Economic activity was unchanged, on balance, since early July, with five districts reporting slight to modest growth and five others reporting slight to modest softening, according to the Federal Reserve Bank’s monthly Beige Book.
Most districts reported steady consumer spending as households continued to trade down and shift spending away from discretionary goods and toward food and other essentials.
Auto sales remained muted across most districts, reflecting limited inventories and elevated prices. Hospitality and tourism contacts highlighted overall solid leisure travel activity with some reporting an uptick in business and group travel.
Manufacturing activity grew in several districts, although there were some reports of declining output as supply chain disruptions and labor shortages continued to hamper production.
Despite some reports of strong leasing activity, residential real estate conditions weakened noticeably as home sales fell in all twelve districts and residential construction remained constrained by input shortages.
Commercial real estate activity softened, particularly demand for office space. Loan demand was mixed, while financial institutions reported generally strong demand for credit cards and commercial and industrial loans, residential loan demand was weak amid elevated mortgage interest rates.
Nonfinancial services firms experienced stable to slightly higher demand.
Demand for transportation services was mixed, and reports on agriculture conditions across reporting districts varied. While demand for energy products was robust, production remained constrained by supply chain bottlenecks for critical components.
The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months.
LABOR MARKETS
Overall labor market conditions remained tight, although nearly all districts highlighted some improvement in labor availability, particularly among manufacturing, construction and financial services contacts. Moreover, employers noted improved worker retention, on balance.
Wages grew across all districts, although reports of a slower pace of increase and moderating salary expectations were widespread. Employers in several districts reported giving midyear and off-cycle raises to offset higher living costs, and many noted that offering bonuses, flexible work arrangements, and comprehensive benefits were deemed necessary to attract and retain workers.
Employers planned to provide end-of-year pay raises to their workers, but expectations for the pace of wage growth varied across industries and districts.
PRICES
Prices remained highly elevated, but nine districts reported some moderation in their rate of increase. Substantial price increases were reported across all districts, particularly for food, rent, utilities and hospitality services.
While manufacturing and construction input costs remained elevated, lower fuel prices and cooling overall demand alleviated cost pressures, especially freight shipping rates.
Several districts reported price tapering for steel, lumber and copper. Most contacts expected price pressures to persist at least through the end of the year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $142.45 to $150.00 per cwt, compared with last week’s range of $142.00 to $147.63. FOB dressed steers, and heifers went for $224.12 to $225.96 per cwt, versus $222.42 to $228.22.
The USDA choice cutout Wednesday was up $0.87 per cwt at $261 34 while select was down $1.79 at $237.51. The choice/select spread widened to $23.83 from $21.17 with 164 loads of fabricated product and 54 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 $2.60 to $2.75 a bushel over the Sep futures, which settled at $6.76 3/4 a bushel and for southwest Kansas were steady at $0.85 over Dec, which settled at $6.71, down $0.05.
The CME Feeder Cattle Index for the seven days ended Tuesday was $179.14 per cwt down $0.44. This compares with Wednesday’s Sep contract settlement of $182.02, down $2.15.