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Chicago

/beige-book-reports/2020/2020-09-ch

"September 2, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District again increased strongly in July and early August, but the pace of growth was slower than the prior reporting period and activity remained well below its pre-pandemic level. Contacts expected further growth in the coming months, but most did not expect a full recovery until at least the second half of 2021. Employment and manufacturing increased strongly; consumer spending and construction and real estate increased moderately; and business spending increased slightly. Wages increased slightly and prices rose modestly. Financial conditions also improved modestly. The pandemic continued to weigh on agricultural incomes.\nEmployment and Wages\nEmployment overall increased strongly during the reporting period, though a large number of contacts made little or no change to their staffing levels. One said that the Paycheck Protection Program (PPP) had allowed his firm to retain workers during the depths of the downturn and was sparing them the difficulty of searching for workers now that activity was picking up. A number of contacts in manufacturing reported they were maintaining higher employment levels than usual because of elevated rates of absenteeism as workers with a positive COVID test or potential exposure had to quarantine. Several contacts again commented that generous unemployment benefits had made it difficult to bring payrolls back to desired levels, especially at the entry level. Wages increased slightly across skill levels. Benefits costs also moved up some.\nPrices\nPrices rose modestly in July and early August, and contacts expected a similar-sized increase over the next 12 months. Consumer prices increased moderately on balance, led by higher vehicle prices. Food and beverage prices fell a bit overall. Producer prices increased slightly. Input costs were up modestly, driven by rising raw materials and shipping costs.\nConsumer Spending\nConsumer spending increased moderately over the reporting period, and sales in many sectors returned to near their pre-pandemic levels. Nonauto retail spending increased moderately. Contacts again reported robust gains in electronics (particularly for items that support e-learning) and sporting goods, but disappointing sales of apparel and other traditional back-to-school items as many schools were opting for virtual learning this fall. Sales leveled off in the grocery and home improvement sectors but remained well above year-ago levels. Vehicle sales fell slightly from strong levels in the previous reporting period. Dealers said that low inventories of some light truck models were holding back sales but supporting higher prices and profitability. Boats and RV sales continued to be strong. Contacts in the leisure and hospitality sector reported large increases in volumes, especially at hotels and restaurants, but activity remained well below its pre-pandemic level.\nBusiness Spending\nBusiness spending increased slightly in July and early August. Many retailers continued to struggle with inventory positions: one contact noted that nonessential retailers were being \"careful on inventory\" and did not want to over-order, while others reported low inventories of light trucks, boats, RVs, and many grocery items. Overall, manufacturers said inventories were somewhat higher than comfortable, and a number continued to report minor supply chain problems. Capital expenditures were little changed, and many contacts said they had paused expansion plans for the year. Freight transportation increased modestly, but remained at a low level. Commercial and industrial energy consumption increased modestly, with higher reported usage by small commercial establishments.\nConstruction and Real Estate\nConstruction and real estate activity increased moderately on balance over the reporting period. Residential construction grew modestly, with increases in single-family suburban building. In contrast, residential real estate activity increased substantially, with gains in most segments. Contacts noted that low interest rates were supporting demand. Many contacts said that demand for larger living spaces had increased since the pandemic began. Prices rose modestly, driven by low inventories of single-family homes. Nonresidential construction increased on net, but activity remained slow. One contact said that financing challenges and weak demand were making it difficult for smaller construction firms to land nonresidential jobs and that larger firms were exploring taking on smaller projects. Commercial real estate activity decreased moderately, as demand for retail and office space fell. Sublease space for those segments increased moderately. Demand for industrial space remained solid. Rents fell modestly overall. Sales of commercial properties were slow and prices fell modestly. Some contacts said they were waiting for prices to fall further before making purchases, and one contact said that the gap between what buyers were willing to pay and what sellers were willing to accept was unusually large.\nManufacturing\nManufacturing production increased strongly in July and early August, but remained below where it was before the pandemic began. Auto production again grew sharply, though the pace of growth was slower than the previous reporting period. Steel production increased moderately, led by increased demand from the auto and construction industries. Heavy machinery manufacturers reported a slight decline in orders because of lower demand from the mining and energy sectors. Sales at specialty metals manufacturers increased modestly due to growth in demand from the auto, medical, and food manufacturing sectors. Demand for heavy trucks increased, but remained at low levels. Manufacturers of building materials reported a modest increase in shipments.\nBanking and Finance\nFinancial conditions improved modestly on balance over the reporting period. Participants in the equity and bond markets reported better conditions, though volatility remained elevated. Business loan demand decreased moderately. Contacts noted that many businesses were flush with cash because of the Paycheck Protection Program (PPP) but were holding back on new capital purchases. Business loan quality deteriorated moderately, with declines concentrated in leisure and hospitality, retail, commercial real estate, and health care. Contacts said that payment deferrals and the PPP continued to help prevent delinquencies for many clients. Standards again tightened modestly. Consumer loan demand increased modestly, led by strong home purchase and refinancing activity. Loan quality improved slightly while standards tightened slightly. Contacts noted that deferrals were limiting delinquencies in the consumer sector as well. Contacts continued to report high levels of deposits for both businesses and households.\nAgriculture\nThe agriculture sector continued to deal with lost income due to COVID-19 related factors, though CARES Act payments provided some support. In addition, a derecho windstorm caused damage to crops (especially corn), storage facilities, and livestock facilities in a number of areas within the District. Parts of the District were also experiencing drought. Still, contacts expected the corn and soybean harvests to be near record levels for the District as a whole. Corn prices were little changed at levels below where they were a year ago, while soybean prices rose and were above year-ago levels. Beef and pork production was catching up from pandemic-related reductions, and the backlog of cattle and hogs ready for slaughter fell. One contact reported that a gap in the supply of hogs was forming due to earlier euthanizations of many baby pigs. Cattle and hog prices rose, but not above year-ago prices. Beef and cheese prices moved lower as supplies normalized.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2020/2020-09-ph

"September 2, 2020\nSummary of Economic Activity\nThird District business activity changed little overall during the current Beige Book period and remained far below levels observed prior to the onset of the COVID-19 pandemic. Business operations increased incrementally, as COVID-19 caseloads remained at relatively low levels throughout the period. As firms recalled more of their workforce, net employment also grew modestly; however, firms also continued to issue permanent layoffs. Some wage increases were noted among lower-paying jobs. Meanwhile, contacts reported ongoing difficulties attracting workers. Prices edged higher again amid continued spotty price spikes. Firms maintained modestly positive expectations for growth over the next six months; however, uncertainty is extremely high, as contacts worried about the end of stimulus measures, pending layoffs, and an inevitable rise of evictions, foreclosures, and bankruptcies. Looming over all is the active presence of the coronavirus.\nEmployment and Wages\nEmployment increased modestly overall as firms stepped up hiring and recalling workers; however, layoffs continued as well. Among firms in our COVID-19 survey, 25 percent reported that they had hired new workers in July, and 13 percent recalled furloughed workers. Meanwhile, about 6 percent of the firms had laid off workers permanently, and another 6 percent had furloughed workers. However, at mid-August, a slightly greater percentage of firms reported that employment had declined over the month than had increased.\nStaffing firms reported that activity continued to increase but remained below pre-pandemic levels by as much as 30 percent. Staffing contacts noted far more orders than they can fill with available labor, and they worried \u2013 as the school year neared \u2013 that childcare issues will further reduce the labor supply. A lack of childcare was also the only impediment cited by a greater percentage of firms in our COVID-19 survey in late July than in early July. Fear of infection and expanded unemployment benefits had become lesser concerns. From a separate July survey of Philadelphia's Center City offices, a vaccine was the overwhelming factor that firms required for a return from remote work; safer transit was a distant second.\nWages appeared to trend slightly upward. In mid-August, the percentage of nonmanufacturing firms reporting higher wage and benefit costs per employee was higher than the percentage reporting lower costs. Manufacturers anticipate compensation costs to rise 3 percent over the next year \u2013 a bit higher than last quarter.\nSeveral firms maintained previously imposed salary cuts on higher-paid positions, but further cuts were not reported. Upward wage pressure is most evident for lower-wage jobs, especially for Pennsylvania firms that are paying closer to the federal minimum than to the $15 an hour, or more, being offered by many warehouses. Also, some firms found it difficult to end the temporary \"hero\" pay and have made all or part of it permanent.\nPrices\nPrices edged higher again, as more contacts reported higher prices rather than lower during the period, except for prices received by nonmanufacturers. However, over 60 percent of all firms noted no change in prices.\nContacts continued to describe spotty price surges as demand shifts, production disruptions, and logistics problems have created scarcity, delays, and price hikes for an ongoing parade of commodities. Scarcity and high prices for lumber continued to plague builders.\nManufacturing\nOn balance, manufacturers reported little or no change in activity during the current period. In our COVID-19 survey, manufacturing firms began the period with sales and new orders of about 11 percent below what had been anticipated pre-pandemic. Firms reported that demand was about 14 percent below expectations as of the end of July.\nIn contrast, positive but low diffusion indexes for shipments and for new orders from a mid-August survey suggested the possibility of slight growth. However, both indexes had fallen since mid-July, indicating that growth was less widespread among firms and that the overall direction of change was less certain.\nConsumer Spending\nOn balance, nonauto retail sales leveled off over the period \u2013 remaining below expectations by 5 to 20 percent, depending on the retail segment (restaurants would be lower). Contacts continued to note some pickup in market share as some of their competitors had closed permanently. Most restaurants are cobbling sales together from a mix of sit-down dining, takeout/delivery, catering, and groceries. A heavy reliance on outdoor seating has contacts nervous as colder weather approaches.\nDemand remained strong for auto sales; however, low inventories kept new car sales steady at levels about 15 percent below the prior year. However, prices rose and used car sales were strong, so dealer profits were also stronger and sometimes record-setting.\nTourism picked up slightly, following a partial recovery last period. However, overall activity was about 40 percent below prior-year levels. Contacts described good activity at open-air resort destinations but still less than in recent years. Attractions, business travel, and urban destinations remain depressed.\nNonfinancial Services\nNonmanufacturers reported a slight increase in activity, but levels remained well below pre-pandemic expectations. In our COVID-19 survey, nonmanufacturing firms began the period with demand about 23 percent below what had been anticipated; this improved slightly to 21 percent below expectations as of the end of July.\nFinancial Services\nThe volume of bank lending continued to hold steady over the period, in contrast to the same period in 2019, during which loan volumes continued growing moderately. Residential mortgages grew moderately during the period, and auto loans and commercial real estate lending grew modestly. However, these gains were offset by moderate declines in commercial and industrial loans. Credit card volumes continued falling moderately; last year, they rose moderately over the same period.\nBanking contacts continued to report that government stimulus and moratoriums on evictions and foreclosures had worked well for most households and businesses. Many creditors have already resumed payments. However, there was universal concern about the outcome once stimulus measures and protections end.\nAccountants and attorneys agreed. With moratoriums in place on foreclosures and evictions, the most serious consequences, thus far, had been a rise in corporate bankruptcies, especially in retail and hospitality. There were also reports of small business closings, but these are difficult to catalog and some simply shut their doors without leaving a trace. However, they expect a wave of foreclosure/eviction cases when the moratoriums end.\nOne attorney noted that banks were working with clients to form new payment plans. However, he said that collection rates have gone down significantly and \"at some point, defaults need to happen.\" Attorneys and accountants worried that clients were too complacent \u2013 believing that another round of assistance would occur. Others noted that increasing numbers of apartment tenants and small businesses had begun skipping payments. Several contacts at one law firm agreed that \"this is a disaster waiting to happen.\"\nReal Estate and Construction\nHomebuilders reported modest growth in sales activity that has kept contractors busy at levels comparable with recent years and created problems securing lumber and labor. Existing home sales grew moderately \u2013 July sales had returned to levels comparable with the prior year. Contacts described very strong demand \u2013 driven by low interest rates and well-heeled consumers searching for more space. However, inventories continued falling, driving prices higher and constraining potential sales growth.\nPhiladelphia's commercial real estate construction grew modestly and leveled off at about 15 percent below the level of activity anticipated before the pandemic. Crew-size reductions for worker safety are the primary reason, but the pipeline for projects beyond the first quarter of 2021 is thin. Commercial office leasing activity declined slightly, as firms continued to delay decisions while many workers remain remote and potential layoffs lie ahead. Demand remains strong for warehousing and positive for life science activities, but weak for retail space.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2020/2020-09-bo

"September 2, 2020\nSummary of Economic Activity\nBusiness activity continued to pick up modestly in the First District in July and early August, even as some sectors saw little improvement. Some retailers cited strong activity, while air travel and hotels remained very soft. Manufacturing and staffing results were similarly mixed, with results largely a function of the pandemic's effects on the sectors of the firms' clients or customers. Residential real estate markets have begun to recover from the pause this spring. Commercial markets were split, with the retail and office sectors still very weak and warehouse and lab space robust. Outlooks continued to be highly uncertain, with more respondents expecting at least mild improvement than predicting increased losses.\nEmployment and Wages\nEmployment changes were mixed. Retail contacts selling autos and furniture brought back almost their entire workforces after layoffs and furloughs in the spring. By contrast, many hotel workers remained furloughed, particularly food and beverage staff that typically work larger functions. Similarly, an aviation and auto industry supplier furloughed large numbers of employees and recently announced an 8 percent permanent staff reduction. Some manufacturing contacts giving \"hazard pay\" to employees said they planned to stop doing so, but one said that they would continue the practice for fear of damaging morale. Staffing firms also noted that hazard pay for some jobs had been eliminated. Some clients of staffing firms raised pay compared to pre-pandemic levels to enhance recruitment.\nPrices\nContacts again said little about prices. Manufacturing contacts continued to report a benign pricing environment. A milk producer said raw milk prices were very low due to decreased demand from restaurants.\nRetail and Tourism\nRespondents continued to report major disruptions related to COVID-19, though some noted improvements since the spring. After limited in-person shopping, car sales in Connecticut were strong throughout June, July, and the start of August, except for the week that remnants of Hurricane Isaias caused power outages throughout the state. A furniture retailer reported average weekly sales up 30 percent compared to last summer, with weekly online sales up more than 300 percent compared with the same weeks in 2019 and in-store sales roughly one-third of pre-pandemic levels.\nRestaurants across Massachusetts dramatically increased outdoor dining options. Over one-third of restaurant sales came from outdoor dining, which is unusual in Massachusetts where fewer than 20 percent of restaurants had outdoor dining options before the pandemic. Restaurants in coastal areas operated at around 75 percent of their usual sales, on average, while those in Boston were faring worse than the rest of the state.\nTravel industry contacts reported hotel stays continued to be impacted significantly by the pandemic, with occupancy rates in Boston remaining under 20 percent. Some hotels will be housing college students for the fall semester to alleviate density in dormitories. Conventions scheduled into the first quarter of 2021 in Boston have been postponed. Air traffic into Logan remained low, with reductions of more than 85 percent in domestic passengers and more than 95 percent in international travelers.\nManufacturing and Related Services\nExperiences diverged markedly across the ten manufacturing firms contacted this cycle. Firms with exposure to home goods, semiconductors, and health care reported strong results, even compared with a year ago, while firms with exposure to aviation and automotive continued to suffer. A manufacturer and retailer of furniture reported that sales in the summer were up 30 percent year-on-year. Semiconductor firms reported significant increases in sales which they attributed to demand for devices and the upcoming release of a new iPhone. By contrast, a firm that makes parts for jet engines reported that sales were down 60 percent; OEM demand was down and aftermarket demand more or less vanished as airlines were not using their planes and were also trying to conserve cash.\nOne manufacturer said that they were increasing capital expenditures both because of discounts on capital goods and because they wanted to be in position to take market share when the economy recovers. Other firms said they faced COVID-related delays in construction or acquisition of capital goods. The commercial aviation-related contact cut capital expenditures substantially.\nContacts said they expected current performance, whether good or bad, to continue in the near term.\nStaffing Services\nNew England staffing firms reported mixed business results into August, reflecting their different industry exposures. Firms that provide services to COVID-related industries, particularly healthcare, continued to see improvement and business growth since the spring. Most contacts indicated that labor demand is the same as or higher than in the spring. Some client organizations called back temporary workers whose jobs could not be done remotely; some moved from entirely virtual hiring to conducting the last round of interviews on-site.\nLabor supply was described as complex. The majority of contacts reported difficulty finding candidates who were willing to work, especially for pay rates that might be lower than pandemic-augmented unemployment benefits. A lack of access to daycare and unwillingness of some working parents to send their children to daycare contributed to a reduced pool of candidates. By contrast, one contact saw increased applicants, citing recent layoffs and furloughs as driving factors.\nOverall, respondents remained cautious about the uncertainty of the COVID situation and the upcoming election. The majority of contacts were somewhat more optimistic than three months ago, but a few were less optimistic and expected business activity to slow in Q3 and Q4.\nCommercial Real Estate\nAround the First District, the office and retail property sectors experienced ongoing weakness while markets for warehouse and lab space remained robust. Office leasing activity remained limited to renewal of expiring leases, and tenants sought renewals of only 1 to 3 years' duration. The supply of office space for sublease increased by a significant margin, with the office vacancy rate in downtown Boston\u2014including sublease supply\u2014rising to an estimated 11 percent in August from roughly 6 percent in March. Office asking rents were steady, but effective rents declined amid increased leasing concessions. Office sales transactions were close to zero and office construction was limited to projects that were underway before the pandemic.\nThe District's industrial property markets saw continued robust demand, as online retailers further expanded their warehouse and distribution space. Demand for laboratory space in greater Boston stayed very strong; one contact raised concerns of a potential glut of lab space when planned projects are completed. The retail sector remained weak apart from grocery-anchored shopping centers and pharmacies; contacts cited an uptick in closures of small businesses. A regional lender to commercial real estate saw steady loan volume as well as a modest increase in requests for loan payment deferrals.\nContacts expected commercial real estate activity to stay flat or decline further for the remainder of 2020 and expressed a very uncertain outlook for 2021. Some were concerned that commercial bankruptcies and foreclosures would accelerate in coming quarters without renewed fiscal stimulus measures.\nResidential Real Estate\nResidential real estate markets in the First District began to pick up in July, following slow sales this spring due to the outbreak of COVID-19. (Boston and Vermont reported year-over-year changes from June 2019 to June 2020. Connecticut data were unavailable. The other four New England states reported statistics through July.) Closed sales for single-family homes increased for all areas reporting July statistics. Condo sales increased in July in New Hampshire and Maine, and decreased by about 1 percent in Rhode Island and Massachusetts. Across the region, contacts were optimistic that sales activity would continue at a high level into the fall.\nMarkets continued to favor sellers. Inventory decreased for both single family homes and condos in all reporting areas, with all markets except the Boston condo market experiencing double-digit drops. Median sales prices rose in all markets except for Boston condos. Additionally, both the Massachusetts and Boston contacts noticed increased moves from urban to suburban locations, which they attributed in part to the pandemic.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2020/2020-07-ph

