On balance, economic activity slowed since the previous Beige Book report from the Federal Reserve Oct. 18, with four of the 12 districts reporting modest growth, two indicating conditions were flat to slightly lower and six noting some declines in activity.
Those observations came with the latest Beige Book report on economic activity Wednesday.
RETAIL SALES MIXED
Retail sales, including autos, remained mixed, the report said. Sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity.
Travel and tourism activity generally were healthy, the Beige Book said. Demand for transportation services was sluggish.
Manufacturing activity was mixed, and manufacturers’ outlooks weakened, the Federal Reserve said. Demand for business loans decreased slightly, particularly real estate loans.
Consumer credit remained fairly healthy, but some banks noted a slight uptick in consumer delinquencies, the report said.
Agriculture conditions were steady to up slightly as farmers reported higher selling prices. However, yields were mixed.
Commercial real estate activity continued to slow, the Beige Book said. The office segment remained weak, and multifamily activity softened. Several districts noted a slight decrease in residential sales and higher inventories of available homes.
The economic outlook for the next six to twelve months diminished over the reporting period.
LABOR MARKETS: DEMAND EASING
Demand for labor continued to ease, as most Federal Reserve districts reported flat to modest increases in overall employment, the Beige Book said. The majority of districts reported that more applicants were available, and several noted that retention improved as well.
Reductions in headcounts through layoffs or attrition were reported, and some employers felt comfortable letting go low performers, the report said.
However, several districts continued to describe labor markets as tight with skilled workers in short supply, the Federal Reserve said.
Wage growth remained modest to moderate in most districts, as many described easing in wage pressures and several reported declines in starting wages, the Beige Book said. Some wage pressures did persist, however, and there were some reports of continued difficulty attracting and retaining high performers and workers with specialized skills.
PRICES
Price increases largely moderated across the 12 districts, although prices remained elevated, the report said. Freight and shipping costs decreased for many, while the cost of various food products increased.
Several districts noted that costs for construction inputs like steel and lumber had stabilized or even declined, the book said.
Rising utilities and insurance costs were notable across districts, the report said. Pricing power varied, with services providers finding it easier to pass through increases than manufacturers.
Two districts cited increased cost of debt as an impediment to business growth, the report said. Most districts expected moderate price increases to continue into next year.