.
Ongoing shipping disruptions in the Red Sea and Panama Canal generally did not have a notable effect on businesses during the reporting period, although some contacts reported rising international shipping costs, the Beige Book said.
REAL ESTATE DEMAND PICKUP
Several reports highlighted a pickup in demand for residential real estate in recent weeks, largely because of some moderation in mortgage rates, but noted that limited inventories hindered actual home sales, the report said. Commercial real estate activity was weak, particularly for office space, although there were reports of robust demand for new data centers, industrial and manufacturing spaces and large infrastructure projects.
Loan demand was stable to down, and credit quality was generally healthy despite a few reports of rising delinquencies, the Beige Book said.
The outlook for economic growth remained generally positive, with contacts noting expectations for stronger demand and less restrictive financial conditions over the next six to 12 months.
LABOR MARKETS
Employment rose at a slight to modest pace in most districts, the Federal Reserve said. Overall, labor market tightness eased further, with nearly all districts highlighting some improvement in labor availability and employee retention.
Businesses generally found it easier to fill open positions and to find qualified applicants, although difficulties persisted attracting employees for highly skilled positions, including health-care professionals, engineers and skilled trades specialists such as welders and mechanics.
Wages grew further across districts, although several reports indicated a slower pace of increase, the Beige Book said. Employee expectations of pay adjustments reportedly were more in line with historical averages.
Price pressures persisted, but there was some moderation in inflation. Contacts highlighted increases in freight costs and several insurance categories, including employer-sponsored health insurance.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.71 per cwt to $186.24, compared with last week’s range of $182.64 to $185.54 per cwt. FOB dressed steers, and heifers went for $287.80 per cwt to $290.93, compared with $283.61 to $290.96.
The USDA choice cutout Wednesday was up $0.12 per cwt at $304.91 while select was up $0.22 at $295.09. The choice/select spread narrowed to $9.82 from $9.92 with 82 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The daily weighted average USDA listed wholesale price for fresh 90% lean beef was $317.53 per cwt, and 50% beef was $104.37.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.40 to $1.50 a bushel over the May corn contract, which settled at $4.28 3/4 a bushel, up $0.02 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $246.90 per cwt, down $0.20. This compares with Wednesday’s Mar contract settlement of $251.02, down $1.27.