"July 15, 2020\nSummary of Economic Activity\nThird District business activity expanded moderately during the current Beige Book period but remained far below levels observed prior to the onset of the COVID-19 pandemic. Business operations resumed or increased, as lower COVID-19 caseloads prompted states to phase out stay-at-home orders and mandated closures. As firms recalled some of their workforce, net employment also grew moderately; however, firms continued to issue permanent layoffs as well. More firms have noted salary reductions than increases. Meanwhile, contacts noted difficulties attracting workers despite high unemployment rates. Prices edged higher, as a fitful economic restart generated spotty price spikes. Modestly positive expectations for growth over the next six months have broadened among firms; however, uncertainty remains high, as contacts cite the duration of the pandemic and the depth of the ensuing recession as key unknowns.\nEmployment and Wages\nAs firms reopened and recalled workers, overall employment rebounded moderately. However, these net gains masked a small, steady stream of permanent layoffs. By mid-June, a modest percentage of firms reported that employment had declined over the month. Since then, an average of 11 percent of the firms in our weekly surveys reported that they had recalled furloughed workers in the prior week; 19 percent had hired new workers \u2013 sometimes to replace those who would not return to work. Meanwhile about 6 percent of the firms reported that they had furloughed workers, and another 4 percent reported that they had laid off workers permanently.\nStaffing firms reported that activity was increasing but remained off pre-pandemic levels \u2013 sometimes as much as 40 percent. Despite elevated unemployment rates, firms often described the labor market as tight. By late June, almost half of the firms in our weekly survey reported that they faced no impediments to hiring workers. However, the remainder did note challenges.\nAmong nonmanufacturing firms, an equal 30 percent share of the contacts noted fear of infection, childcare needs, and expanded unemployment insurance (UI) benefits, respectively, as impediments. According to manufacturers, their workers tended to be less concerned about the virus but more attracted to the UI benefits than their nonmanufacturing counterparts. In the Philadelphia metro area, contacts noted reluctance from their transit-dependent workers to return to work or end telecommuting.\nWages appeared to trend slightly downward. In mid-June, the percentage of nonmanufacturing firms reporting lower wage and benefit costs was slightly higher than the percentage reporting higher costs. To trim expenses, more firms noted cutting salaries (with or without cutting hours). Most firms ended or were phasing out pay premiums to attract and retain frontline workers. Staffing firms noted that the lowest wage rates were holding steady, or rising slightly, but observed that clients, especially in parts of Pennsylvania, were still shifting their firm's wage structure toward a market-driven minimum that is about double the state minimum wage.\nPrices\nOn balance, more contacts reported higher prices rather than lower during the period, except for prices received by nonmanufacturers. However, well over half of all firms noted no change in prices.\nRising prices were most often described as spotty, rather than general. Firms noted price spikes for disparate items, such as ground beef and food service containers. Contacts cited disruptions in the market's normal supply and demand relationships, plus supply chain disruptions, including transport logistics, as factors.\nManufacturing\nManufacturers reported a modest rebound in activity during the current period. At mid-June, over 40 percent of the firms reported increases in shipments and in new orders, while about 20 percent reported declines. When asked to estimate their total production changes, the median firm response was 25\u201330 percent lower for the second quarter compared with the first quarter of the year.\nIn our weekly survey, manufacturing firms began the period with sales and new orders of about 30 percent below what had been anticipated pre-pandemic. At the end of June, firms reported estimated demand about 18 percent below expectations.\nConsumer Spending\nOn balance, nonauto retail sales rebounded moderately. However, the gains were distributed unevenly among retailers and restaurants. Some businesses have closed and some survivors have been picking up the market share the former leaves behind, but nearly all survivors report working harder to maintain a profit margin.\nSales of new and used cars rebounded moderately during the period. Some Pennsylvania dealers noted record sales for June but acknowledged that some of those sales may reflect pent-up demand.\nTourism has rebounded sharply in beach areas and mountain resorts for businesses that are permitted to reopen. Business travel and urban destinations remain largely inactive. Overall, activity remains more than 50 percent below prior-year levels.\nNonfinancial Services\nOn balance, nonmanufacturers reported a moderate rebound in activity, but the activity remains well below pre-pandemic expectations. In our weekly survey, reported demand of nonmanufacturing firms had already improved from an early-April low of 48 percent below pre- pandemic expectations to 30 percent below at mid-May. By the end of June, firms reported estimated demand was 22 percent below expectations.\nFinancial Services\nThe volume of bank lending held steady over the period in contrast to the same period in 2019, in which loan volumes grew moderately. Commercial and industrial loans, residential mortgages, and auto loans grew moderately during the period, and commercial real estate lending grew modestly. However, these gains were offset by moderate declines in home equity lines and other consumer loans. Credit card volumes also fell moderately.\nBanking contacts noted generally increased optimism among their clients \u2013 that Paycheck Protection Program loans, loan deferrals, and other assistance had supported many businesses well. However, one banker cautioned against a false sense of security. Most bankers noted that the third and fourth quarters will tell, as deferrals run out and businesses must begin to meet their loan obligations. As of late May, 16 percent of the firms in our weekly survey indicated that they were very concerned about maintaining solvency; 22 percent were somewhat concerned.\nReal Estate and Construction\nHomebuilders reported steadily improving traffic and sales that reached a moderate pace of growth. Contacts cited various contributing factors, including low interest rates, a desire for more elbow room, pent-up demand from prior months, and a lack of the usual competition from May/June weddings and graduations.\nExisting home sales may have increased slightly. Although year-over-year sales in May were down sharply, pending contracts had improved. Real estate contacts reported that early estimates of June sales were stronger, but that recent gains may reflect pent-up demand from months during the shutdown.\nPhiladelphia's commercial real estate construction grew modestly from low levels as more projects restarted. An engineering firm noted that many municipal projects have been shelved, as tax revenues and tolls have fallen. Commercial leasing activity continued to decline modestly, as firms are taking more time to reassess their space needs. Some firms will extend leases when possible to afford more time to understand the changes wrought by the COVID-19 pandemic on demand for their products, their workforce efficiency, and telecommuting's long-term potential. Demand for retail space is in sharper decline.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2020/2020-07-sf

"Beige Book Report: San Francisco\nJuly 15, 2020\nSummary of Economic Activity\nEconomic activity in the Twelfth District contracted modestly on balance during the reporting period of mid-May through June. Employment levels increased slightly, as rehiring activity proceeded cautiously. Wages were generally stable, as were prices. Sales of retail goods rose moderately, while activity for providers of consumer and business services continued to contract sharply. Manufacturing activity was mixed, and conditions in the agriculture sector remained weak. Conditions in residential real estate improved moderately, while the commercial market was mixed. Lending activity ticked up.\nEmployment and Wages\nEmployment levels increased slightly, as reopening and rehiring activity proceeded cautiously after the prior months' surge in layoffs and furloughs. Most companies that reduced employment in the wake of the COVID-19 outbreak added only a fraction of previously separated workers to their payrolls, while others that did not lay off or furlough workers scaled back hiring plans going forward. IT and business services companies noted continued hiring, albeit at a slightly slower pace. Building material producers reported a tick up in payrolls in response to growing demand from the construction sector. In Los Angeles, restaurants increased employment modestly, but anticipated having to reinstate furloughs due to a reversal in the reopening process. Entertainment streaming services increased employment slightly, while unemployment in film and television production in Southern California remained historically elevated. Over the next several months, tourism industry employers in Hawaii expect to recall only about 10 to 15 percent of the workers who were laid off or furloughed in March and April. Some contacts reported generous unemployment compensation limited the pace of hiring.\nWages were broadly stable. While contacts noted modestly to moderately falling wages for some lower-skilled jobs and rising salaries for in-demand jobs in IT and finance, most reported stable compensation. A few contacts cited firms' tendency to try to ride out the initial shock of a downturn before adjusting wages and other business costs. However, some firms have suspended or postponed bonuses and merit increases in response to deteriorating business conditions.\nPrices\nMost contacts reported stable prices over the reporting period as businesses generally took a cautious approach to potential price changes. A few observed slightly higher prices at restaurants, perhaps to account for the cost of new cleaning and safety supplies and supply constraints for certain foods. Some restaurants limited price changes in an attempt to retain customers. Building materials' prices ticked up with construction projects restarting or continuing in several regions and residential permitting rising in some areas. Electricity and fuel prices were unchanged on balance. Selling prices for most crops fell, as supply outstripped demand, especially from foreign markets. A credit union in California suspended most fees on consumer accounts. Hoteliers and airline operators decreased some prices for tourist destinations.\nRetail Trade and Services\nRetail sales rose moderately, as restrictions on nonessential businesses eased in the early part of the reporting period. Contacts observed a broad reversal in the negative growth trajectory of retail activity, with foot traffic to brick-and-mortar establishments picking up. However, in several areas, a late June resurgence in COVID-19 cases slowed or reversed the reopening process, jeopardizing further recovery in consumer spending. In the Mountain West, retail sales beat expectations in June and auto dealers saw strong demand over the past two months. However, auto dealers anticipated a falloff in sales over the next several months as vehicle inventories reached rock-bottom levels and were not expected to recover until the fourth quarter. Sales of wood products at home improvement stores in the Pacific Northwest increased solidly. An Arizona big box retailer reported lower in-store sales and ample inventory. Steep declines in tourist arrivals in Hawaii and Southern California have severely limited foot traffic to stores dependent on visitors' spending during summer months.\nActivity in consumer and business services contracted sharply. In the Los Angeles area, most restaurants operated at a loss or remained closed entirely. Moreover, restaurants that were operating maintained narrow inventories in case shelter-in-place restrictions were reimposed, a decision that weakened sales at restaurant suppliers. Hawaii hotel occupancy rates continued to run at a tiny fraction of normal levels, while a Southern California hotel owner reported a moderate improvement in room bookings to a level still significantly below prior years. A provider of business advisory services in California reported that many client firms curtailed spending on nonessential business services and declined to extend some contracts, suggesting a weak consensus business outlook. Domestic visitor levels ticked up in some Mountain West national parks, yet the absence of international travelers more than offset this positive development, leaving revenues depressed on a year-over-year basis. Electricity usage fell slightly on balance, as higher residential demand only partially offset lower industrial demand. In the entertainment sector, film and television production was still frozen while media subscription services saw a further tick-up in sales.\nManufacturing\nManufacturing activity was mixed but remained tepid in general. Where demand warranted firms' returning to full capacity, their ability to do so depended largely on how readily they could adapt to social-distancing regulations, a factor that varied significantly from business to business. A steel producer in Oregon reported that funds from the Paycheck Protection Program helped them stay afloat over the reporting period but that work orders were still a fraction of their pre-COVID-19 level. On the other hand, a building product manufacturer saw an encouraging increase in production and sales but attributed some of the jump to making up for April's very weak activity rather than improved market conditions. Elsewhere, a renewable energy equipment manufacturer noted a modest rebound in capacity utilization as supply chains passing through China and Mexico reopened. Spotty availability of input materials generally posed an additional challenge for some manufacturers attempting to move toward more normal operations.\nAgriculture and Resource-Related Industries\nAgriculture sector activity remained weak on balance over the reporting period. While yields were generally solid for most crops, including wheat, potatoes, and fruit, domestic sales were mixed and foreign sales poor. This combination of strong crop yields and subdued demand further deteriorated profit margins for many growers. Contacts in the Pacific Northwest and Mountain West reported continued weakness in domestic wholesale distributors' and restaurants' demand for grains and potatoes. On the other hand, fruit and vegetable growers in California noted moderately higher demand from domestic grocery stores. On the export side, the strong dollar and continued tepid foreign demand due to the COVID-19 outbreak limited export sales for growers across the District. For example, California nut exports fell further after planned holiday celebrations around the summer solstice in China were cancelled.\nReal Estate and Construction\nResidential construction activity increased moderately. In most areas, contacts reported solid permitting and building activity. In Seattle, residential permits were slightly higher than in the same period last year, and a Northern California contact noted that permitting activity was picking up, reflecting a return to construction after some stoppages in March and April. Overall, home sales picked up noticeably while inventories declined, putting some upward pressure on home prices. In Oregon, a large backlog of homeowners wanting to list their home for sale indicated that inventory in some areas may rise in coming months. In Idaho and Eastern Washington, observers saw early evidence of buyers moving from higher-cost coastal markets after starting permanent teleworking. A Northern California contact reported that a number of renters were unable to pay rent, while some homeowners were delinquent on mortgage payments.\nActivity in the commercial real estate market was mixed. Contacts in the Mountain West and California noted that some commercial projects that paused due to virus concerns have restarted. Office occupancy was generally stable in this region. However, the outlook for office occupancy and new office construction in District cities is highly uncertain, with some predicting a steep decline in occupancy and a freeze in new construction. Demand for warehouse space picked up in Northern California.\nFinancial Institutions\nOverall lending activity ticked up, with contacts noting home mortgage refinancing and PPP loans as key drivers. Bankers reported that households capitalized on lower interest rates and PPP loans helped businesses maintain solvency and solid credit standing. Fiscal support to households supported their credit standing too. However, a fin-tech firm in San Francisco saw a marked decline in the overall credit quality of its small business customers. A few contacts continued to express concern about the ambiguity of certain PPP forgiveness terms. Liquidity conditions were solid across the District, and the supply of deposits increased modestly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJuly 15, 2020\nThis report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before July 6, 2020. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nEconomic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic. Consumer spending picked up as many nonessential businesses were allowed to reopen. Retail sales rose in all Districts, led by a rebound in vehicle sales and sustained growth in the food and beverage and home improvement sectors. Leisure and hospitality spending improved, but was far below year-ago levels. Most Districts reported that manufacturing activity moved up, but from a very low level. Demand for professional and business services increased in most Districts, but was still weak. Transportation activity rose overall on higher truck and air cargo volumes. Construction remained subdued, but picked up in some Districts. Home sales increased moderately, but commercial real estate activity stayed at a low level. Financial conditions in the agriculture sector continued to be poor, while energy sector activity fell further because of limited demand and oversupply. Loan demand was flat outside of some Paycheck Protection Program (PPP) activity and increased residential mortgages. The PPP and loan deferrals by private lenders reportedly provided many firms with sufficient liquidity for the near term. Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications.\nEmployment and Wages\nEmployment increased on net in almost all Districts as many businesses reopened or ramped up activity. Districts highlighted gains in the retail and leisure and hospitality sectors. However, payrolls in all Districts were well below pre-pandemic levels. Job turnover rates remained high, with contacts across Districts reporting new layoffs. Contacts in nearly every District noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits. Many contacts who have been retaining workers with help from the PPP said that going forward, the strength of demand would determine whether they can avoid layoffs.\nPrices\nPrices were little changed overall. Contacts across Districts largely reported both input and selling prices were flat. When input prices did change, increases slightly outnumbered decreases. Contacts in several Districts reported that supply chain challenges were pushing up prices for health and safety equipment used to limit the spread of COVID-19. There were also reports of rising food and beverage prices, particularly for beef. When selling prices changed, decreases outnumbered increases, as contacts in several Districts cited weak demand and limited pricing power. One exception noted by multiple Districts was new and used vehicle prices, which were boosted by low inventories.\nHighlights by Federal Reserve District\nBoston\nEconomic activity generally improved since the last report, even as significant disruptions attributable to the pandemic continued. Some firms called back workers let go earlier in the spring, and a few engaged in net new hiring, while others began layoffs. Activity in the region's residential and commercial real estate markets remained exceedingly slow. The outlook continues to be unusually uncertain.\nNew York\nThe regional economy has begun to rebound in recent weeks, though activity is still well below pre-pandemic levels and many sectors remain depressed. Businesses have called back some furloughed workers and there have been scattered reports of new hiring, but the labor market remains weak. Prices and wages have been mostly steady, on balance.\nPhiladelphia\nBusiness activity expanded moderately during the current Beige Book period but remained far below levels attained prior to the onset of COVID-19. Firms faced several challenges for hiring, yet wages appear to be trending slightly lower. In contrast, prices are trending slightly higher, as the market and supply chain disruptions of a fitful economic restart have created various price spikes. Uncertainty has increased.\nCleveland\nActivity picked up across a wide range of businesses as more of the economy reopened. However, business conditions remained weak overall. And while contacts expect activity to increase further in coming months, they remain concerned about the sustainability of the recovery if the spread of COVID-19 is not contained. This caution is partly reflected in continued weakness in capital spending and hiring plans.\nRichmond\nThe Fifth District economy expanded as many segments of the economy were able to reopen, although economic activity has yet to return to pre-pandemic levels. Retail and leisure travel, in particular, benefited from eased restrictions. Employment rebounded somewhat but remained well below prior levels. Price growth accelerated moderately, mainly driven by supply chain disruptions and high demand for certain goods.\nAtlanta\nEconomic conditions remained soft. Labor markets improved and nonlabor costs were muted. Overall, retail sales strengthened. Tourism activity resumed, though limited by capacity constraints. Residential real estate conditions improved, and commercial real estate activity was mixed. Manufacturing activity weakened. Banking conditions worsened.\nChicago\nEconomic activity increased strongly. Employment, consumer spending, and manufacturing increased substantially, while business spending and construction and real estate activity increased modestly. Wages edged up, prices declined slightly, and financial conditions deteriorated modestly. The pandemic continued to weigh on agriculture incomes.\nSt. Louis\nEconomic activity has rebounded sharply since during late May; however, overall conditions remain significantly depressed and the pace of recovery appears to have slowed since mid-June. In comparison with our previous report, the outlook among contacts is slightly more pessimistic while also much more uncertain.\nMinneapolis\nNinth District economic activity was mixed across sectors since the previous report, after more dramatic contractions in recent reporting periods. Consumer spending and tourism improved\u2014after significant previous declines\u2014due to emergency federal stimulus and the gradual reopening of state economies in the District. Most other sectors saw continued decline overall, especially relative to normal activity levels.\nKansas City\nEconomic activity rebounded slightly in June, and contacts expected additional gains in the months ahead. Consumer spending increased modestly, including higher retail, auto, restaurant and tourism sales. Residential real estate also picked up, but commercial real estate conditions deteriorated further. Manufacturing activity expanded slightly, but the energy and agriculture sectors remained a drag on the regional economy.