Wednesday, the Federal Reserve published its latest Beige Book, saying most of the 12 Federal Reserve districts reported little or no change in economic activity since the previous publication in December.
The Federal Reserve publishes the Beige Book eight times a year, reporting economic activity in each district plus a summary.
OVERALL ECONOMIC ACTIVITY
Of the four districts that differed, three reported modest growth and one reported a moderate decline.
Consumers delivered some seasonal relief to the economy over the holidays by meeting expectations in most districts and by exceeding expectations in three, including in New York, which noted strong holiday spending on apparel, toys and sporting goods.
In addition, seasonal demand lifted airfreight volume from ecommerce in Richmond and credit card lending in Philadelphia. Several districts noted increased leisure travel, and a tourism contact described New York City as bustling.
Contacts from nearly all districts reported decreases in manufacturing activity.
Districts continued to report that high interest rates were limiting auto sales and real estate deals. However, the prospect of falling interest rates was cited by numerous contacts in various sectors as a source of optimism.
In contrast, concerns about the office market, weakening overall demand, and the 2024 political cycle often were cited as sources of economic uncertainty.
Overall, most districts indicated that expectations of their firms for future growth were positive, had improved, or both.
LABOR MARKETS
Seven districts described little or no net change in overall employment levels, while the pace of job growth was described as modest to moderate in four.
Two districts continued to note a tight labor market, and several described hiring challenges for firms seeking specialty skills, such as auto mechanics or experienced engineers in the Boston and San Francisco districts, respectively.
However, nearly all districts cited one or more signs of a cooling labor market, such as larger applicant pools, lower turnover rates, more selective hiring, and easing wage pressures. The pace of wage growth was characterized as moderate in Boston, Richmond, Chicago and Dallas; as modest in New York and Philadelphia; and as slight in St. Louis.
Firms from many districts expected wage pressures to ease and wage growth to fall further over the next year.
PRICES
Six districts said their contacts had reported slight or modest price increases, and two reported moderate increases. Five districts also said price increases had subsided from the prior period, while three others indicated no significant shift.
Firms in most districts cited examples of steady or falling input prices, especially in the manufacturing and construction sectors, and more discounting by auto dealers. Increased consumer price sensitivity had forced retailers to narrow profit margins and to push back on suppliers’ efforts to raise prices.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $172.07 per cwt to $175.34, compared with last week’s range of $173.00 to $176.63 per cwt. FOB dressed steers, and heifers went for $271.13 per cwt to $274.43, compared with $270.02 to $279.69.
The USDA choice cutout Wednesday was up $3.46 per cwt at $298.45 while select was up $3.04 at $283.02. The choice/select spread widened to $15.43 from $15.01 with 75 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.25 to $1.35 a bushel over the Mar corn contract, which settled at $4.42 1/4 a bushel, down $0.01 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $225.87 per cwt, down $0.56. This compares with Wednesday’s Jan contract settlement of $228.42, up $0.87.