National economic activity continued to expand from early April to mid-May, according to the Federal Reserve Bank’s Beige Book. However, conditions varied across industries and districts.
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 directly from each district’s sources. Reports are published eight times per year.
OVERALL ACTIVITY
Most districts reported slight or modest economic growth, while two noted no change in activity, the Beige Book said. Retail spending was flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers.
Auto sales were roughly flat, with a few districts noting that manufacturers were offering incentives to spur sales, the report said. Travel and tourism strengthened across much of the country, boosted by increased leisure and business travel, but hospitality contacts were mixed in their outlooks for the summer season.
Demand for nonfinancial services rose, and activity in transportation services was mixed, as port and rail activity increased whereas reports of trucking and freight demand varied, the Beige Book said. Nonprofits and community organizations cited continued solid demand for their services, and manufacturing activity was widely characterized as flat to up, though two districts cited declines.
Tight credit standards and high interest rates continued to constrain lending growth, the report said. Housing demand rose modestly, and single-family construction increased, though there were reports of rising rates affecting sales activity.
Conditions in the commercial real estate sector softened amid supply concerns, tight credit conditions and elevated borrowing costs, the Beige Book said.
Energy activity was largely stable, whereas agricultural reports were mixed, as drought conditions eased in some districts, but farm finances/incomes remained a concern, the Beige Book said. Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greatr downside risks.
LABOR MARKETS
Employment rose at a slight pace overall, the Beige Book said. Eight districts reported negligible to modest job gains, and the remaining four reported no changes.
A majority of districts noted better labor availability, though some shortages remained in select industries or areas, the report said. Multiple districts said employee turnover has decreased, and one said employers’ bargaining power has increased.
Hiring plans were mixed—a couple of districts expected a continuation of modest job gains, while others noted a pullback in hiring expectations amid weaker business demand and reluctance linked to the uncertain economic environment.
Wage growth remained mostly moderate, the report said. Several districts reported wage growth was at pre-pandemic averages or was normalizing toward those rates.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $188.47 per cwt to $192.34, compared with last week’s range of $184.00 to $194.17 per cwt. FOB dressed steers, and heifers went for $293.59 per cwt to $299.84, compared with $289.67 to $300.73.
The USDA choice cutout Wednesday was up $1.50 per cwt at $313.62 while select was down $9.95 at $302.48. The choice/select spread widened to $11.14 from $8.69 with 115 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $350.98 per cwt, and 50% beef was $69.82.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.38 to $1.50 a bushel over the Jul corn contract, which settled at $4.55 1/4 a bushel, down $0.07 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $248.68 per cwt, up $0.05. This compares with Wednesday’s Aug contract settlement of $260.25, down $4.35.