\nDallas\nEconomic activity in the Eleventh District rebounded, but was still well below pre-COVID levels. Manufacturing and service sector activity grew. While drilling activity fell to new lows and loan demand contracted further, sentiment among energy and finance contacts improved. New-home sales rose strongly. Employment held steady, according to contacts. Input costs increased and selling prices fell. Outlooks improved, but the upward trend in new COVID-19 cases has increased uncertainty.\nSan Francisco\nEconomic activity in the Twelfth District contracted modestly. Employment levels increased slightly. Prices remained generally flat. Sales of retail goods rose moderately, while consumer and business services activity contracted sharply. Activity in the manufacturing sector was mixed, and the agriculture sector remained weak. Residential construction activity picked up somewhat, while the commercial side was mixed. Lending activity ticked up.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJuly 15, 2020\nSummary of Economic Activity\nThe Second District economy rebounded moderately in the latest reporting period, following a steep contraction, as the spread of the virus subsided and businesses began to reopen. Employment came off its lows across most industry sectors, while wages were steady, on balance. Input prices rose modestly, but selling prices were flat to down slightly overall. Activity showed signs of rebounding in most industry sectors, with the strongest bounce-backs seen in retail, wholesale trade, and manufacturing. Leisure & hospitality businesses also reported some improvement. Business contacts have grown considerably more optimistic about the near-term outlook, though many businesses expressed concern about PPP loans running out or not being forgiven. Consumer spending has been mixed, but, on balance, has rebounded substantially\u2014especially for vehicles. In contrast, tourism and travel have remained depressed. Home sales and residential leasing activity have been sluggish, though some areas have seen a nascent pickup in June, as restrictions were eased. Commercial leasing and construction activity remained weak. Finally, banks reported increased demand for mortgages, mostly tighter credit standards, steady delinquency rates, and ongoing widespread leniency on existing loans.\nEmployment and Wages\nThe labor market has improved slightly, as businesses have begun to recall workers and some have added new workers. Most pandemic-related layoffs are still considered to be temporary, though one employment agency in upstate New York noted that some previously furloughed workers have more recently been laid off permanently. That agency along with another in New York City noted that hiring has remained sluggish. A number of contacts at firms providing various business and office services have reduced staffing levels, hours, and salaries. On balance, though, business contacts indicate that their staffing levels have rebounded at least moderately from the lows seen during the spring.\nSome businesses have noted ongoing challenges in both bringing back furloughed workers and hiring new ones. Among the factors deterring workers are child care needs, safety concerns, and the generosity of unemployment benefits under the CARES Act.\nLooking ahead, business contacts in most industries plan to increase staffing levels, on balance, in the months ahead. However, the information and professional & business service sectors, which had relatively mild layoffs, did not plan to expand staff overall.\nWages have generally been steady in recent weeks. One employment agency noted that wages have risen for lower-paid workers, whereas many businesses have cut salaries for managers and other highly-paid workers. Looking ahead, businesses generally expect wages to rise, on balance, though not in the business services, information, or leisure & hospitality sectors.\nPrices\nBusiness contacts reported that input costs were up modestly, on balance, while selling prices were flat to down slightly. A sizable number noted mostly modest costs related to installing and maintaining safety protocols. The most widespread cost pressures were reported by education & health and leisure & hospitality firms. Trends in selling prices varied widely across sectors. Contacts in professional & business services, leisure & hospitality, and financial services noted fairly widespread price cuts, while those in other sectors noted stable selling prices. Notably, retail and leisure & hospitality firms generally expected to raise prices in the months ahead.\nConsumer Spending\nRetailers reported that sales remained soft in May but many noted a pickup in June, as restrictions on non-essential stores began to ease. While shifts to online sales and curbside pickup have boosted business, overall sales have remained well below pre-pandemic levels. One upstate New York mall noted that many of its stores have remained closed due to tighter restrictions on stores without exterior entrances. Retailers expected sales to continue to improve gradually in the months ahead.\nVehicle sales have rebounded fairly sharply in May and June, according to dealers in upstate New York, though they remained somewhat below comparable 2019 levels. Contacts expressed concern that lean inventories of both new and used vehicles may constrain sales through the summer.\nManufacturing and Distribution\nManufacturing and wholesale trade activity have picked up modestly, while transportation & warehousing business has remained weak. New York State and New Jersey lifted restrictions on manufacturing and distribution businesses earlier than for most other sectors.\nLooking ahead, manufacturers and wholesalers expressed increased optimism, while transportation & warehousing contacts were modestly optimistic. Capital spending plans of manufacturers have picked up a bit, but service firms have scaled back plans substantially.\nServices\nService industry contacts reported some pickup in business but noted that activity has remained well below pre-pandemic levels. Contacts in leisure & hospitality and transportation\u2014the hardest hit sectors during the pandemic\u2014have noted scattered signs of improvement, though safety concerns have inhibited demand. Moreover, capacity and other restrictions on restaurants and retail consumer services have limited capacity. Tourism has remained moribund, with hotels and airlines continuing to see business at well under half of capacity.\nHealth and education service providers report ongoing weakness in business and were not generally optimistic about the near-term outlook. Activity has also remained depressed in the information and professional & business services sectors, as many business customers have cut back on such services. There is widespread concern about when such business will rebound.\nReal Estate and Construction\nHome sales markets across the District have been mixed, with New York City's sales and rental markets sluggish but some markets in less urban areas and in upstate New York showing strength. In New York City, closings were down more than 50 percent from a year earlier, while new contract signings were down roughly 75 percent. However, a local real estate authority noted a nascent surge in activity in late June\u2014as restrictions were lifted\u2014and expected Q3 to be quite active due to pent up demand and increased supply. The City's residential rental market has weakened due to a combination of very little new leasing and a number of tenants not renewing. Both prices and rents appear to be down from pre-pandemic levels, though there is some uncertainty due to low volume.\nIn other parts of the District, however, there have been signs of strengthening housing demand\u2014particularly in the market for second homes. Activity across much of New York State picked up substantially when restrictions were lifted in early June, and demand appears to have exceeded supply driving higher prices and bidding wars across parts of the region.\nCommercial real estate markets across the District remain weak, with availability rates rising, rents flat or declining, and leasing activity very sluggish. Many retail tenants have continued to fall behind on rent\u2014particularly in malls, where restrictions have stayed in place. Still, real estate contacts remained somewhat optimistic, on balance, about the near term outlook.\nNew construction activity has remained quite sluggish, though many ongoing construction projects have begun to start up again, as restrictions have been eased.\nBanking and Finance\nContacts in the finance sector generally noted continued weak business but have grown somewhat more optimistic in their expectations for the months ahead. Small to medium-sized banks in the District reported higher demand for residential and commercial mortgages, lower demand for commercial & industrial loans, and unchanged demand for consumer loans. Refinancing activity has also increased. Bankers reported easing credit standards on consumer loans, but widespread tightening in credit standards across other categories. Spreads reportedly narrowed on all loan categories except commercial mortgages. Delinquency rates generally remained stable, and lenders reported more lenient policies for delinquent accounts across all categories.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"July 15, 2020\nSummary of Economic Activity\nThe Fifth District economy grew compared to our prior report, although economic activity generally remained well below pre-COVID-19 levels. Manufacturers experienced a slight uptick in new orders but shipments of finished goods were little changed. Ports reported modest declines in both imports and exports. Trucking companies, on the other hand, indicated a modest increase in demand as the reopening of stores and restaurants spurred new shipments. Retail shopping picked up modestly as more stores were able to reopen, but sales remained below year-ago levels. Leisure travel and tourism activity increased moderately, particularly at drivable locations. Business travel, in contrast, remained depressed. Residential home sales increased despite a low inventory of existing homes. Commercial real estate leasing rose modestly, overall, due to strong demand for industrial space. Bankers reported a slight increase in lending, predominately loans for home purchases and mortgage refinancing. On balance, demand for nonfinancial services declined moderately. Employment rose moderately in recent weeks as many firms called back previously furloughed or laid-off workers; however, total employment remained well below pre-pandemic levels. Price growth increased modestly, overall. Prices for some goods, like personal protection equipment, rose sharply due to supply chain disruptions and high demand.\nEmployment and Wages\nSince our previous report, employment increased as firms across a wide variety of industries reported calling some of their previously separated employees back to work, hiring new workers, and posting for vacant positions. Despite the rise in employment in recent weeks, total employment remained considerably below pre-pandemic levels. Several contacts noted challenges bringing workers back, including fear of contracting COVID-19 at work, inability to find childcare, or their ability to make more money on unemployment. While most firms reported no changes to wages or salaries, a few said that they cut hourly wages to reduce costs.\nPrices\nOn balance, price growth picked up modestly in recent weeks. According to our most recent surveys, manufacturers reported a slight increase in both prices paid and prices received while services sector firms reported a moderate increase in both price measures. One service firm noted that supply chain disruptions and high demand for personal protection equipment led to a substantial increase in prices for those goods.\nManufacturing\nManufacturing conditions in the Fifth District were little changed since our previous report. Shipments were fairly steady, and new orders increased slightly. However, lost revenue forced some manufacturers to cut budgets and discretionary spending as well as cancel capital spending projects. Customers who were unable to pay for products created additional stress for manufacturers. Payroll Protection Program (PPP) loans allowed some companies to remain solvent. One firm that contracts with government agencies expressed concerns about government budget changes in the wake of the virus. Some firms were able to offset losses, by shifting production to COVID-related goods such as medical supplies or sneeze guards.\nPorts and Transportation\nFifth District ports experienced modest declines in shipping volumes in both exports and imports in recent weeks. On the import side, declines were seen in home furnishings, autos, and engine parts, while apparel and medical supplies showed some strengthening. Port contacts attributed some of the weakness in exports to supply chain disruptions. One port lost business as large retailers closed, eliminating distribution centers. Ports saw some canceled calls, although not as many as in the last few months. An airport operator said cargo flights had increased to partially offset the decline in cargo space from the reduction in passenger flights.\nTrucking companies in the Fifth District reported a moderate increase in demand since our last report. Contacts noted increased shipments of retail goods and wine as stores and restaurants reopened. Shipments of food, cleaning supplies, and home-improvement goods remained strong. Some businesses reported lingering softness as shipments were still below last year. However, one company had more freight than it could haul and looked to expand its fleet, while others continued capital expansion plans in order to be well-positioned upon full recovery. Spot market activity picked up, and most customers who had temporarily shut down reopened.\nRetail, Travel, and Tourism\nRetailers reported that business picked up modestly in recent weeks as more stores were able to reopen, but demand remained below the level of a year ago. Several companies struggled as supply chain disruptions led to low inventories. In particular, automobile dealers reported that manufacturer shutdowns led to low inventories of new cars, which boosted sales of used cars. In addition, the supply of used cars increased as rental companies closed and corporations sold their excess fleet vehicles. Some retailers also experienced soft demand, and one store expressed concerns that closures of nearby restaurants would hurt business. However, others, such as grocers, hardware stores, and consumer appliance and electronics stores, had strong sales, and some faced higher demand than they could meet.\nTravel and tourism improved moderately since our last report but were soft compared to last year. Hotels and vacation rentals in some areas reported high occupancy, spurred by leisure travel, particularly in the drivable market. However, business travel remained low, and event venues were hit by lack of conventions, which they anticipated would hurt business for some time. Meanwhile, restaurants continued to struggle as they operated at reduced capacity, and some shut down because of virus spikes or fear of vandalism. Attractions, theaters, and performing arts groups struggled as many remained closed and those that opened had soft demand.\nReal Estate and Construction\nFifth District home sales increased modestly since our last report. Realtors said business picked up after some softness in recent months. Contacts reported that demand exceeded supply, partially because listings were low, as people were still reluctant to show their homes. Days on the market decreased, and low interest rates boosted sales. Realtors noted particularly strong demand for lower priced homes, but low listings caused some customers to shop in higher price ranges than they had originally planned. New construction continued, but starts were delayed due to the remote work and distancing policies of local agencies.\nCommercial real estate leasing increased modestly but remained soft compared to pre-pandemic levels. Rental rates were somewhat lower, but contacts said buyers were not getting the low prices they expected. Retail remained weak as some stores and restaurants closed permanently. Office leasing was modest, and several tenants asked for short-term lease renewals in order to allow them to re-evaluate their use of and need for office space. Industrial leasing remained strong, and one broker expected a continued rise in industrial leasing to allow companies to hold more inventory. Multifamily leasing was somewhat soft, and some landlords increased concessions to attract tenants.\nBanking and Finance\nOverall, loan activity picked up slightly for this period. Respondents reported higher residential mortgage growth and strong demand for mortgage refinancing. On balance, conventional commercial lending declined moderately, although demand improved slightly in Fifth District states that reopened earlier. Auto lending remained below year-ago levels. Deposit growth continued to be strong, despite lower rates on interest-bearing accounts, driven mainly by proceeds from federal aid disbursements. Delinquency rates remained low, but a few financial institutions reported being more cautious in terms of their underwriting in light of the pandemic.\nNonfinancial Services\nNonfinancial services firms reported moderate declines in demand and revenues in recent weeks. Several contacts who engaged in business to business services, such as consulting, employee training, and marketing, said that their clients have reduced spending as a result of their own revenue declines. A few others said that revenue was down because they could not attend conventions and events, which typically generate new business for them. Lastly, an executive from a firm that provides services to federal government agencies expressed concerns that budget cuts would result in reduced demand in 2021 after current contracts expired.\nFor more information about District economic conditions visit: www.richmondfed.org/research/data_analysis\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJuly 15, 2020\nSummary of Economic Activity\nEconomic activity has rebounded sharply since late May; however, overall conditions remain significantly depressed and the pace of recovery appears to have slowed since mid-June. Contacts reported reopening and bringing back furloughed workers, but the pace has been uneven across firms and sectors. General retailers, auto dealers, and hospitality contacts report increases in business activity, while manufacturing contacts reported little change. Homes sales increased sharply while construction activity was mixed. In comparison with our previous report, the outlook among contacts is slightly more pessimistic while also much more uncertain.\nEmployment and Wages\nEmployment continued to increase at a robust pace. However, the pace of recovery has slowed through the reporting period and the level of economic activity remains depressed. Businesses have begun to reopen and bring back furloughed workers, but recovery has been uneven across firms and sectors. Small businesses have been slow to recover; one staffing contact reported small firms were \"decimated,\" estimating that 5% of their small clients had filed for bankruptcy and expecting up to 25% to do so by the end of the year. Businesses that support other businesses, such as wholesalers and intermediate-goods manufacturers, have also been slow to recall workers in the face of weak demand. Some firms reported difficulty hiring back low-wage workers, attributing it to continued health concerns and unemployment benefits. Other firms, especially larger ones, have increasingly laid off workers as they reassessed how long the recovery will take and whether they should downsize permanently.\nReports on wage growth have been mixed. Some firms have increased wages for low-wage workers to entice them to return to work and forgo unemployment benefits; however, other contacts reported reducing hazard pay. A payroll contact reported that half his clients who had previously cut wages had returned them to pre-March levels. Other firms have reported cutting nonwage benefits, such as matching 401K contributions, to control costs. One contact emphasized a systemic lack of \"normal\" raises and bonuses.\nPrices\nPrices have increased slightly since the previous report. The majority of contacts reported little to no change in input prices. However, many manufacturing and healthcare contacts reported somewhat higher input prices. Contacts reported robust growth in some commodity prices, such as coal, lumber, and shredded scrap; however, most prices remain lower than one year ago. Prices for crops have decreased moderately since the previous report. Some crop prices have risen robustly, but others such as those for wheat have decreased significantly. Although the price of corn has increased moderately since the previous report, the price has decreased significantly year-over-year. This has been largely triggered by lower demand for ethanol. The trucking industry has increased prices for services slightly since the previous report.\nConsumer Spending\nConsumer spending activity remains far below typical levels, though general retailers, auto dealers, and hospitality contacts reported increases in business activity since our previous report. Seasonally adjusted credit and debit card spending in most District states increased from the end of May to mid-June. Most general retailers indicate that activity in May has exceeded low expectations and they had reported an optimistic outlook prior to the recent surge in new coronavirus cases. Many restaurants continue to struggle under modified business models, and some indicate that they may not be able to stay open much longer if business conditions do not improve. Auto dealers reported strong sales in June, with some firms reporting year-over-year increases. St. Louis-area hotel contacts reported that occupancy has increased since the beginning of May but remains significantly depressed. Hospitality contacts do not expect business to return to typical levels until 2022.\nManufacturing\nManufacturing activity is little changed since our previous report. Survey-based indices showed slight improvement in overall manufacturing activity in Arkansas and Missouri from May to June. New orders and production increased modestly in both states, the first signs of growth since February. Contacts in steel and printing industries reported no change to production because of limited demand; both are still producing at about two-thirds capacity. One contact reported extending planned shutdowns past the Fourth of July, resulting in the furloughing of some workers; another contact reported having recently laid off a few workers.\nNonfinancial Services\nActivity in the services sector has improved since the previous report. Job vacancies decreased uniformly across the District in nonfinancial services firms by approximately 10 percent year-over-year. Staffing contacts reported that professional service sector positions have increased halfway to pre-pandemic levels and very few contractors have been laid-off in recent weeks. A hospital contact reported volumes for inpatient services has increased faster than anticipated. Reports from contacts at airports in the District noted steady recoveries. Passenger traffic has more than doubled since our previous report. However, levels compared with last year remain severely depressed. Contacts reported that cargo traffic remains steady and is only down in some airports by only 1.5 percent compared with last year. Trucking contacts noted small increases in revenue due to price and hauling increases.\nReal Estate and Construction\nResidential real estate activity has sharply increased since the previous report. Pending home sales in early June improved from their lows in April, and some contacts reported new sales above levels relative to last year. Home showings in early June were up relative to one year ago across most states in the District. Inventory levels remained very low throughout the District, and contacts reported increased competition for available listings, with sales exceeding the asking price. A contact in St. Louis reported an increase in in-person showings and closings. A contact in Memphis noted that some businesses were downsizing their office real estate as they moved toward permanent remote-work arrangements. Construction activity was mixed in late May and early June as businesses reported either no change or a decrease in weekly operating revenue in June relative to prior weeks. A contact in St. Louis reported a slowdown in invoice payments from customers, suspecting that customers were looking for ways to conserve cash.