Overall economic activity increased at a slight to modest pace in eight of the 12 Federal Reserve districts, while two reported little change and two reported slight to modest declines, according to the Federal Reserve Bank’s Beige Book Wednesday.
The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered from each district’s sources. Reports are published eight times a year.
MIDDLE EAST CONFLICT BRINGS UNDERTAINTY
The conflict in the Middle East was cited as a major source of uncertainty that complicated decision-making around hiring, pricing and capital investment, with many firms adopting a wait-and-see posture, the Beige Book said.
Manufacturing activity rose slightly to moderately in most districts, the Beige Book said. Banking sector activity generally was steady with loan demand stable to up moderately.
On balance, consumer spending increased slightly despite harsh winter weather in some regions and higher fuel prices, the Beige Book said. But, many districts continued to report signs of consumer financial strain, increased price sensitivity and rising demand at food banks and other social service organizations, while spending among higher-income consumers was resilient.
Housing market activity softened across several districts as heightened uncertainty and rising mortgage rates dampened buyer demand, the Beige Book said. Commercial real estate markets improved, with strength in industrial properties, especially data center projects. Office markets saw solid demand for Class A space but weaker demand for lower-tier properties.
Energy activity was up slightly as oil prices rose, though many producers remained cautious about increasing drilling because of uncertainty about the persistence of higher prices, the Beige Book said.
Agricultural activity was mixed, and several districts reported rising crop prices helped offset steep price increases of fertilizer and fuel, the Beige Book said. Business outlooks varied amid widespread uncertainty about future conditions.
LABOR MARKETS
On balance, employment was steady to up slightly during this reporting period, though one district noted a slight decline, the Beige Book said. Most districts described labor demand as stable, with low turnover, minimal layoffs and hiring mostly for replacement.
Several districts noted increased demand for temporary or contract employees, as firms remained cautious about committing to permanent hires, the Beige Book said. Many districts said labor availability had improved, although difficulty finding some skilled workers, especially in the skilled trades, persisted.
While most districts indicated Artificial Intelligence had not yet affected overall staffing levels significantly, some said AI-driven productivity improvements had enabled many firms to delay or reduce hiring.
Wages generally continued to rise at a moderate pace, the Beige Book said. Some districts reported continued wage pressures for some roles in health care and the skilled trades, though overall wage competition remained muted.
PRICES
Price growth mostly remained moderate overall, with the vast majority of districts reporting moderate increases growth, the Beige Book said. Generally, input cost increases outpaced selling price growth, compressing margins.
Energy and fuel costs rose sharply in all districts, attributed to the Middle East conflict, leading to higher freight and shipping costs and higher prices for plastics, fertilizers and other petroleum-based products.
Input cost pressures beyond energy-related increases also were widespread, the Beige Book said. Several districts reported rising prices for metals because of tariffs, such as steel, copper and aluminum.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $245.55 per cwt to $250.44, compared with last week’s range of $235.00 to $248.29 per cwt. FOB dressed steers and heifers went for $386.05 per cwt to $394.58, compared with $373.20 to $388.53.
The USDA choice cutout Wednesday was down $1.22 per cwt at $381.98 while select was down $1.22 at $378.58. The choice/select spread was unchanged at $3.40 with 93 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $446.47 per cwt, and 50% beef was $188.09.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.02 to $1.15 a bushel over the May corn contract, which settled at $4.51 1/4, up $0.08 1/4.
Three steer live cattle contracts were tendered for delivery Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $375.48 per cwt, up $0.44. This compares with Wednesday’s Apr contract settlement of $373.50, down $2.37.