Net national economic activity expanded modestly since the previous Beige Book report a month ago, said the October report 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 directly from each district’s sources. Reports are published eight times per year.
GENERAL OUTLINE
Economic conditions varied across industries and districts, the Beige Book said. Four districts noted flat activity and two cited declines, with slowing or weak demand attributed to higher interest rates, inflation and supply disruptions.
Retail spending was relatively flat, reflecting lower discretionary spending, and auto dealers reported sustained sales sluggishness stemming from limited inventories, high vehicle prices and rising interest rates.
Travel and tourist activity rose strongly, boosted by continued strength in leisure activity and a pickup in business travel, the report said.
Manufacturing activity held steady or expanded in most districts in part because of easing supply chain disruptions, though there were a few reports of output declines, the Beige Book said.
Demand for nonfinancial services rose, the report said. Activity in transportation services was mixed, as port activity increased strongly whereas reports of trucking and freight demand were mixed.
Rising mortgage rates and elevated house prices further weakened single-family starts and sales, but helped buoy apartment leasing and rents, which generally remained high, the Beige Book said. Commercial real estate slowed in construction and sales amid supply shortages and elevated construction and borrowing costs, and there were scattered reports of declining property prices.
Industrial leasing remained robust, while office demand was tepid, the report said. Bankers in most reporting districts cited declines in loan volumes, partly the result of shrinking residential real estate lending.
Energy activity expanded moderately, whereas agriculture reports were mixed as drought conditions and high input costs remained a challenge, the Beige Book said. Outlooks grew more pessimistic amid growing concerns about weakening demand.
KEY AGRICULTURE RESULTS
The Kansas City Federal Reserve Bank said farm financial conditions remained strong in the district because of elevated crop prices.
However, there were adverse developments tied to drought and input costs, the KC Fed said. At the start of the fall harvest, nearly one-third of corn and soybean crops were in very poor condition in some district states, heightening concerns about reduced yields.
In the livestock sector, hog prices declined moderately over the past month but remained slightly more than year-ago levels, the KC Fed said. Cattle prices continued to increase alongside reports of additional herd liquidations largely from higher feed and transportation costs.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $143.40 to $148.93 per cwt, compared with last week’ range of $144.00 to $148.91. FOB dressed steers, and heifers went for $227.54 to $231.69 per cwt, versus $225.42 to $230.93.
The USDA choice cutout Wednesday was up $2.61 per cwt at $253.39 while select was up $0.91 at $222.19. The choice/select spread widened to $31.20 from $29.50 with 111 loads of fabricated product and 43 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 $2.10 to $2.25 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.78 1/4, down 2 3/4.
No live cattle contracts were tendered for delivery Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $172.03 per cwt down $0.24. This compares with Wednesday’s Oct contract settlement of $175.22, up $0.40.