\nBanking and Finance\nReports from District banks indicate a strong increase in demand for banking services. Demand for commercial and industrial loans has increased sharply, while residential real estate and consumer loan volumes modestly increased. Low interest rates spurred many customers to refinance mortgages, providing new fee income to bankers. In addition to mortgage closings, PPP loans and other incentives have provided additional liquidity. However, banking contacts have expressed concerns about profitability due to the expectation of a longer-term low-rate environment and higher delinquency rates. As a result, many bankers have reduced deposit rates to offset margins.\nAgriculture and Natural Resources\nDistrict agriculture conditions remain unchanged relative to the previous reporting period. Between the end of May and end of June, the percentages of corn and soybeans rated fair or better increased modestly, while the percentages of cotton and rice decreased modestly. The percentages of corn, rice, and soybeans rated fair or better are significantly above their values a year ago, while the percentage of cotton rated fair or better slightly decreased. Agriculture contacts have indicated that, in the past month, agribusinesses have not experienced significant shortages or slowdowns in demand and have remained open due to their essential status. However, there is some concern that additional financing may be necessary to bridge gaps in cash flows if the overall economic slowdown is prolonged.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"July 15, 2020\nSummary of Economic Activity\nNinth District economic activity was mixed since the previous report, with declines in most sectors, despite some improvements due to emergency federal stimulus and gradual reopening of state economies in the District. Employment rose from very contracted levels, wage pressures were flat, and price pressures remained minimal. The District economy saw growth in consumer spending and tourism, but decline in services, construction and real estate, manufacturing, energy, and mining; agricultural conditions remained poor.\nEmployment and Wages\nEmployment rose since the last report, but from very contracted levels, and labor markets remained volatile. Solid employment gains were seen in May, and a variety of sources suggested a continuation in June. The lifting of pandemic-related restrictions on many businesses allowed increased hiring and callbacks of laid-off workers in many sectors. Ad hoc polls in June by the Minneapolis Fed showed that slightly more firms were hiring than those that were cutting staff. A staffing contact in North Dakota said job orders have been \"much better\" since hitting lows in April. Volatility remains in the labor market, however. Announcements of temporary and permanent mass layoffs rose notably in June in Minnesota and Wisconsin after slowing significantly in May. Initial unemployment claims fell in June across the District compared with April and May levels, but remained significantly elevated. Monthly job postings plummeted across the District in May, but there was some evidence of stabilizing in June. Numerous sources noted that seasonal hiring over the summer would remain well below normal levels. A contact in the Bakken region of North Dakota reported that energy-related firms \"would not try to save their employees\" as they had during the downturn in oil prices five years ago, and that wide-scale layoffs had begun \"and will continue at a fairly expedited rate.\" A workforce contact in northern Minnesota said that some businesses expected somewhat higher permanent layoffs than they were communicating publicly with employees.\nWage pressures were flat overall since the last report. Ad hoc polls by the Minneapolis Fed found that a majority of employers have made no changes in wages since the onset of the pandemic; slightly more reported wage decreases than those reporting increases. Faced with budget deficits, some local governments have reportedly instituted furloughs or negotiated wage cuts, or both. However, some firms that have enjoyed strong demand during the pandemic have increased wages. A discount retailer raised its starting wage from $13 to $15 an hour, and a second discount retailer gave its Minnesota employees a $5 million bonus for working through the pandemic\u2014the third such bonus in as many months. A major health care provider in Minnesota also ended furloughs and pay cuts to most workers after demand rebounded faster than anticipated.\nPrices\nPrice pressures remained minimal. The majority of respondents to a recent poll of Ninth District firms in a diverse mix of sectors reported no change in prices charged for their products and services in the second quarter of 2020 relative to a year earlier; of the remainder, more reported decreases in prices than increases. Contacts reported slightly more pressure on input prices. Manufacturing contacts generally reported flat or decreased input prices, with the significant exception of personal protective equipment, which remained in tight supply. Retail fuel prices in District states have climbed appreciably since the previous report, though they remain below their prepandemic levels. Prices received by farmers in May were mixed.\nConsumer Spending\nConsumer spending improved since the last report, boosted by recent federal stimulus and the reopening of many businesses closed by the pandemic. But overall levels remained depressed. Numerous sources reported that consumer-facing businesses (e.g., retail, restaurants, and bars) were seeing increased traffic compared with May. But most were still well below normal seasonal activity, and even below restricted capacities. A Minnesota mall said it was seeing about one-quarter of its normal shopper activity in June. Tourism contacts in Minnesota and Montana confirmed that the majority of large events booked for the second half of the year have been canceled; one contact called it a \"rolling cascade.\" June traffic across the Mackinac Bridge into Michigan's Upper Peninsula was down 18 percent over a year earlier, an improvement over May crossings, which plummeted by 37 percent.\nMotor vehicle sales were strong. A dealership with multiple locations in the western part of the District saw sales growth of 15 percent or more in May and June. Sales of recreational vehicles were also healthy. Data on motor vehicle sales taxes and title registrations showed similar upticks in Minnesota and Wisconsin. Passenger screenings in June at the eight largest District airports roughly doubled over the previous month, but remained 75 percent below last year. Airport contacts said that leisure travel was returning faster than business travel.\nServices\nProfessional services firms reported decreased activity since the last report. Contacts in advertising and marketing reported that clients had curtailed spending as they sought to hold on to cash. Vendors providing displays, food, or logistics services to support convention, exhibition, and entertainment events continued to report a severe contraction in demand. Contacts in trucking and logistics reported steady business overall, with variation depending on customer base.\nConstruction and Real Estate\nCommercial construction was down moderately overall. The value of May construction starts across District states rose compared with April, but was notably down from 2019. The number of active projects was also trending modestly lower through the end of June. Minnesota construction contacts reported flat or falling levels of new projects out for bid. Recent permit activity showed signs of slowing, particularly in the city of Minneapolis, though not everywhere. Numerous sources also said more firms were competing for available work. Residential construction fell modestly overall, due mostly to a sizable drop in single-family permits in Minneapolis-St. Paul; increases were seen in St. Cloud, Minn., Bismarck, N.D., and Rapid City, S.D.\nCommercial real estate fell moderately since the last report. Office space was under pressure given the slower economy and delayed return of remote workers to central business districts. Traditional retail space remained under tremendous strain. A major retailer closed six locations across the District. A Minnesota mall reported that many tenants were still closed in late June. Those that were open \"are really struggling, nowhere near break-even,\" and leases for virtually all tenants had been altered or renegotiated. Residential real estate was down across the District, according to the most recent (May) sales data available at deadline. Most regions saw double-digit declines in closed home sales compared with last year, with many reaching 20 to 30 percent.\nManufacturing\nManufacturing activity contracted slightly since the last report. An index of manufacturing conditions indicated decreased activity in June compared with a month earlier in Minnesota; the index for North Dakota and South Dakota rebounded to a slightly expansionary level. Some contacts reported strong demand in the plastics sector and supporting industries due to the need for personal protective equipment. However, numerous other contacts reported a marked slowdown in new orders as customers remained in \"wait-and-see\" mode. \"Our order books have never had fewer future demand orders,\" noted a custom manufacturer, who added that its existing demand was \"nearly immediate.\"\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained poor. Producers reported that disruptions in trade with China were creating \"headwinds\" in grain markets. Recent declines in milk prices dealt a blow to already suffering dairy producers. In contrast, the majority of the District's corn and soybean crops were in good or excellent condition as of late June. Oil and gas activity continued to decline even as crude prices rebounded somewhat. The number of active drilling rigs in the District as of late June was down sharply again from the previous reporting period. Multiple District iron ore production facilities remained shuttered as demand for steel was low.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJuly 15, 2020\nSummary of Economic Activity\nAfter a sharp contraction in previous months, Tenth District economic activity rebounded slightly in June. Expectations also improved, and contacts in most sectors anticipated higher levels of activity in the months ahead. Consumer spending increased modestly, with stronger retail, restaurant, auto, and tourism sales. Manufacturing activity expanded slightly, driven by gains at non-durable goods plants. Sales also picked up in the transportation and wholesale trade sectors, although transportation activity remained well below year-ago levels. Professional and high-tech services contacts continued to report lower sales, and additional declines were anticipated in the months ahead. Residential real estate activity increased moderately as home sales, prices and construction activity rose. However, commercial real estate activity dropped further. Energy activity also continued to decline, and contacts expected oil prices to remain below the price needed to substantially increase drilling for more than a year. The agriculture sector remained weak, but all meat-packing plants were operational by late June. District employment started to recover, with the most significant gains in the retail, restaurant and tourism sectors. Despite recent improvement, employment still remained well below year-ago levels in several sectors. Wages rose modestly, and prices increased across most District sectors.\nEmployment and Wages\nDistrict employment started to recover in June after declining in the previous two survey periods. The most significant gains occurred in the retail, restaurant, and tourism sectors, with retail employment approaching year-ago levels. However, several industries reported employment levels that were still sharply below a year ago including transportation, tourism, restaurants and durable-goods manufacturing. Overall, employment was anticipated to increase slightly in the months ahead, but expectations were varied across industries.\nLabor shortages were not an issue for the majority of respondents, but some contacts reported shortages for truck drivers, skilled technicians, and restaurant workers. Wages rose slightly, and modest gains were expected in the coming months.\nPrices\nInput and selling prices rose in June, and modest price increases were expected in both the services and manufacturing sectors in the months ahead. Retail contacts noted moderate growth in both input and selling prices and expected additional increases going forward. Both input and selling prices rose sharply in the restaurant sector and similar price growth was anticipated in the next few months. Construction supply respondents noted a modest rise in selling prices. Selling prices continued to decline in the transportation industry, but input prices rose moderately. Raw materials prices edged up in the manufacturing sector, while the prices of finished products rose slightly.\nConsumer Spending\nConsumer spending picked up modestly since the last survey period after plummeting in previous months. Sales increased for auto, restaurants, tourism, and retailers as many businesses reopened to consumers. Despite improved auto, restaurant and tourism sales, activity remained well below year-ago levels. However, retail activity was up from a year ago, driven by higher sales at grocery stores and building and garden supplies retailers. Health services sales continued to contract, but at a slower rate compared with previous months. A majority of firms reported receiving loans from the SBA PPP program, and most contacts indicated that these loans helped prevent layoffs and cover costs related to the pandemic. Expectations for all consumer spending sectors rose considerably after historically low expectations a few months ago.\nManufacturing and Other Business Activity\nManufacturing activity expanded slightly in June after steep decreases for three straight months. The increase in activity was driven by an uptick at non-durable goods factories, including sharply higher production at food and beverage manufacturing plants. Activity at durable goods factories, especially for primary and fabricated metals, continued to decline, but at a slower pace than in previous months. Production and new orders increased slightly but remained well below year-ago levels. Over 75 percent of factory contacts reported applying for the SBA PPP program, and most indicated that those loans prevented some layoffs and furloughs. Expectations for future activity increased, though capital expenditures plans and expectations for new orders for export remained subdued.\nOutside of manufacturing, sales increased in the transportation and wholesale trade sectors. Wholesale trade sales were near year-ago levels, but transportation sales remained significantly below year-ago levels. Sales dipped further at professional and high-tech services firms, and were below levels a year ago. Contacts in the transportation and professional and high-tech services sectors anticipated fewer sales and capital expenditures in the months ahead. By contrast, expectations among wholesale trade contracts rebounded, with contacts expecting significantly higher sales moving forward.\nReal Estate and Construction\nResidential real estate activity expanded moderately in June, while commercial real estate activity declined modestly. Residential sales increased moderately as stay-at-home orders were lifted, and contacts were optimistic about strong sales in the months to come. Inventories fell further, and were sharply below year-ago levels. Home prices increased moderately and were expected to increase further as sales strengthen and inventories remain low. Residential construction activity rose modestly and construction supply firms noted a slight increase in sales, with one contact noting a surge in sales for deck supplies. Commercial real estate conditions deteriorated further as vacancy rates increased significantly, while absorption, sales, and prices declined. Many contacts noted that access to credit had become more difficult in recent months, and one respondent reported that retail leasing was particularly challenging.\nBanking\nBanking contacts reported a slight decrease in overall loan demand in recent weeks including a slight decrease in consumer loan demand, a modest decrease in commercial real estate loan demand, and a moderate decrease in commercial and industrial loan demand. However, the demand for residential real estate loans increased sharply since the last survey. Bankers reported that credit standards tightened across all loan categories. Loan quality decreased slightly compared to a year ago, but a sharp deterioration was expected over the next six months. Deposit levels rose at a strong pace, with deposits from stimulus checks and the SBA PPP program playing a large role.\nEnergy\nDistrict energy activity collapsed further in June, with sharp drops in revenues, profits and employment. The number of active oil and gas rigs in the District also continued to decline as firms shut-in additional wells to ease production levels. The oversupply of oil combined with weaker demand due to the global pandemic continued to curb regional oil production and well-head prices. Contacts expected oil and gas prices to rise modestly in the months ahead, but prices were expected to remain below the level needed for a substantial increase in drilling for more than a year. Additional deterioration was anticipated in the energy sector, although the pace of declines was expected to moderate. Despite weak conditions, over two-thirds of energy contacts reported that they could survive for more than a year if current revenue levels persisted.\nAgriculture\nThe Tenth District farm economy remained weak despite some signs of stabilization in markets for key agricultural commodities. By late June, all U.S. meat packing plants were operational, but COVID-19 continued to impede supply chain functions. Capacity utilization and meat production at packing plants increased slightly since May, but appeared to remain limited somewhat by modified operations. Alongside production constraints, demand for meat was expected to decrease in 2020 as a result of broader economic weaknesses, putting additional downward pressure on cattle and hog prices. Ethanol production rebounded slightly in June, but remained about 20 percent lower than a year ago and continued to weigh on corn prices. District contacts reported that farm borrower liquidity weakened considerably alongside lower commodity prices, but government aid programs could provide a moderate degree of support to agricultural credit conditions.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"July 15, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District increased strongly in late May and June, but remained well below its pre-pandemic level. Contacts expected further growth in activity in the coming months, but most did not expect a full recovery until at least the second half of 2021. Employment, consumer spending, and manufacturing increased substantially, while business spending and construction and real estate activity increased modestly. Wages edged up, prices declined slightly, and financial conditions deteriorated modestly. The pandemic continued to weigh on agriculture incomes.\nEmployment and Wages\nEmployment increased substantially from a very low level over the reporting period, with gains spread widely across industries. Many contacts who received a Paycheck Protection Program (PPP) loan continued to indicate that the program was helping them avoid layoffs. A number of contacts said that their ability to retain workers after the PPP money ran out depended heavily on future demand. Manufacturers facing slowdowns reported further use of downtime to carry out maintenance or do productivity enhancing projects. Some auto dealers reported selling a large number of vehicles while employing far fewer workers. Several contacts again commented that generous unemployment benefits were making it difficult to bring payrolls back to desired levels. Wages edged up across skill levels. Benefits costs also ticked up.\nPrices\nPrices declined slightly overall in late May and June, though contacts expected modest increases over the next 12 months. Retail prices decreased modestly on balance. There were noticeable declines for apparel, but food and beverage prices rose, particularly for beef. Producer prices edged down. Input prices were largely unchanged, with the exception of shipping costs, which increased modestly.\nConsumer Spending\nConsumer spending increased substantially as many establishments were permitted to reopen. The rebound generally exceeded contacts' expectations. Nonauto retailers saw gains in all sectors. Contacts noted that the home improvement, home furnishings, food and beverage, and sporting goods sectors continued to be strong. Apparel was selling, but only with very generous promotions. Vehicle sales moved up sharply, and dealerships' service departments continued to work through backlogs that had built up while stay-at-home orders were in place. Contacts reported large increases in boat and RV sales. Most contacts in the leisure and hospitality sector were open, but sales remained well below pre-coronavirus levels. For example, casinos in Iowa were allowed to reopen at 50 percent capacity, a level that reportedly matched demand. In contrast, movie theaters in most of Michigan were required to stay closed. Contacts expressed great uncertainty about the path of consumer spending over the rest of the year, especially for the holiday season.\nBusiness Spending\nBusiness spending increased modestly in late May and June. Retail inventories were generally above desired levels, particularly for apparel, though there were reports of low inventories of light trucks, boats, and RVs. A number of manufacturers said that inventories were higher than desired. Capital expenditures increased slightly, but many contacts continued to say they had pulled back on spending plans for the year. Contacts again indicated they were making major changes in work environments to protect employees against the coronavirus, but noted cost offsets from lower travel and entertainment spending. Freight transportation increased modestly, but remained at a low level. Commercial and industrial energy consumption increased moderately, with the largest growth in manufacturing.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly on balance over the reporting period, but remained subdued. Residential construction decreased slightly. One contact reported a pullback in speculative single-family construction. Residential real estate activity increased moderately from a very low level, with gains concentrated in the starter home segment. Contacts continued to report that low inventories were supporting prices. Nonresidential construction decreased slightly on net, with much of the activity representing work on projects in progress before the pandemic. Commercial real estate activity was little changed and the market remains highly distressed. Industrial properties had the highest percentage of on time rent payments, while many tenants in the retail, restaurant, and hospitality sectors had asked for forbearance through at least the end of the summer. Retail and restaurant store closures were reportedly accelerating. Rents moved down, while vacancies and sublease space increased.\nManufacturing\nManufacturing production increased strongly in late May and June, but remained well below where it was before the pandemic began. Auto production increased very sharply from a very low level as both assemblers and suppliers reopened. However, some contacts in the industry were concerned that the rising number of COVID-19 cases in parts of the US could result in new plant shutdowns. Steel production increased moderately, led by increased demand from the auto and oil and gas industries. Demand for heavy machinery picked up, but remained weak. Orders from specialty metals manufacturers increased moderately on balance, with reports of steady demand from the defense sector and increases from the medical and food manufacturing sectors. Manufacturers of building materials reported a moderate increase in shipments.