The Federal Reserve Bank’s Beige Book, a summary of US economic activity that is published eight times a year, Thursday said economic activity rose slightly in most Federal Reserve districts since the last report on Oct. 23.
Three regions exhibited modest or moderate growth that offset flat or slightly declining activity in two others, the Beige Book said.
GROWTH EXPECTATIONS GREW
Although growth in economic activity generally was small, expectations for growth rose moderately across most geographies and sectors, the report said. Business contacts expressed optimism that demand will rise in coming months.
Consumer spending generally was stable, the Beige Book said. Many consumer-oriented businesses across districts said further increases in price sensitivity among consumers, as well as reports of increased sensitivity to quality.
Spending on home furnishings was down, which contacts attributed to limited household mobility, the book said.
Mortgage demand was low overall, though reports on recent changes in home loan demand were mixed because of volatility in rates, the report said. Commercial real estate lending was similarly subdued. Still, contacts generally reported financing remained available.
Capital spending and purchases of raw materials were flat or declining in most districts, the Beige Book said. Farm equipment sales were a notable headwind to overall investment activity, and several contacts expressed concerns about the future prices of equipment given ongoing weakness in the farm economy.
Energy activity in the oil and gas sector was flat but demand for electricity generation continued to grow at a robust rate, the Book said. The rise in electricity demand was driven by rapid expansions in data centers and reportedly was planned to be met by investments in renewable generation capacity in coming years.
LABOR MARKETS
Employment levels were flat or up only slightly across districts, the Beige Book said. Hiring activity was subdued as employee turnover remained low and few firms reported increasing their headcount.
The level of layoffs reportedly also was low, the Federal Reserve report said. Contacts indicated they expected employment to remain steady or rise slightly over the next year, but many were cautious in their optimism about any pickup in hiring activity.
Wage growth softened to a modest pace across most districts, as did expectations for wage growth in coming months, the Beige Book said. Job growth and wage growth for entry-level positions and skilled trades were exceptions, rising robustly and expected to grow further through next year.
Prices rose only at a modest pace, the Book said. Consumer- and business-oriented contacts reported greater difficulty passing costs on to customers.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $190.00 per cwt to $191.51, compared with last week’s range of $186.86 to $189.51 per cwt. FOB dressed steers, and heifers went for $292.77 per cwt to $300.42, compared with $290.89 to $298.91.
The USDA choice cutout Wednesday was down $2.50 per cwt at $308.33 while select was up $2.37 at $277.70. The choice/select spread narrowed to $30.63 from $35.50 with 135 loads of fabricated product and 20 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $326.83 per cwt, and 50% beef was $69.69.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.35 to $1.54 a bushel over the Dec corn contract and in Kansas unchanged at $0.15 over Mar. Dec settled at $4.22, down 1 1/4, and Mar settled at $4.30, down $0.02 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $259.82 per cwt, up $0.44. This compares with Wednesday’s Jan contract settlement of $256.95, down $2.35.