The Federal Reserve’s latest Beige Book Wednesday said US economic activity was about flat or up slightly since the previous report on Oct. 19.
Five Districts reported slight or modest gains in activity, and the rest experienced either no change or slight-to-modest declines, the Beige Book said. Interest rates and inflation continued to weigh on activity, and many contacts expressed greater uncertainty or increased pessimism concerning the outlook.
CONSUMER SPENDING MIXED
Nonauto consumer spending was mixed but, on balance, eked out slight gains, the Federal Reserve said. Inflation pushed low-to-moderate income consumers to substitute increasingly to lower-priced goods.
Travel and tourism contacts, by contrast, reported moderate gains in activity, as restaurants and high-end hospitality venues enjoyed robust demand, the Bank said. Auto sales declined slightly on average, but sales increased significantly in a few districts in response to higher inventories.
Manufacturing activity was mixed across districts but up slightly on average, the report said. Demand for nonfinancial services was flat overall but softened in some districts. Higher interest rates further dented home sales, which declined at a moderate pace overall but fell steeply in some districts.
Apartment leasing started to slow, as well, the Bank said. Residential construction slid further at a modest pace, while nonresidential construction was mixed but down slightly on average.
Commercial leasing weakened slightly, and office vacancies edged up, the Beige Book said. Bank lending saw modest further declines amid increasingly weak demand and tightening credit standards.
Agricultural conditions were flat or up a bit, and energy sector activity increased slightly on balance, the Federal Reserve said.
LABOR MARKETS
Employment grew modestly in most districts, the report said, but two districts reported flat headcounts and labor demand weakened overall. Hiring and retention difficulties eased further, although labor markets were still described as tight.
Scattered layoffs were reported in the technology, finance, and real estate sectors, the Beige Book said. However, some contacts expressed a reluctance to shed workers in light of hiring difficulties, even though their labor needs were diminishing.
Wages increased at a moderate pace on average, but a few districts experienced at least some relaxation of wage pressures, the Bank said. Opinions about the outlook pointed to stable or slowing employment growth and at least modest further wage growth moving forward.
PRICES
Consumer prices rose at a moderate or strong pace in most districts, the Federal Reserve said. Still, the pace of price increases slowed on balance, reflecting a combination of improvements in supply chains and weakening demand.
Retail prices faced pressure as consumers increasingly sought discounts, the Bank said. Prices fell for some commodities, including lumber and steel, but food prices increased further or remained elevated in some districts.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $155.00 to $159.50 per cwt, compared with last week’s range of $150.85 to $156.00. FOB dressed steers, and heifers went for $237.81 to $245.46 per cwt, versus $236.10 to $242.19.
The USDA choice cutout Wednesday day was up $0.14 per cwt at $254.88 while select was down $0.81 at $225.01. The choice/select spread widened to $29.87 from $28.92 with 158 loads of fabricated product and 31 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 $2.05 to $2.20 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.62, down $0.03 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $178.40 per cwt down $0.45. This compares with Wednesday’s Jan contract settlement of $180.47, up $2.47.