\nBanking and Finance\nFinancial conditions deteriorated modestly during the reporting period. Participants in the equity and bond markets reported little change in prices on net, but volatility remained elevated. Business loan demand decreased moderately as activity related to the PPP slowed. Many contacts reported large increases in businesses' cash deposits. Contacts said there was some interest in the Federal Reserve's Main Street Lending Program, but that many businesses had access to cheaper credit elsewhere. Business loan quality deteriorated moderately, particularly in the leisure and hospitality, commercial real estate, and health care sectors. Contacts noted that deferrals and the PPP had helped prevent delinquencies for many clients. One contact said that most clients appeared to have sufficient liquidity to make it into the fall. Business loan standards again tightened moderately. Consumer loan demand decreased modestly, though demand for mortgage refinancing remained strong. Loan quality again deteriorated slightly. Contacts noted that delinquencies were limited because they were granting deferrals. One contact said that roughly half of their deferrals had been to households that may struggle to resume loan payments once the current 60 to 90 day deferral period was over. Consumer loan standards tightened modestly.\nAgriculture\nThe COVID-19 pandemic continued to weigh on agriculture incomes. That said, farm incomes received a boost from some commodity price increases and CARES Act payments. Corn and soybean prices moved up after a USDA report that the number of corn acres planted was smaller than expected. Following a smooth planting season, corn and soybean crops were off to an excellent start. Specialty crops were also in decent shape. Meat production rebounded to levels near that of a year ago as packing plants reopened and began running extra shifts. Nevertheless, contacts reported a large backlog of hogs to slaughter. Cattle and hog prices fell and were below year ago levels. Milk prices at the farm gate stayed below last year's levels in spite of some upward movement in dairy prices. Cheese demand surged, pushing prices to high levels. Ethanol margins widened, but some facilities remained closed and others were operating below full capacity. Demand for sites to locate renewable energy assets, recreational ground, and rural housing helped keep farmland values mostly stable.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"July 15, 2020\nSummary of Economic Activity\nAfter declining sharply in March and April, the Fourth District economy expanded in recent weeks as some firms resumed business operations. Contacts across most industry segments reported a rebound in activity during the early phases of reopening, although many suggested that the pace of improvement slowed as the reopening progressed. Most were also careful to point out that demand remained well below pre-pandemic levels despite the recent gains. Looking forward, contacts generally expected activity to pick up further in coming months. However, some questioned the sustainability of the pace of recovery amid a spike in new COVID cases across the country along with weak new orders and declining backlogs in some key industries. That uncertainty likely contributed to softness in capital spending and hiring plans. More than 40 percent of contacts cut capital spending plans since the last report, while less than 10 percent planned to spend more. Contacts across a wide array of industries indicated they were bringing idled workers back only slowly, and are unlikely to rehire all of them in the near term. Wages, nonlabor costs, and selling prices were generally flat-to-down.\nEmployment and Wages\nLabor demand remained soft across most industry segments even as more of the District's economy came back on line. Half of contacts reported that staffing levels had not changed over the past two months, while the share reporting staff reductions was slightly larger than the share that reporting staff additions. Firms indicated that weak demand for their goods and services was the primary factor constraining hiring, but contacts also suggested that hiring was inhibited by workers' persistent fears of contracting the virus, a lack of child care, and generous unemployment insurance benefits.\nWages remained mostly flat as nearly three-quarters of contacts reported no change in the past two months. Many firms instituted formal pay freezes at the onset of the pandemic, while others temporarily put off merit increases until they were more confident in the sustainability of the recovery. More firms reportedly cut worker pay since the last report (particularly for higher salaried employees) and asked workers to take unpaid leave. Where wage increases were noted, contacts indicated that they were due to increased overtime and bonuses or COVID-related \"hazard\" pay.\nPrices\nNonlabor input costs were flat to down since the last report. Manufacturers reported that prices for important inputs such as steel and petroleum-related products were mostly flat to down in recent weeks amid weak global demand and excess inventories, while freight haulers indicated that lower fuel prices had offset higher insurance costs. Contacts generally expected nonlabor costs to move higher in coming months as the economic recovery proceeds. With weak demand and little upward pressure on wages and other input costs, selling prices were mostly flat-to-down as well. Contacts in retail, transportation, and professional and business services were more likely to report increases in selling prices than those in manufacturing and construction. Still, the price increases were not material and often reversed declines recorded in previous periods.\nConsumer Spending\nRetail spending increased for most contacts since the previous report, although it was still below the pre-pandemic level. Automotive and apparel contacts generally indicated that demand had increased more than expected early in the reopening, and one tourism contact noted that hotel room bookings edged up as youth sports activity resumed. Some restaurants found success by continuing to focus on carryout and delivery even as dine-in restrictions were eased. However, some retailers have experienced very little recovery since the initial shutdown, and rising COVID cases have forced restaurants in a few areas to curb operations again. Overall, contacts are cautiously optimistic that consumer spending will continue to recover in coming months.\nManufacturing\nManufacturing conditions improved modestly since the last report. Contacts indicated that manufacturing output reached its trough in mid-April and has been increasing since then. Firms that experienced an uptick in demand attributed this increase to more of their customers resuming operations, particularly in the District's auto industry. Despite the general improvement, demand remained below pre-pandemic levels overall and was particularly weak in the District's aerospace sector. Moreover, several contacts indicated that new orders were uneven and failed to keep pace with shipments, leading to shrinking backlogs. Nearly two-thirds of contacts expected demand to increase in the coming months, yet more than half suggested that they had decreased planned capital expenditures in order to preserve cash.\nReal Estate and Construction\nOverall construction activity stabilized since our last report. However, conditions varied widely under the surface and contacts expressed concerns about the sustainability of the industry's recovery. Homebuilders reported stronger-than-expected new-home sales in May and June as buyers returned to the market as social distancing restrictions were eased. In addition, low mortgage interest rates encouraged undecided buyers to \"get off the fence.\" Residential realtors suggested that demand for existing properties was robust as well, but a shortage of listings constrained sales. Both builders and realtors expected demand for single-family properties to remain firm in the near term, but several worried that conditions could change in the fall if high unemployment persists.\nNonresidential construction rebounded as delayed projects in some areas were restarted. However, several nonresidential builders indicated that there were few new projects entering the pipeline and that backlogs were being worked down, raising concerns that activity may weaken in the fall. Meanwhile, nonresidential real estate activity remained weak. Commercial realtors reported that overall demand for space was flat to down as softness in office and retail more than offset some strength in light industrial. Landlords continued to express concerns about cash flow as more of their tenants, particularly small businesses, come under financial strain.\nFinancial Services\nBankers reported that overall activity was slowly returning to normal in recent weeks. Contacts suggested that demand for business loans, particularly Paycheck Protection Program (PPP) loans, slowed substantially after large increases in March and April. One large regional bank reported that customers who had drawn down existing credit lines and revolving loans had begun to pay those loans back more quickly than anticipated. Deposit levels remained elevated as clients held on to cash from preemptive line-of-credit drawdowns, disbursements of PPP loans, and government stimulus checks. Most contacts reported that delinquency rates remained relatively low, but several expressed concern that delinquencies may increase when PPP funds run out and government-provided assistance diminishes. Demand for purchase mortgages increased as stay-at-home orders were eased, and mortgage refinancing activity remained high.\nProfessional and Business Services\nActivity in professional and business services increased at a modest pace since the previous report, although it remained muted compared to a year earlier. As businesses continued to reopen, demand for payroll and other administrative services was returning, as was demand for marketing services. Technology companies that focus on work from home solutions have also seen an increase in demand as businesses prepare for possible future disruptions. Optimism increased significantly among contacts in the technology industry, as businesses will likely require many third party services in order to thrive in the \"new normal\" work environment.\nFreight\nThe vast majority of transportation contacts reported an increase in freight demand in recent weeks. This pickup coincides with a resumption of manufacturing activity in the District as well as continued gains in shipments from grocers. One contact said that demand from grocers was 40 percent higher than prior to the pandemic, which offset weaker demand from some other sectors. By contrast, a few haulers were forced to accept below-cost shipments to maintain cash flow. Looking forward, two-thirds of transportation contacts expected demand to increase in coming months. At the same time, many were concerned about the potential for a second wave of COVID-related shutdowns which may disrupt shipments later in the summer and into the fall.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"July 15, 2020\nSummary of Economic Activity\nOn balance, economic activity in the Sixth District remained weak from mid-May through June. Labor markets improved somewhat as businesses in parts of the region reopened. Nonlabor costs remained subdued. Reports from retailers noted strong consumer demand and increased sales of automobiles. Tourism contacts reported that attractions and hotels had begun to reopen, but revenues and employment levels were expected to be constrained by mandated capacity limits. Demand for residential real estate strengthened and inventory levels fell resulting in upward pressure on home prices. Commercial real estate market conditions were mixed. Manufacturing activity declined, and reports on new orders were mixed. Financial institutions reported a deterioration in conditions as COVID-19 impacted some firms' credit. Overall commercial loan growth was slow and consumer lending remained soft.\nEmployment and Wages\nLabor conditions improved modestly since the previous report. Some firms reported slowly recalling workers and increasing hours as demand increased, while others remained in a holding pattern. Many of those bringing employees back indicated staffing was not back to pre-pandemic levels. While some employers reported taking measures to cut less productive processes and employees, others were able to acquire more skilled and productive staff due to greater talent availability. Although some remote workers returned to the office, many firms indicated success with remote arrangements and noted they will continue this stance for the near term and possibly beyond. Some employers remained committed to maintaining employment levels and plan to reduce hours, wages, and possibly benefits to maintain those levels; however, most indicated that demand will determine staffing levels in the second half of the year. As the support from the Paycheck Protection Program winds down, many employers indicated that they will be forced to lay off workers should business remain weak.\nContacts continued to report wage and salary cuts, except at the low-end of the pay scale and among essential workers. Reports on the disincentive to work from receiving unemployment insurance benefits were mixed.\nPrices\nContacts continued to note muted input costs and little to no pricing power. Though many described rising costs associated with sanitation practices and Personal Protective Equipment used to protect employees and clients from COVID-19, most reported an inability to pass along these additional costs. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs remained steady, on average, at 1.2 percent in June. Year-ahead expectations increased somewhat to 1.7 percent.\nConsumer Spending and Tourism\nRetailers reported healthy demand as many stores reopened. While some noted that there was still uncertainty clouding their outlook, expectations are for sales and margins to improve over the remainder of the year. Auto dealers reported increased sales activity since the last report.\nTourism and hospitality contacts noted that they have begun to reopen hotels and attractions in accordance to recommended guidelines. However, business capacity will be constrained by social distancing requirements which will continue to negatively impact both revenue and employment.\nConstruction and Real Estate\nDistrict housing market conditions improved significantly over the reporting period. Pent-up demand and low interest rates accelerated home sales. In many markets, home inventories contracted significantly, creating strong upward pressure on home prices. Despite low interest rates, affordability remained a concern as median home prices continued to reach new highs in several markets. The limited supply of existing homes increased demand for new homes. 30-day delinquencies rose sharply, especially in South Florida markets, despite a surge in forbearances.\nCommercial real estate (CRE) contacts reported continued challenges associated with the effects of the COVID-19 pandemic. Hard hit sectors like retail and hospitality reported some stabilization as local economies reopened; lower-price point hotel brands saw improvements in occupancies and values from record lows in May through early June. Multifamily owners reported minor softening in occupancies and were offering greater concessions to minimize lease turnovers. There were growing reports of tenants and borrowers seeking relief. Investment activity was muted compared with pre-COVID-19 levels. Contacts reported that capital was readily available at banks; however, underwriting criteria tightened for the financing of operating CRE projects, and originations continued at a subpar pace. Contacts reported that high-quality asset values declined marginally, and hospitality and retail sector assets declined at a more accelerated pace since the beginning of the pandemic.\nManufacturing\nManufacturing contacts indicated that overall business activity decelerated, but at a somewhat slower pace than the previous report. While most firms reported decreases in new orders and production levels, a modest rise in new orders was noted by a few contacts. Purchasing managers suggested that supplier delivery times were getting longer as some supply chain disruptions continued. Contacts also cited a decline in finished inventory levels. Expectations for future production levels declined, with only one-fifth of contacts expecting higher production levels over the next six months.\nTransportation\nTransportation activity was largely unchanged since the previous report. Class I railroads saw slight improvements in volumes; however, total rail traffic remained substantially weak. Short-line railroads noted declines in shipments of autos and increases in aggregates and building materials. Ports experienced a significant reduction in auto imports and container traffic was down. Inland barge companies cited modest improvements in demand, but movements of energy products were soft as refineries continued to operate below capacity.\nBanking and Finance\nConditions at financial institutions deteriorated over the reporting period due to credit issues related to the COVID-19 pandemic. Provisions for loan loss reserves increased significantly for most institutions, in preparation for increased charge-offs once forbearance periods end, exerting downward pressure on earnings. Additionally, lower short-term interest rates further compressed net interest rate margins. Loan growth remained muted with most centered on approvals of new loans under the Paycheck Protection Program. Except for first lien residential mortgages, consumer loan growth was flat partly due to tightening credit standards. Liquidity remained healthy as deposit levels increased.\nEnergy\nEnergy industry contacts continued to report weak demand, oversupply, and constrained global storage capacity for crude oil, liquefied natural gas, and refined products such as distillates. Oil and gas producers noted that they expect U.S. oil production to take one to two years to return to pre-COVID-19 levels. Fuel distributors reported little to no demand from municipalities, transit authorities, school systems, and airlines, while demand from food wholesalers and grocers remained solid. Utilities in the region indicated that reductions in demand were not as large as anticipated in the first quarter. While utilities contacts noted that planned capital investments will continue through 2021, other energy sectors reported delayed or cancelled projects, cuts to budgets, and layoffs, some permanent, over the same period.\nAgriculture\nAgricultural conditions remained weak. Mostly drought-free conditions prevailed. On a month-over-month basis, June's production forecast for Florida's orange crop was down from the previous month and last year, while Florida's grapefruit production forecast was down from the previous month but remained ahead of last year. The USDA reported that in May, year-over-year prices paid to farmers were up for rice, soybeans, and eggs but down for corn, cotton, cattle, broilers, and milk. On a month-over-month basis, prices increased for cotton, rice, cattle, and broilers but decreased for corn, soybeans, eggs, and milk.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"July 15, 2020\nSummary of Economic Activity\nEconomic activity picked up somewhat in the second half of May and June, according to First District business contacts, but largely remained well below year-earlier levels. Retailers reported increased sales in June, with some online purchases exceeding June 2019. Tourism contacts cited much-improved summer bookings in coastal areas compared with cancellations in April and May. Manufacturing results were mixed, but most reported rising revenues. Software and information technology services firms said their businesses were holding steady, with declines in new orders but continuing strength from existing customers. Commercial and residential real estate markets in the region continued to report that activity had paused. Considerable uncertainty characterized respondents' outlooks, as was the case in the May report.\nEmployment and Wages\nEmployment changes were mixed across firms and sectors. One retailer brought back all corporate staff full time on July 1 and plans to bring about 1,800 furloughed warehouse and store employees back to work in August. An online retailer is hiring more workers, particularly customer service, to meet increased demand. Employment among manufacturers was mixed, with some firms hiring many workers and others engaging in layoffs and furloughs. An aerospace manufacturer laid off 7 percent of its workforce and cut salaries for all employees including senior executives. A toy maker furloughed salespeople and complained that production workers had not returned because of generous UI benefits. Responding software and IT services firms said they have continued to pay employees fully, partly funded by declines in operating expenses due to travel cutbacks. Headcount was down since last quarter at two software firms that froze hiring. By contrast, one IT firm continued to hire and said other layoffs in tech made it possible for them to bring on new highly skilled workers.\nPrices\nPrices continued to receive little mention. Manufacturing contacts cited a benign pricing environment with no one reporting significant positive or negative pricing pressure either among their suppliers or in their end-markets. Similarly, most software and IT services contacts reported no current plans to change pricing.\nRetail and Tourism\nRetail respondents continued to report major disruptions related to COVID-19 shut-downs but, despite the challenges, sales have improved since April. One contact reported increasing strength week-to-week in June, with women's clothing and outdoor equipment leading sales growth. An online retailer similarly reported increased revenue and continued growth in first-time users. They noted sustained year-over-year increases in sales of home office supplies and, more recently, higher sales of large home appliances, which previously were not a major source of revenue. One retailer whose sales dramatically increased in March and slumped in April and May reported June results at nearly the same level as June 2019. One contacted retailer noted looting and vandalism from the protests in early June at several stores.\nTravel industry contacts reported improved bookings of hotel stays and short-term rental properties. In one coastal area, hotel bookings have nearly returned to 2019 levels for July and August. Restaurants in these areas continue to report difficulties adjusting to distancing restrictions, but each successive weekend has resulted in more customers. Air travel, however, remains severely impacted by the pandemic; total air passengers in Boston in June were down more than 85 percent from the same time last year, an improvement from April (down over 97 percent). Cruise traffic has been halted until September.\nManufacturing and Related Services\nExperiences varied widely across the eight manufacturing firms contacted this cycle. A frozen fish producer and a maker of cardboard boxes reported very strong demand and sales; the box company said that sales growth slowed in June but was still strong. A toy company said that business had slowed significantly since April, partly because the cessation of movie production hit their media tie-ins, and partly because of production difficulties. An aerospace company said that while defense sales remained strong, commercial aviation declined. Idle planes mean no demand for aftermarket parts; in addition, build rates for new planes are falling because the travel recession is expected to last until 2022 and consequently airlines do not want to take delivery of new planes. A manufacturer and retailer of furniture which closed in March has reopened and hired back most of its employees after securing PPP funding and seeing demand pick up. A travel industry contact reported that goods trade through Boston's port fell in May, with exports down 40 percent and imports down 9 percent from the prior year.\nThe outlook was somewhat mixed. Most respondents said they expected business to improve over the rest of the year, but the toy maker said they would make significant staff cuts if sales did not improve by August.\nSoftware and Information Technology Services\nActivity at software and IT services firms in the First District remained mostly stable throughout the most recent quarter. All firms reported significant declines in new bookings, but steady revenue from existing customers. The majority of firms expected to see flat to 2 percent revenue growth, with another firm anticipating low double-digit growth year-over-year attributable to a cloud-based software acquisition finalized earlier this year. Multiple firms noted that what recent demand they have seen, has mostly been for cloud-based product lines.\nRespondents were split in terms of optimism, with most remaining concerned regarding the U.S. economy. One medical technology contact noted that their elevated uncertainty may linger through the end of the year as hospitals remain focused on the pandemic. Contacts that reported being more optimistic than last quarter generally cited increased demand for cloud-based services and increased certainty regarding remote operations.\nCommercial Real Estate\nCommercial real estate activity in the First District has remained on pause because of COVID-19. Most contacts reported an increase in sublease availability in the office leasing market. Most tenants were able to pay May and June rents, except for retail tenants who were hit hardest by the pandemic. Warehouses, grocery stores, and pharmacies were among the few robust leasing sectors. Across the region's markets, investment sales activity was slow to nonexistent. All contacts expressed substantial concern about uncertainty.\nIn the Boston area, few leasing transactions have occurred. Vacancies increased in the Boston office market while the industrial leasing market was also quiet, except for warehouse leasing. In the Hartford area, there was little leasing activity; renewals represented the only office leasing market transactions. Hartford's industrial leasing market for buildings over 25,000 square feet was relatively active, but the market for smaller buildings was quiet. In the Providence area, leasing picked up slightly in recent weeks, but most transactions were time-sensitive deals. The pandemic has worsened the historically quiet industrial leasing market in Providence, and contacts expected the availability rate to rise significantly in the near future.\nResidential Real Estate\nResidential real estate markets in the First District remained slow through May as a result of the COVID-19 pandemic. (All areas reported year-over-year changes from May 2019 to May 2020. Connecticut data were unavailable.) For both single family homes and condos, all reporting areas experienced double-digit decreases in closed sales compared to a year ago. Many contacts indicated they viewed this as a temporary pause in activity, saying people had delayed, rather than cancelled, their plans to buy or sell. Contacts across the region said they anticipate a busy summer as local economies begin to reopen and people who put their plans on hold because of the pandemic enter the market. However, they also expressed concern that further spread of the virus may cause market activity to slow again.\nResidential markets continued to favor sellers. Inventory dropped substantially in all reporting areas for both single family homes and condos. At the same time, median sales prices increased in all areas except for Vermont and condo markets in Boston and Massachusetts. The New Hampshire representative noted \"Buyers have been quicker to return to the housing market in force than sellers.\" Eagerness among buyers to take advantage of exceptionally low mortgage rates is likely contributing to this dynamic.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2020/2020-07-da

