Overall economic activity rose slightly since mid-January, according to the Federal Reserve Bank’s Beige Book Wednesday, which outlines US economic activity eight times a year.
Six districts reported no change, four reported modest or moderate growth, and two noted slight contractions, the Beige Book said.
Consumer spending was lower, with reports of solid demand for essential goods mixed with increased price sensitivity for discretionary items, particularly among lower-income shoppers, the report said. Unusual weather conditions in some regions over recent weeks weakened demand for leisure and hospitality services.
Vehicle sales were modestly lower, the Beige Book said. Manufacturing activity exhibited slight to modest increases across a majority of districts. Contacts in manufacturing, ranging from petrochemical products to office equipment, expressed concerns over the potential effect of looming trade policy changes.
Banking activity was slightly higher among districts that reported on it, the report said. Residential real estate markets were mixed, and reports pointed to ongoing inventory constraints.
Construction activity declined modestly for residential and nonresidential units, the Beige Book said. Some contacts in the sector also expressed nervousness around the effect of potential tariffs on the price of lumber and other materials.
Agricultural conditions deteriorated some among reporting districts, the report said.
Overall expectations for economic activity over the coming months were slightly optimistic.
LABOR MARKETS
Employment nudged slightly higher, with four districts reporting a slight increase, seven reporting no change and one reporting a slight decline, the Beige Book said. Multiple districts cited job growth in health care and finance, while employment declines were reported in manufacturing and information technology.
Labor availability improved for many sectors and districts, though there were occasional reports of a tight labor market in targeted sectors or occupations, the Beige Book said. Contacts in multiple districts said rising uncertainty over immigration and other matters was influencing current and future labor demand.
Wages grew at a modest-to-moderate pace, which was slightly slower than the previous report, with several districts noting wage pressures were easing, the report said.
PRICES
Prices increased moderately in most districts, but several reported an uptick in the pace of increase relative to the previous reporting period, the Beige Book said. Input price pressures generally were greater than sales price pressures, particularly in manufacturing and construction.
Many districts said higher prices for eggs and other food ingredients were affecting food processors and restaurants.
Reports of substantial increases in insurance and freight transportation costs were also widespread, the Beige Book said. Firms in multiple districts noted difficulty passing input costs on to customers.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $197.00 per cwt to $203.12, compared with last week’s range of $199.80 to $207.87 per cwt. FOB dressed steers, and heifers went for $311.51 per cwt to $313.95, compared with $313.22 to $319.42.
The USDA choice cutout Wednesday was down $1.33 per cwt at $313.54 while select was off $1.49 at $302.53. The choice/select spread widened to $11.01 from $10.85 with 151 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $382.13 per cwt, and 50% beef was $103.30.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.30 a bushel over the May corn contract, which settled at $4.55 3/4, up $0.04 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $277.87 per cwt, down $0.88. This compares with Wednesday’s Mar contract settlement of $276.10, up $2.25.