The national summary from mid-May through June is that; The economy continued to expand in all 12 districts at a slight to moderate pace. Tight labor markets are reducing the rate of hiring and causing wages to rise moderately. Consumer spending remained strong, with the exception of slower automobile sales. The housing market is strengthening. Low home inventory is causing prices to rise in most regions. Energy (oil and gas), markets improved and gasoline pricing fell. Construction materials and freight prices increased as construction continued to expand. Manufacturing showed improved performance in most regions. Policy uncertainties (healthcare, trade course of action and immigration), are negatively impacting business investment.
The Beige Book, this report is published eight times per year. Each Federal Reserve bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. In this report we distil the 32 page Beige book into a 800 word summary.
Figure 1 shows a map of the U.S highlighting the 12 districts. The shortened district summaries below were reproduced from the Federal Reserve Beige Book.
Boston- Economic activity expanded at a modest pace in recent weeks. Hiring activity was mixed, proceeding at a moderate pace on average. Wage increases remained moderate with not much variation. Prices were mostly stable. Contributors were cautiously optimistic concerning prospects for further growth.
New York- Economic growth picked up to a modest pace in recent weeks. Labor markets tightened further, as hiring has picked up. Input cost pressures have become less widespread, while selling prices continued to rise modestly. Housing markets have strengthened, whereas commercial real estate markets have softened slightly.
Philadelphia- Overall, economic activity appeared to slow, as consumer spending declined sharply for apparel, and demand softened for autos, new home construction, and nonresidential construction. Most other sectors continued to grow at a modest pace. On balance, employment and wages continued to grow modestly, and prices grew only slightly.
St. Louis- Economic activity has improved slightly. Employers reported minimal hiring due to difficulties finding qualified candidates putting upward pressure on both wages and benefits. There were positive developments on consumer spending as contacts reported a rebound in sales after a string of weak reports.
Cleveland- Business contacts were less positive, and the overall pace of growth was modest. Price and cost pressures eased slightly. Labor markets continued to tighten. Manufacturing activity increased, but at a slower pace. Demand for IT services was particularly strong.
Minneapolis- Economic activity increased modestly during the reporting period. Professional services, commercial construction, manufacturing, energy, and mining saw growth, while employment was held back by tight labor availability. The already struggling agricultural sector weakened as severe drought conditions spread.
Richmond- Economic activity expanded modestly, but at a somewhat faster pace. The manufacturing sector improved further, which boosted the transportation sector as more goods were moved through ports and around the country. Retail sales increased and tourism and travel reports were mostly upbeat. Construction and real estate markets continued to improve modestly. Labor markets remained tight, and price increases were modest.
Kansas City- Economic activity expanded moderately in June, and most sectors expected additional gains in the months ahead. Consumer spending, manufacturing, services, construction and energy activity increased since the previous survey. The pace of growth in the energy sector was anticipated to ease slightly. The agriculture sector remained weak, with subdued farm revenue and low commodity prices.
Atlanta- Economic activity expanded modestly. Labor market tightness continued. On balance, wage growth remained steady. Input costs were subdued. Consumer spending softened. Home sales increased and prices appreciated modestly. Nonresidential construction increased; however, multifamily construction showed signs of slowing. Manufacturing activity grew at a modest pace.
Dallas- Economic activity grew moderately and outlooks remained positive. Growth in retail sales decelerated, but there were reports of sales improving in energy-related areas and in the border region. Activity in the energy sector expanded further, partly driving increased manufacturing production. Demand for staffing services remained strong. Apartment demand improved after a sluggish first quarter.
Chicago- Growth picked up to a moderate pace and prices rose modestly. Employment, business spending, and manufacturing grew at moderate rates, while consumer spending and construction and real estate activity increased modestly. Conditions were little changed in the financial and agricultural sectors.
San Francisco- Economic activity continued to expand at a moderate pace. Overall price inflation was flat, while upward wage pressures strengthened. Sales of retail goods were modest, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector improved. Activity in the residential housing market was robust. Conditions in the financial services sector remained solid.
At Gerdau, we scrutinize the Federal Reserve Beige book report looking for information on how the economy is performing nationally and regionally and clues to possible policy changes going forward.