"July 15, 2020\nSummary of Economic Activity\nThe Eleventh District economy regained its footing following unprecedented declines in the previous two reporting periods. Activity in the manufacturing and service sectors began rebounding, as did retail spending. However, the level of output and demand remained below pre-COVID levels. Loan volumes contracted at a modest pace, and drilling activity fell to new lows. Activity in the housing market expanded, with new home sales outperforming activity in the existing-home market. Employment stabilized, according to contacts, but overall labor market conditions remained weak. Wages were flat to slightly up. While input costs rose modestly, selling prices generally dipped further. Outlooks improved, but a weak economy, depressed activity in the energy sector, the resurgence of COVID-19 infections, and a pause in the reopening of the district economy were causing concern among contacts.\nEmployment and Wages\nMost contacts reported holding employment steady. Manufacturing and service sector employment was flat, with scattered reports of hiring, while energy contracted. Forty-three percent of respondents to a June Dallas Fed survey of 400 Texas manufacturing and services firms indicated reduced employment levels due to COVID-19 and, among this group, 26 percent said it would take more than a year to get back to pre-COVID headcounts and 19 percent said they do not ever expect employment to get back to pre-COVID levels. Also, many contacts cited challenges in bringing workers back given rising infection rates, quarantined employees, and confirmed positive COVID-19 cases among staff.\nWages were flat to slightly up; however, airlines and energy firms among others noted pay cuts and/or freezes. Companies looking to hire along with staffing firms noted difficulty recruiting due to lack of applicants and/or high unemployment insurance benefits.\nPrices\nInput costs rose at a modest pace, in part due to supply-chain issues, rising freight costs, and precautions being taken by firms to protect staff and customers from exposure to COVID-19. Selling prices were flat to down due to weak demand, though there were reports of increased prices for new and used vehicles arising from inventory shortages. New home prices rose slightly, and homebuilders noted getting only modest relief from contractors and suppliers on pricing. Airline ticket prices held steady or dipped. Staffing firms reported no change in bill rates, while some oilfield services firms said prices were down 10-15 percent vs. earlier in the year.\nManufacturing\nOutput growth rebounded in June following steep declines in the previous three months. Durables and nondurables increased, led by strength in transportation equipment, food, printing, and construction-related manufacturing. Declines in the oil and gas industry remained a significant headwind among those experiencing sustained weakness. Refiners and chemical manufacturers noted modest improvements in utilization rates, though margins were still depressed. Chemical firms said demand for PPE and disinfectant products remained robust, but resin and basic chemical demand was soft. Manufacturing outlooks improved, though the recent spike in COVID-19 cases and a weak economy weighed on business sentiment.\nRetail Sales\nRetail sales rebounded sharply in June, albeit from depressed levels. A majority of respondents noted an increase in sales activity, though reports regarding the pace of growth were mixed. Auto dealers cited a pickup in demand, with reports of strength in all-terrain vehicle (ATV) sales. Inventories dropped further, particularly for auto dealers, which some contacts attributed to supply-chain issues. Outlooks were optimistic but contingent upon a stabilization of COVID-19 cases.\nNonfinancial Services\nService sector activity rose modestly in June, following a period of declining demand from March through May. Performance was mixed across industries, with those experiencing sluggish activity citing weakness in the oil and gas sector, continued operational restrictions, and weak demand. Health care firms saw a strong pickup in demand. Some professional and technical services firms said they were benefitting from strength in the residential real estate market. Activity in the leisure and hospitality sector rebounded but remained well below last year's levels. Airline passenger demand grew modestly during the reporting period; however, it remained markedly lower compared to year-ago levels. Domestic demand was driven by leisure travel, and overseas travel remained limited. Demand for staffing services was flat to down during the reporting period. Outlooks were mixed and generally uncertain due to the resurgence of COVID-19, and concern about future consumer demand trends.\nConstruction and Real Estate\nActivity in the housing market improved markedly. Existing-home sales fell in May partly due to a lack of inventory, but picked up in June. Showings were up as well, indicating increased buyer interest. New-home sales strengthened, with several contacts noting a record month in May and continued solid activity in June. Contacts said record-low mortgage rates were driving sales, with the pace of sales higher in the low- to mid-price range. After a temporary pause, new development activity was picking back up, and contacts noted evaluating new lot/land deals and/or moving forward with planned acquisitions. Outlooks have improved significantly, but there was lingering concern about the demand impact in the fall of a weak labor market, the upcoming election, and virus flare ups.\nMultifamily contacts said leasing activity weakened in early to mid-spring due to COVID-19, but has improved since then. Rents were flat to down, and concessions have increased. Apartment rent collections continued to outperform expectations, but the upcoming expiration of federal unemployment benefits was a downside risk to the outlook. Office leasing remained sluggish, though it did improve slightly compared to the previous reporting period. Activity was concentrated in short-term renewals and/or smaller-sized deals. Industrial demand remained solid.\nFinancial Services\nLoan demand fell, though at a more moderate pace than in the previous reporting period. Volumes weakened further for all loan types except for residential real estate, which rose sharply. Loan pricing continued its marked decline, and credit standards tightened further. Loan performance eroded noticeably, and majority of respondents expected further deterioration. Nearly 19 percent of banks observed an increase in draws on existing commercial credit lines due to COVID-19, down from 37 percent from six weeks ago. On average, bankers said roughly 15 percent of their total loans were currently in deferral. Expectations regarding general business conditions improved, and the outlook for future loan demand turned positive for the first time since March.\nEnergy\nEleventh District drilling activity eroded further but showed signs of stabilizing by the end of the reporting period. Meanwhile, well completion activity stabilized and logged modest weekly gains. Though overall oilfield activity remained depressed, sentiment has improved due to a pickup in oil prices, and a majority of firms expect to restart shut-in wells by September. The recent increase in COVID-19 cases and hospitalizations was causing some concern among contacts. Most contacts don't expect U.S. crude oil production to return to pre-COVID levels until at least mid-2021.\nAgriculture\nSoil moisture conditions remained favorable across most of the district, except for the Texas Panhandle area where there was drought. Wheat remained a bright spot with production up from last year, though prices were lower. While overall crop conditions were favorable, lower-than-profitable prices were leading agricultural producers to rely on government support payments to supplement farm income. On the livestock side, meat packers were adjusting to the new operating environment and have ramped production back up. Dairy prices rose as the industry made a concerted effort to curb production in response to lower restaurant demand.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

/beige-book-reports/2020/2020-05-sl

"Beige Book Report: St Louis\nMay 27, 2020\nSummary of Economic Activity\nEconomic conditions have declined since mid-April, but at a moderately slower pace. While a very small fraction of firms had closed permanently, around half of firms remain closed temporarily. Among the firms that are closed, about one-third expect to reopen in the next 3 weeks, one-quarter in the next 3 to 5 weeks, one-quarter in the next 5 to 10 weeks, and the remainder in more than 10 weeks. Firms that are reopening are often doing so for training and preparation purposes; less than one-fifth expect demand for their products or services to pick up in the next 5 weeks. Contacts' general outlook for regional economic growth during the remainder of 2020 is pessimistic, as about two-thirds of contacts expect growth to be slower than the same period in 2019.\nEmployment and Wages\nLabor markets have continued to decline sharply over the reporting period, although the pace of decline has slowed considerably, with some contacts attributing employment stability to PPP funding. A payroll contact reported that new layoffs were driven predominantly by small firms, though many large employers have also furloughed workers since March\u2014notably, several healthcare systems. Contacts reported that reopening firms were limited by labor shortages, which they ascribed to increased unemployment benefits, personal health concerns, and childcare responsibilities leading potential workers to stay home.\nWages and other benefits were lower than in our previous report; a payroll company reported a \"second wave\" of wage cuts, and reports across industries have mentioned cuts to benefits, including employer 401k matching. Some companies, especially those in competitive fields, have promised to repay lost wages at the end of the crisis; and others have increased wages to maintain morale and lure back hesitant workers.\nPrices\nPrice pressures have decreased modestly since the previous report. On net, 16% of contacts reported that prices charged to consumers were lower in the second quarter relative to the same time last year. Nonlabor costs to businesses were generally unchanged, but some sectors did report significant increases: Wholesale, healthcare, and construction industries reported large net increases in nonlabor input costs. The healthcare industry in particular remains concerned about heightened prices for personal protective equipment because demand for these products has increased as other firms begin to reopen.\nConsumer Spending\nConsumer spending activity has been mixed but remains at historic lows. There have been slight upticks in activity for auto dealers and hotels in recent weeks. A furniture retailer expects to reopen in the coming weeks and expects that demand will pick up in the next month. A jeweler does not expect demand to pick up for another two months or longer and may not reopen. Hospitality contacts continue to report low or no activity throughout April. Tourism venues expect to remain closed for the next two months or longer.\nAuto dealers reported mixed activity over the past month. Some contacts cited stay-at-home orders and lack of inventory as reasons for low sales, while others reported that current-quarter sales are about the same as they were this time last year, noting that stimulus money and financing deals have helped bolster sales. Some dealers reported that demand has already picked up since the shutdown, while others anticipate it will take two months or longer to see an upward trend in demand.\nManufacturing\nReports from manufacturing contacts were mixed. However, levels of production remain very low. A steel manufacturer reported a 30% reduction in production, and a machine products manufacturer reported a 50% reduction in production.\nBoth these contacts cited reduced demand as their biggest impediment. A printing company reported sharp increases in production from 15% to 80% of normal levels. Furthermore, several auto plants in the region have reopened or plan to reopen within a couple of weeks, but are working at 25% to 50% of normal production levels with supply chain disruptions.\nNonfinancial Services\nActivity in the nonfinancial services sector has worsened moderately since the previous report. On net, about one-third of contacts expect that it will take more than 10 weeks for demand for services to begin to improve. Contacts in the healthcare sector reported severe drops in non-COVID-19 patient visits, by as much as 50% since March. Elective surgeries have been postponed by hospitals. Contacts reported furloughing between 5% to 33% of their workforce. Contacts in primary care note the use of telehealth to replace some, but not all, patient visits.\nIn the transportation industry, passenger activity in airports is significantly lower but has ticked up slightly in recent weeks. Contacts noted a 95% drop year over year in passenger traffic. Airports have been able to remain open by making use of their cash reserves and relief funding from the CARES Act, by postponing capital expenditures, and with increases in cargo traffic. Contacts in logistics and freight noted mixed activity. Contacts linked to foodstuffs and online shopping noted increased activity, while contacts linked to retail trade and other sectors noted a drop in activity since the previous report.\nReal Estate and Construction\nResidential real estate activity sharply declined in April as measured by existing home sales, new listings, and pending sales. Contacts reported drops in home sales between 8% and 50% in April relative to one year ago, despite sales conditions being generally unaffected by COVID-19 in March. Some brokers indicated that they have already experienced an uptick to near-normal sales. Home showings have rebounded from their lows in late March and early April. Inventory levels have decreased about 20% from the same time last year.\nA majority of contacts reported lower new residential construction demand compared with the previous year. A contact in Memphis reported few new projects in the pipeline. Contacts in Louisville and St. Louis reported that homebuilding remained stable in April because of the continuation of in-progress projects.\nCommercial real estate activity has moderately decreased since March. All contacts surveyed reported lower demand for retail space relative to the previous year. Contacts reported little change in the demand for industrial space and a moderate decrease in demand for office space. Some contacts expressed that despite sharp drops in the retail side of their business, continued industrial demand has been a bright spot for their firms. Contacts reported only a slight decline in rent collections.\nContacts reported clients have suspended or delayed commercial construction projects. Contacts also reported difficulties with the construction process due to supply chain issues and increased safety costs.\nBanking and Finance\nBanking conditions in the District have declined slightly after a surge in demand for emergency loans in April. Contacts reported the pipeline for PPP loans is now manageable. Demand for most consumer loans declined moderately, with the exception of credit cards loans, which modestly increased. Banks indicated a sharp increase in delinquencies, primarily in mortgages, credit cards, and auto loans; but they expect fewer delinquencies in the third quarter. Louisville area bankers reported increasing loan loss reserves.\nAgriculture and Natural Resources\nDistrict agriculture conditions have been mixed since April. Contacts reported that transportation and warehousing costs have increased and supply chain issues are affecting many producers. Smaller meat processing plants experiencing higher demand due to closures of larger plants are constrained by regulatory requirements. Contacts reported significant variation in revenue as some industries such as rice producers have seen increased demand and prices for their goods.\nMeanwhile, cotton and other row crop producers reported lessened demand and continued low commodity prices, making profitability a challenge. Planting has increased since the previous reporting period and is up modestly from this time in 2019. However, this is largely due to improvements in states that experienced historic flooding in 2019.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

/beige-book-reports/2020/2020-05-ny

"Beige Book Report: New York\nMay 27, 2020\nSummary of Economic Activity\nThe Second District economy contracted substantially again in the latest reporting period, as widespread closures and stay-at-home orders severely constrained business activity. Employment continued to decline, and wages were mixed but down modestly, on balance. Businesses reported that input prices rose slightly but selling prices decreased slightly. Activity fell in every sector, with particularly widespread declines in leisure & hospitality. However, business contacts tended to be less pessimistic than in the prior report about the near-term outlook, and those in the manufacturing, construction, real estate, and health services sectors expected modest improvement. Consumer spending has fallen further, though there have been scattered reports of a nascent pickup in early May, as more parts of the economy have started to reopen. Tourism and travel have remained moribund, with hotels and airlines continuing to see very little business. Home sales and residential leasing activity have remained down sharply, as have commercial leasing and construction activity. Finally, banks reported further moderate weakening in loan demand, tighter credit standards, and higher delinquency rates but also greater leniency on existing loans.\nEmployment and Wages\nThe labor market has remained weak, as widespread layoffs have continued and hiring has been spotty. Two major employment agencies\u2014one in New York City and another in upstate New York\u2014noted that hiring was sluggish in April, though the latter noted a modest pickup in early May. A wide array of business contacts, as well as employment service firms, reported widespread layoffs and furloughs, especially at small to medium-sized businesses. However, the vast majority of these were viewed as temporary, with workers expected to be re-hired when business activity rebounds. Some businesses have already made efforts to recall laid off workers, as well as hire new workers. A number of these firms noted that this has been challenging, with many unemployed workers reluctant to return to work\u2014some attributed this to generous unemployment benefits, as well as safety concerns.\nReports from across business sectors remained negative. Contacts in leisure & hospitality, transportation, retail, and construction reported the most widespread staff reductions, while businesses in manufacturing, information, finance, and professional & business services noted modestly declining staffing levels.\nLooking ahead, contacts in both manufacturing and real estate said they expect a modest pickup in employment, while those in leisure & hospitality, retail, finance, and professional & business services projected steady staffing levels. Businesses across other sectors expected moderate staff cuts, on net, in the months ahead.\nWages have mostly been flat to lower since the last report. Businesses in the hard-hit leisure & hospitality sector continued to report widespread reductions in wages, whereas contacts in health services and finance indicated steady to modestly rising wages. Contacts in other service industries reported modest declines in wages.\nPrices\nInput costs were mixed but up modestly, on balance, with a number of contacts noting extra costs associated with installing and maintaining safety protocols. As in the last report, selling prices were steady to down modestly. Businesses in leisure & hospitality noted fairly widespread price cuts, while those in health & education services and wholesale trade characterized their selling prices as steady. Contacts in other sectors reported slight declines in the prices they receive.\nConsumer Spending\nRetailers reported further widespread drops in sales in April, with many malls and establishments still shut down, as those classified as non-essential were ordered to close in March. With New York and New Jersey easing restrictions in recent days, some retailers have been allowed to reopen with curbside pickup. Retailers have also sometimes been able to shift to online sales, though often with much-reduced volume. Food, personal care, and other stores deemed essential have tended to fare better. Retailers expected sales to be steady to down modestly in the months ahead.\nVehicle sales ground to a halt starting in mid-March, according to dealers in upstate New York, but picked up slightly into April, due to adoption of remote sales platforms. Dealers reported a further pickup in the first half of May, as restrictions on showroom visits were eased somewhat. While essential dealer repair services remained open, volume was much lower than usual.\nManufacturing and Distribution\nManufacturing, transportation, warehousing, and wholesale trade firms reported a further drop-off in business activity in recent weeks. However, there was substantial variation across segments, with those manufacturing and distributing essential goods faring much better than average. New York State and New Jersey are lifting restrictions on manufacturing before most other sectors.\nLooking ahead, manufacturers expect activity to rebound, while wholesale and transportation firms foresee further weakening in activity. Businesses have continued to cut both actual and planned capital spending.\nServices\nService industry contacts reported continued widespread deterioration in business activity. Leisure & hospitality contacts reported particularly widespread declines in activity, as restaurants remained shut down for dine-in service and hotels suffered from an almost complete drop-off in travel and tourism.\nContacts in professional & business services also indicated steep declines in activity, while businesses in the information, health, and education sectors all reported more moderate, but still fairly widespread, declines.\nLooking ahead, business contacts continued to express great uncertainty about whether and when business would get back to reasonably normal levels, but there continued to be fairly widespread pessimism. A contact in air transportation expects any rebound in air travel to be slow and led by the leisure segment, noting a modest recent pickup in advance bookings for late 2020. A contact in New York City's tourism sector expects any rebound in visitations to be slow\u2014particularly for international visitors, the most profitable segment\u2014noting that Broadway theaters are closed until at least Labor Day.\nReal Estate and Construction\nHome sales markets across the District have largely ground to a halt, with almost no new transactions and home viewing limited to virtual showings. The residential rental market has slowed but not quite as dramatically. A local real estate authority noted that new rental leasing in New York City was down about 70 percent, while renewals were up, and that there has been a pickup in demand for single-family home rentals outside the city. A major appraiser noted that it's almost impossible to gauge changes in prices and rents during this pandemic due to a dearth of transaction activity.\nCommercial real estate markets across the District also remain moribund, with April marking a record low in new leasing activity and some companies pulling out of leases. A contact at a major commercial real estate firm estimated that only about 10 percent of tenants in both office and industrial space have fallen behind on rent, thus far, but that the corresponding rate for retail tenants is well over 50 percent. Even beyond that, for some mall retailers, rent is assessed a share of sales revenue. More generally, real estate contacts were more optimistic than contacts in other sectors about the near term outlook.\nNew construction starts have essentially remained at zero, and ongoing construction projects remained paused, except where considered essential. However, this is likely to pick up as states ease restrictions on construction activity in the days ahead.\nBanking and Finance\nThere was widespread interest, among businesses in all sectors, in the SBA Paycheck Protection Program loans, though some contacts expressed concerns about the program's implementation and accessibility. Separately, small to medium sized banks across the District reported lower loan demand across all categories, but most dramatically from the commercial segment. Banks reported tightening credit standards across all categories except consumer loans. Loan spreads narrowed on all categories except C&I loans. Respondents reported widespread declines in average deposit rates. Bankers reported higher delinquency rates but more lenient policies for delinquent accounts across all categories.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2020/2020-05-at

"May 27, 2020\nSummary of Economic Activity\nSixth District business contacts reported that economic activity continued to decline from April to early May due to the COVID-19 pandemic. Labor market activity remained weak and nonlabor costs declined overall. Retailers reported further declines in discretionary consumer spending, although sales of essential items continued to grow; ecommerce activity accelerated. Auto sales were subdued. Hospitality contacts noted record low revenues. Despite soft demand for new and existing homes, inventories fell and home prices remained steady. Commercial real estate market reports were mixed. Overall, manufacturing activity contracted and new orders declined significantly. Financial institutions reported growth in commercial loans as businesses accessed lines of credit and the Paycheck Protection Program (PPP) and some softness in consumer lending.\nEmployment and Wages\nOverall, District labor markets continued to deteriorate from closures related to the COVID-19 pandemic and the resulting decline in demand for products and services. Several contacts noted they were redeploying workers from low to high demand areas within their organization. Many contacts reported success in securing a PPP loan, which allowed them to avoid layoffs. Although more furloughs and layoffs were announced, most contacts were furloughing employees with medical benefits rather than laying off in hopes of re-engaging them when demand returned. Several employers noted concern that the generosity of unemployment benefits may make it difficult to attract workers once demand improves especially among lower paid jobs. Most contacts noted that they had frozen or slowed hiring with the notable exception of high demand sectors such as grocery and home improvement stores.\nContacts noted that weaker demand resulted in more reports of pay cuts, elimination of bonuses, and reduced hours; these cuts were more broad based than in the previous report. Some temporary increase in hourly wages and bonuses continued to be reported among high demand or essential workers, however there was no evidence that these inducements were increasing substantially or spreading to other sectors.\nPrices\nMost contacts reported input costs decreased over the reporting period due to the impact on demand from COVID-19. As demand shifted from restaurants to grocers as a result of safer-at-home practices, some food service supply chains were left with excess inventories while others, such as meat processing and packing, experienced shortages. However, the majority of firms have not increased prices, either due to a lack of pricing power or as a show of goodwill to troubled consumers. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs declining to 1.2 percent in April, as sales levels declined dramatically \"compared to normal.\" Year-ahead expectations, on average, declined to 1.4 percent.\nConsumer Spending and Tourism\nSimilar to the last report, continued declines in discretionary consumer spending due to COVID-19 was partially offset by sales growth in grocery and household products, office equipment, and home improvement goods. Ecommerce activity continued to accelerate as brick-and-mortar sales continued to decline. Reports from businesses in locales that were cleared to reopen indicated implementing social distancing measures and heightened sanitation efforts. While auto sales were muted, contacts noted that the rate of decline was slower than expected.\nAcross the District, tourism and hospitality contacts reported that revenue per available room had reached a historical low for April as a result of COVID-19. Most contacts were in the process of developing their reopening strategy which would include marketing efforts and implementation of social distancing and elevated sanitation, among other things. Firm reopen dates had not yet been determined and the general sentiment was that the recovery for this industry would be moderately slow.\nConstruction and Real Estate\nThe District housing market continued to show signs of significant disruption as a result of COVID-19. Contacts indicated a sharp overall decline in pending home sales, as well as a significant contraction in homes available for sale. Mortgage financing remained constrained as many lenders increased credit overlays. However, contacts suggested that purchase activity improved since the beginning of April as more buyers sought to take advantage of low interest rates. Home prices remained resilient as sellers maintained asking prices. Though new home starts and sales were down sharply from a year ago, contacts indicated that cancellations were lower than expected and builders did not need to significantly increase incentives in order to close sales.\nCommercial real estate (CRE) contacts reported continuing challenges associated with the effects of COVID-19. Reports were mixed, as rent collections exceeded low expectations and investment activity continued to slow during the reporting period. Contacts continued to report a deceleration in new leasing inquiries, though leasing activity that was already in the pipeline appeared to be steadily continuing to move towards completion. Reports of a greater number of tenants seeking rent relief emerged. Declining tourism and travel conditions have had a significant impact on CRE activity across the District. Contacts reported that capital was readily available for financing stabilized CRE projects. Reports also indicated that accurately appraising property values has become much more difficult and anticipate this to last through the remainder of the year.\nManufacturing\nManufacturing firms reported a decrease in overall business activity, steered by a notable decline in new orders. To adjust to weakening demand, contacts described lowering production levels by reducing capacity and, in some instances, temporarily halting production at some of their plants. Some purchasing managers indicated they were experiencing delays in deliveries due to disruptions in supply chains. Across the board, contacts had or planned to implement enhanced safety procedures at their plants to promote social distancing and to provide a sanitary work environment.\nTransportation\nTransportation activity weakened over the reporting period, and about half of contacts noted significant disruption to operations due to COVID-19. Air cargo companies reported further capacity reductions as more than roughly two-thirds of worldwide passenger flights were suspended. However, demand for air cargo services remained robust; thus, carriers operated cargo-only flights by using passenger aircraft to meet demand. Railroad contacts noted continued year-over-year declines in overall traffic in petroleum and petroleum products, metals, lumber, and motor vehicles and parts. District ports cited continued softness in container cargo. Third-party logistic firms saw trucking volumes fall off as panic buying of essential consumer goods subsided.\nBanking and Finance\nConditions at financial institutions deteriorated slightly. While net interest margins remained stable, emerging credit issues related to COVID-19 prompted an increase in provisions for loan loss reserves, which significantly lowered earnings. Loan growth accelerated for the commercial and industrial segment due to a combination of customer drawdowns of existing lines of credit and approvals of new loans under the PPP. Both commercial real estate and construction loan growth declined due to weaker demand but remained positive. Residential real estate loan growth increased due to lower interest rates and a high level of refinancing. However, consumer loan growth declined due to lower demand and credit standards being tightened. Increased deposits and lending facilities created by the Federal Reserve System kept liquidity stable.\nEnergy\nOil and gas producers and servicers reported temporary closures of wells as global demand for crude oil remained weak among historic oversupply. Utilization at refineries and chemical manufacturers was down to historic lows, aside from those used to make personal protective equipment, disinfectant, sanitizer, and other high-demand products related to COVID-19. Thus, refining and chemical manufacturing contacts reported layoffs, spending cuts, and maintenance delays.\nReports indicated that widespread maintenance delays into the second half of the year will create added strain on limited maintenance contractors, staff, and equipment. Industrial construction contractors reported extensive project delays and cancellations. While some energy contacts expect demand to rise in late summer, many noted that the industry will still have to contend with crude oil oversupply and storage overhang. Utilities contacts reported decreased demand for power overall, largely from the commercial segment.\nAgriculture\nAgricultural conditions softened. Most of the District remained drought free, with the exception of much of Florida, southern Louisiana, and other parts of the Gulf coast region, which experienced abnormally dry to severe drought conditions. On a month-over-month basis, the April production forecast for Florida's orange crop was down from last month's forecast and last year's production, while the grapefruit production forecast was down from last month's forecast but ahead of last year's production. The USDA reported that for March, year-over-year prices paid to farmers were up for corn, rice, eggs, and milk but down for cotton, soybeans, cattle, and broilers. On a month-over-month basis, prices increased for broilers and eggs but decreased for corn, cotton, rice, soybeans, beef, and milk.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"May 27, 2020\nSummary of Economic Activity\nThird District business activity continued to fall sharply during the current Beige Book period, as the COVID-19 pandemic persisted across most of the mid-Atlantic region. Statewide stay-at-home orders and mandated closures of nonessential businesses remained in place for most of the current period. Economic contraction continued at a moderate or steep rate for manufacturing, services, and most consumer sectors; tourism fell modestly further to a near-zero level. Real estate sector activity was mixed. Firms continued to furlough or lay off workers even as Paycheck Protection Program (PPP) loans surged onto banks' ledgers. The wage path remains unclear, although downward pressure may emerge once hardship pay is no longer needed. Prices fell modestly, as lower demand and low oil prices prevailed. As mandated closures begin to lift, firms are hopeful that business will resume. However, contacts are uncertain how fearful consumers will be while the COVID-19 threat remains and how freely consumers will spend after the threat lifts.\nEmployment and Wages\nEmployment continued to contract sharply. By mid-April, over half of the firms reported that employment had declined. A greater percentage reported a shorter average workweek. By the end of the period, about eight percent of the firms in our weekly survey reported that they had shut down. In other responses, almost 40 percent ceased all hiring and 25 percent reported employee furloughs and reductions of employees' average work hours.\nStaffing firms reported that activity was down in a range from 35 percent to 50 percent. One contact observed that over the course of a day, a recruiter might make 40 calls to prior job candidates, speak with four, and hire one. In our weekly survey, just 10 percent of the firms reported that they had recalled furloughed workers. When asked about impediments to recalling workers, 33 percent of the firms noted fear of infection and 25 percent noted lack of childcare; overcoming the lure of expanded unemployment benefits was noted by 29 percent of the firms.\nThe path of wages continued to be unclear, as firms offered mixed reports of various wage strategies. Some firms are still paying premiums to attract and retain frontline workers. Other firms were forced to cut wages, hours, and overtime in order to survive. In mid-April, over one-third of the nonmanufacturing firms reported decreases in wage and benefit costs.\nPrices\nOn balance, more contacts reported lower prices rather than higher during the period, except for spikes associated with scarcity and hoarding. However, well over half of all firms noted no change in prices.\nFalling demand and lower prevailing oil prices were cited as factors for generally lower prices. Price spikes were noted for fresh fruit. A Pennsylvania homebuilder observed that the sector's shutdown had compressed backlogs and increased short-term demand for materials. An analyst for the transportation services sector noted that after having cut capacity in prior downturns, firms sometimes took the position expressed by one, \"I'm not adding people, I'll take it in price.\"\nManufacturing\nAccording to manufacturing contacts, the contraction became broader and steeper during the current period. At mid-April, about three-fourths of the firms reported decreases in shipments and in new orders.\nBy the end of the period, three-fourths of the firms in our weekly survey reported that sales or new orders were down by greater than 5 percent of expectations prior to the pandemic; one-third reported decreases in excess of 30 percent or had shut down.\nAccording to several firms with global perspectives, supply chain problems have shifted from China to Mexico. One contact observed that Europe and the U.S. will not recover as easily from the pandemic as China did and that many facility investments in the U.S. have been delayed. A key supplier noted that U.S. manufacturing activity is down nearly 20 percent and \"moving sideways now.\"\nConsumer Spending\nOn balance, nonauto retail sales declined further, but the pace of decline was moderate, not steep as before. Where possible, retailers and restaurants have further ramped up delivery and take-out services. However, the first clutch of many anticipated restaurant closings was announced in the Philadelphia area as the period ended.\nSales of new and used cars fell sharply again this period, but by early May, dealers and customers became more accustomed to online sales, which partially offset the steeper April decline. Sales, service, and profits are far below prior-year levels.\nAfter a full six weeks at a near standstill, tourism was modestly lower than the average of the entire prior period. A majority of hotels, resorts, and attractions remain closed. As of May 9, a tourism analyst estimated that weekly travel spending was down nearly 90 percent from prior-year levels in Pennsylvania, and down about 85 percent in Delaware and New Jersey. Only as this period drew to a close were a few more attractions, such as beaches and golf courses, beginning to reopen.\nNonfinancial Services\nEven more so than manufacturers, a broader cross section of service sector firms reported declining new orders/sales in the current period than before \u2013 resulting in another severe overall decline. At mid-April, almost nine-tenths of the firms reported decreases of sales or revenues, and two-thirds of the firms reported decreases of new orders.\nBy the end of the period, over 70 percent of the firms in our weekly survey reported that sales or new orders were down by greater than 5 percent of prior expectations; nearly 40 percent reported decreases in excess of 30 percent or had shut down.\nFinancial Services\nThe volume of bank lending grew rapidly over the period as commercial banks originated an enormous number of new loans to firms under the PPP. However, demand for consumer loans diminished and partially offset the PPP loan growth.\nAuto loans and other consumer loans fell moderately and steadily throughout the period; credit card volumes fell sharply throughout. By comparison, commercial and residential real estate lending trended about the same as in the same period one year ago.\nBanking contacts noted increased optimism among their clients after PPP loans had been widely disbursed. Our weekly firm surveys also reflected increasing optimism from early April, when 28 percent of the firms were very concerned about maintaining solvency over the next month, and early May, when 18 percent of the firms were very concerned. Bankers noted that existing aid, loan extensions, and forbearance would carry most firms for the next three to six months, but problems may arise in the third quarter. Contacts most often noted hospitality and hospitals among the sectors of greatest concern.\nReal Estate and Construction\nHomebuilders maintained a lower level of construction activity similar to the end of the prior period, and Pennsylvania builders began restarting in early May. Builders noted that they were slowly converting most of their prior deposits into final contracts, but they were seeing too little traffic to sustain future activity.\nExisting home sales declined sharply. Real estate contacts reported that potential sellers showed little interest in listing, much less showing, their homes, and fewer buyers were in the market. Brokers noted that credit markets were tightening and that interested buyers tended to be younger.\nPhiladelphia's commercial real estate construction grew slightly at lower levels as some projects started back up in early May; however, some sites chose not to restart, and other projects are slowing delivery. Contacts noted a decline in new plans and little commercial construction financing. \"None of our normal metrics apply,\" an analyst stated of the commercial sales/leasing market, which continued a modest decline. April rent collections, which were down somewhat for office and industrial space, were down significantly for retail space.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"May 27, 2020\nOverall Economic Activity\nEconomic activity declined in all Districts \u2013 falling sharply in most \u2013 reflecting disruptions associated with the COVID-19 pandemic. Consumer spending fell further as mandated closures of retail establishments remained largely in place during most of the survey period. Declines were especially severe in the leisure and hospitality sector, with very little activity at travel and tourism businesses. Auto sales were substantially lower than a year ago, although several Districts noted recent improvement. A majority of Districts reported sharp drops in manufacturing activity, and production was notably weak in auto, aerospace, and energy-related plants. Residential home sales plunged due in part to fewer new listings and to restrictions on home showings in many areas. Construction activity also fell as new projects failed to materialize in many Districts. Commercial real estate contacts mentioned that a large number of retail tenants had deferred or missed rent payments. Bankers reported strong demand for PPP loans. Agricultural conditions worsened, with several Districts reporting reduced production capacity at meat-processing plants due to closures and social distancing measures. Energy activity plummeted as firms announced oil well closures, which led to historically low levels of active drilling rigs. Although many contacts expressed hope that overall activity would pick-up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery.\nEmployment and Wages\nEmployment continued to decrease in all Districts, including steep losses in most Districts, as social distancing and business closures affected employment at many firms. Securing PPP loans helped many businesses to limit or avoid layoffs, although employment continued to fall sharply in retail and in leisure and hospitality sectors. Contacts cited challenges in bringing employees back to work, including workers' health concerns, limited access to childcare, and generous unemployment insurance benefits. Overall wage pressures were mixed as some firms cut wages while others implemented temporary wage increases for essential staff or to compete with unemployment insurance. Most Districts noted wage increases in high-demand and essential sectors, while wages were flat or declining in other sectors.\nPrices\nPricing pressures varied but were steady to down modestly on balance. Weak demand weighed on selling prices, with some contacts noting discounting for apparel, hotel rooms, and airfare. Several Districts also reported low commodity prices, including oil, steel, and several agricultural commodities. Supply chain disruptions and strong demand led to higher prices for some grocery items including meat and fresh fruit. One District reported that firms faced additional costs related to safety protocols and social distancing compliance, while another District noted that the costs of personal protective equipment had risen due to strong demand.\nHighlights by Federal Reserve District\nBoston\nActivity continued declining as a result of pandemic-related economic shutdowns and social distancing guidelines. Retail and tourism firms cut employment, staffing firms saw reduced demand, and most manufacturing contacts froze hiring. Respondents said the outlook was very uncertain.\nNew York\nThe regional economy continued to contract since the last report, though there were scattered signs of a pickup in early May. Businesses reported widespread layoffs and flat to declining wages, but the vast majority of separations were deemed temporary. Prices paid rose slightly, while selling prices edged down. Leisure & hospitality and retail trade have remained the most severely affected. Financial firms reported weaker activity.\nPhiladelphia\nBusiness activity continued to fall sharply during the current Beige Book period, as the COVID-19 pandemic persisted. Nearly all sectors are operating at lower levels of activity. Government assistance eased liquidity concerns and addressed rapidly rising joblessness. General prices have begun to fall, but the wage path remains mixed. Firms also remain uncertain of the future.\nCleveland\nCustomer demand declined in a broad range of industries. The few areas of strength were limited to grocery sales and business lending. Firms responded with wide-spread layoffs, deep cuts to capital spending, and wage reductions for a growing minority of firms. Inflation pressures eased because of weak demand and lower commodity prices. Though many firms believe the worst declines have passed, few are expecting a strong recovery.\nRichmond\nThe Fifth District economy contracted further in recent weeks as the shutdown measures to slow the spread of the COVID-19 outbreak continued to have severe consequences. Retail, travel, and hospitality remained some of the hardest hit industries, but negative impacts were reported in every sector. Employment declined sharply and price growth slowed slightly, remaining modest.\nAtlanta\nEconomic conditions remained weak. Labor markets were soft and nonlabor costs decreased. Retail sales of essential products and services rose and ecommerce activity grew. Hospitality activity continued to weaken. Residential real estate slowed somewhat and commercial real estate activity was mixed. Manufacturing activity decreased as new orders fell. Banking conditions were mixed.\nChicago\nEconomic activity declined sharply as the coronavirus caused major economic upheaval. Employment, consumer spending, business spending, construction and real estate, manufacturing, and agriculture all decreased substantially. Wages edged up and prices were little changed. Financial conditions improved modestly.\nSt. Louis\nEconomic conditions have weakened moderately since the previous report. Around half of firms are closed temporarily. Among the firms that are closed, about one-third expect to reopen in the next 3 weeks. Banks indicated a sharp increase in delinquencies, primarily in mortgages, credit cards, and auto loans, but expect fewer delinquencies in the third quarter.\nMinneapolis\nThe Ninth District economy contracted further. Employment fell significantly, and wage pressures fell due to the decline in activity along with wage and salary cuts by some firms. While most sectors declined, oil and gas exploration and supporting industries saw a particularly steep decline as oil prices fell dramatically. Restaurants, lodging, and tourism continued to suffer, and agriculture fell from an already low level.\nKansas City\nEconomic activity declined substantially since the previous survey, and contacts remained pessimistic about future levels of activity. Contacts reported broad-based declines in consumer spending. Real estate activity declined significantly, and sales fell at transportation, wholesale trade and professional and high-tech services firms. Manufacturing activity contracted sharply, and energy and agricultural sectors weakened further.\nDallas\nEconomic activity contracted further, though the pace of decline moderated from April to early May in manufacturing and services. Oilfield activity fell to record lows. Home sales dropped sharply but were beginning to slowly improve. Employment plummeted, and selling prices fell. Outlooks were bleak and uncertain, largely centered on the speed and scope of the reopening.\nSan Francisco\nEconomic activity in the Twelfth District contracted markedly. Employment declined dramatically due to virus related disruptions. Prices remained generally flat. Activity in retail trade, consumer and business services, and manufacturing all contracted noticeably. Activity in the agriculture sector slowed further. The residential real estate market was mixed, while the commercial side slumped. Lending activity increased due to PPP loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"May 27, 2020\nSummary of Economic Activity\nEleventh District economic activity contracted sharply in April, while preliminary data from May point to a notable easing in the pace of decline as restrictions on businesses were gradually lifted. Activity in the energy and service sectors remained the hardest hit. Manufacturing output and new orders fell further, though food manufacturing continued to increase. Loan volumes contracted broadly, with the exception of residential mortgages and SBA's PPP funds. Home sales fell sharply from mid-March through mid-April but have been improving from low levels since then. Employment and hours worked continued to plummet, pressuring wages. While input costs were flat to slightly up, food processors noted a large increase in meat prices. Selling prices dipped further. Preliminary results from a May Dallas Fed Survey of Texas manufacturing and service firms indicated that current revenue levels for most respondents were down markedly compared with a typical May, and about a fifth said they would not be able to survive past six months if revenues did not improve. Outlooks remained weak due to uncertainty surrounding the pace and scope of the reopening of the District economy.\nEmployment and Wages\nEmployment declines were steep, spanning all metros and most industries. An April Dallas Fed survey of 400 Texas businesses in the services and manufacturing sectors showed that 47 percent of respondents had either temporarily or permanently laid off workers and 63 percent had cut hours. Energy contacts said oilfield workers were being furloughed or laid off in tandem with declining activity, and cuts were also widespread at corporate offices. A large rail firm said they have furloughed about 5,000 workers due to decreased traffic, and there were a few reports of employment cuts in real estate and construction. In contrast, a food manufacturer noted difficulty finding workers and a few finance firms said they were adding employees or using overtime to process PPP loans. Some companies said PPP funding had helped them hold on to employees.\nFirms that were beginning to call workers back said that fear of infection, lack of childcare, and generous unemployment insurance (UI) benefits were preventing some workers from returning. A few staffing firms noted difficulty recruiting due to increased UI benefits. Wages were flat to down, with auto dealers and energy firms among others noting reduced benefits and pay.\nPrices\nInput costs were flat to slightly up except for meat processing, where contacts noted significant upward price pressures. Weak demand for most products and services further depressed selling prices, though there were reports of rising costs of PPE and related supplies. Some firms noted making cost reductions to conserve cash. Airlines reported further discounting of tickets. Rail shipment rates for some commodities rose, but pricing for most others dipped. New home prices were flat though realtor bonuses and incentives were being offered. Staffing firms reported no change in bill rates.\nManufacturing\nOutput declines steepened in April, but preliminary data suggest that the pace of contraction slowed markedly in May. Declines spanned durables and nondurables, but manufacturers of transportation equipment and those tied to the oil and gas sector were among the hardest hit. Refinery utilization rates fell to 70 percent in April, well below the normal run rate of over 90 percent. Margins remained depressed and petrochemical manufacturers noted deferring maintenance and/or delaying construction projects to preserve capital. Only food manufacturers continued to cite growing demand. Overall outlooks remained starkly negative due to heightened uncertainty surrounding return to normalcy and post-pandemic consumer demand.\nRetail Sales\nRetail sales dipped further due to business closures and overall weak demand, with only a handful of contacts noting an improvement from low levels. Several firms also mentioned the weakness in the oil and gas industry as a headwind. Auto sales plunged in April and remained sluggish in early May, though some dealers noted a pickup in demand. Outlooks remained bleak and uncertain, mainly centered on the speed and extent of the recovery.\nNonfinancial Services\nActivity in the service sector remained depressed, though the rate of decline appeared to moderate in May relative to April. A few firms that cited rising revenues noted strong backlogs, increased demand stemming from the current economic distress, or a pickup in demand from a very weak April. Firms noting continued weakness generally reported low levels of demand, particularly in travel, accommodation, and food services. Among restaurants, those with no drive-thru infrastructure were the most impacted. Airlines said passenger demand was flat during the reporting period; however, it is down 90 percent compared to year ago levels. Domestic travel was mainly limited to essential workers, while overseas traffic largely consisted of cargo. Rail, air, and sea cargo volumes decreased year-over-year as well as during the reporting period. Staffing firms saw a drop off in orders, though there were reports of increased demand for workers in healthcare, nursing, logistics, and trucking. Service sector outlooks were largely pessimistic.\nConstruction and Real Estate\nExisting-home sales fell sharply in April and listings were down as well. New home sales plummeted from mid-March to mid-April but have been rising since then partly due to low mortgage rates. Despite the pickup, sales are generally running below plan. Home showings are either virtual or by appointment. Builders said cancellations have slowed in recent weeks from the highs seen in late March and early April. Some supply chain issues were noted due to plant closures. Several new land and lot deals were cancelled or on pause, spec building has slowed, and existing lot contracts were being renegotiated due to heightened uncertainty and the need to preserve cash. Outlooks remained weak, though they have improved slightly in recent weeks.\nMultifamily contacts said rent collections in April and early May were ahead of expectations. Leasing activity was sluggish but was picking up, and rent concessions had increased. Office leasing activity slowed, particularly in Houston. Investment sales were sluggish and capital for new development has mostly dried up as investors take a wait-and-see approach.\nFinancial Services\nLoan volumes contracted broadly, with the exception of PPP and residential real estate loans. Loan pricing continued its marked decline, and credit standards tightened considerably. Loan performance eroded across all loan types, and 83 percent of respondents expected further deterioration. Well over a third of bankers observed increased use of existing lines of credit due to COVID-19, up from 25 percent last period. On average, bankers said 13 percent of their clients were receiving loan payment deferrals. A majority of respondents have made SBA PPP loans to businesses, and most cited administrative or technology related challenges in processing and/or distributing PPP funds. Outlooks remained negative.\nEnergy\nEleventh District drilling and completion activity fell to record lows during the reporting period as depressed prices and storage constraints forced many firms to shut-in production. Smaller exploration & production firms reported idling most of their fracking crews and larger firms said they have been idling about half of them. Bankruptcies are expected to spike due to ongoing funding constraints. Contacts indicated that activity may be nearing a bottom, but recovery will likely be slow due to expectations of low crude oil prices through 2021.\nAgriculture\nSoil moisture levels remained favorable across most of the district, except for South Texas where there was drought. Wheat remained a bright spot with higher prices, strong demand, and solid yield prospects. Prices fell for other grain crops, particularly corn, due to declining ethanol demand. Contacts noted some concern for 2020 revenues in part due to lower grain prices. Reduced meat processing capacity due to social distancing measures and plant closures translated into lower demand and prices for cattle, even as beef prices soared.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"May 27, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District declined sharply in April and early May, as the spread of the coronavirus caused major economic upheaval. Contacts were split over whether activity would decline further or pick up during the next 3 months, and they largely expected full recovery to take more than a year. Employment, consumer spending, business spending, construction and real estate, manufacturing, and agriculture all decreased substantially. Wages edged up and prices were little changed. Financial conditions improved modestly.\nEmployment and Wages\nTotal employment fell dramatically over the reporting period, with especially large declines in the retail, leisure and hospitality, and auto industries. That said, many contacts reported little change in employment, and a staffing firm that primarily serves manufacturers said that workers were beginning to return from furloughs. Many contacts who received a Paycheck Protection Plan (PPP) loan said that they were avoiding layoffs in order to qualify for the loan forgiveness provision of the program. Still, a number of other contacts reported challenges in meeting the PPP loan forgiveness requirement, with some saying that generous unemployment benefits were making it difficult to bring payrolls back to necessary levels. Contacts again indicated they were making major changes in work environments to protect employees against the coronavirus. Wages edged up overall, with reports of workers at many essential businesses receiving bonuses or raises. Benefit costs were flat.\nPrices\nPrices were little changed in April and early May, though contacts expected modest price increases over the next 12 months. Both retail and producer prices were flat overall, though grocery prices rose moderately and hotel room rates declined substantially. Input prices were largely unchanged, with the exception of shipping costs, which increased some.\nConsumer Spending\nConsumer spending again decreased sharply over the reporting period. Nonauto retail sales declined considerably, as sellers of non-essential goods remained closed in much of the District. Sales fell for almost all categories, with apparel, electronics, and furniture stores particularly hard hit. In contrast, grocery stores reported sizeable increases in sales, and demand for home improvement items was steady. E-commerce again saw very large gains. Light vehicle sales were much lower, as some dealerships remained closed. Sales picked up at dealerships that were open, though the pace remained well below that of a year ago. Consumption of services remained much lower than prior to the coronavirus crisis.\nContacts in the food services, entertainment, tourism, and recreation sectors expressed deep concern about the upcoming summer season, noting that social distancing requirements were likely to put substantial limits on occupancy.\nBusiness Spending\nBusiness spending decreased significantly in April and early May. Retail inventories were well above comfortable levels in most segments after sales fell dramatically, and many contacts cancelled the bulk of their orders for the short term.\nThere were, however, reports of low inventories of groceries, household products, and home improvement products. A number of manufacturers said that inventories were higher than desired. Capital expenditures declined, and many contacts said they were suspending capital spending for the remainder of the year. Contacts continued to spend to support telecommuting. Demand for transportation services decreased moderately overall, as lower long-haul volumes outweighed increases in local delivery services. Commercial and industrial energy consumption declined moderately, with lower usage by retail stores, restaurants, and the auto industry.\nConstruction and Real Estate\nConstruction and real estate activity decreased substantially over the reporting period. Residential construction decreased moderately\u2014most projects that started before the coronavirus outbreak continued, but few new projects were started.\nResidential construction in Michigan restarted in early May after being suspended in late March, but contacts were concerned about the availability of labor, in part because many workers had left the state during the suspension. Residential real estate activity decreased substantially. One contact noted heightened interest in moving out of urban areas. Home prices fell slightly, as inventories and the number of interested buyers both fell. Apartment owners reported fewer rent delinquencies than they had expected and believed generous unemployment benefits were helping. Nonresidential construction activity decreased moderately as most existing projects continued. Commercial real estate activity decreased significantly, with the largest drops in the retail and hospitality sectors. Prices were little changed, though contacts reported elevated uncertainty over how to price many properties. Rents fell modestly as vacancies and the availability of sublease space increased modestly.\nManufacturing\nManufacturing production decreased substantially in April and early May. Auto production was very low as many assemblers and suppliers remained shut down. While many automakers in the US planned to resume production in the middle of\nMay, there was concern over supply chains due to uncertainty about when factories in Mexico would reopen. Steel production declined precipitously, driven by large declines in autos and oil and gas. Demand for specialty metals decreased moderately, as reduced orders from autos and aerospace outweighed slight increases from the medical and defense industries. Orders for heavy trucks continued to decline from their peak last year. Manufacturers of building materials saw a modest decrease in shipments, while manufacturers of packaging materials reported a large increase in demand.\nBanking and Finance\nFinancial conditions were mixed but improved modestly on balance. Participants in the equity and bond markets reported large gains over the previous reporting period, though volatility remained elevated. Business loan volumes increased dramatically as banks processed a massive number of Paycheck Protection Program applications. Demand for other loan products decreased moderately. Quality deteriorated moderately overall, and contacts highlighted declines for the leisure, hospitality, dental, non-profit, agriculture, and energy sectors. Standards again tightened moderately. Consumer loan demand decreased moderately overall. Volumes were lower for most categories, but remained high for mortgage refinancing. One contact said that auto loan applications were up a good deal from March, though still well below normal levels. Loan quality again deteriorated slightly and standards tightened slightly.\nAgriculture\nAgriculture incomes fell over the reporting period as most commodity prices fell. Contacts reported disruptions in the supply chain for meats, dairy, and vegetables. The disruptions were particularly notable for meats, as coronavirus outbreaks forced a number of packing plants to suspend operations. Some packers restarted, but output was substantially lower than a year ago. With no place to deliver market-ready animals, farmers were forced to slow herd growth (including by euthanizing hogs). On net, the supply disruptions led to higher prices and shortages of meat at grocery stores and restaurants, but lower prices for cattle and hogs. Milk prices also fell, with some producers dumping milk. Some ethanol plants accepted corn deliveries again, but corn prices remained low. Soybean prices also fell, but were favorable relative to corn, resulting in some shift toward planting beans. Planting progress was ahead of last year. Late freezes damaged some crops, particularly fruit trees. Farmers anticipated government programs would help during the downturn, but observers expected some distressed farms to be forced to liquidate.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"May 27, 2020\nSummary of Economic Activity\nEconomic activity in the Fifth District continued to decline after the sharp fall reported in our previous Beige Book. Manufacturers experienced declines in shipments and new orders, as well as cancellations of exiting orders, leaving some with excess inventories. Ports saw steep declines in volumes compared to the same time last year although imports from China increased somewhat. Trucking companies had a moderate decline in volumes as the increases in shipments of essential supplies did not make up for the losses in other shipments such as retail goods. Most retailers reported very little sales compared to last year and were concerned about low demand persisting for some time. Travel and tourism remained depressed with hotels reporting little occupancy outside of some health care and construction workers. Some restaurants pivoted to carry-out sales, while others remained closed. Home sales declined moderately and inventories were further reduced from low levels as few new listings came on the market. Commercial real estate leasing also declined moderately and some tenants requested payment deferments. Banks reported a slight decline in overall lending activity, but strong demand for CARES Act loans. Nonfinancial services firms reported a moderate decline in revenue and demand. Employment continued to decline sharply in recent weeks. Wages were little changed, overall, but there were a few reports of temporary wage increases or bonuses to keep workers on payrolls. Price growth slowed slightly but remained at a modest pace, overall.\nEmployment and Wages\nOverall, employment continued to decline sharply in recent weeks. The only reports of firms hiring or looking to hire came from high demand industries, such as food manufacturing, logistics, cleaning services, and some segments of retail.\nAlso, some employers noted that while they didn't lay off staff, they did reduce the number of hours they worked. Others expressed difficulties retaining or rehiring workers because they had child or elder care responsibilities, or because it was more financially beneficial to collect unemployment insurance. While there were few reports of permanent wage increases, there were several reports of employers temporarily increasing wages to retain essential on-site staff, to match the amount employees could earn on unemployment, or to reduce absenteeism.\nPrices\nPrice growth slowed slightly but overall remained modest. According to our most recent surveys, growth in prices received by firms slowed across manufacturing and service sectors. Conversely, growth in prices paid rose slightly for manufacturers and increased moderately for services firms. Coal prices declined further in recent weeks, from already low levels, while oil and gas prices fluctuated but remained historically low. Agriculture commodity prices mostly trended lower although prices paid by food manufacturers and consumers increased for some food groups, like meat and eggs.\nManufacturing\nManufacturers reported steep declines in shipments and new orders since our last report. Firms also reported a rise in cancellations of existing orders, which led to inventory build-up and a need for more storage capacity. A meat processor reported a decline in production as some plants shut down after employees tested positive for COVID-19. A prepared food manufacturer reported a decline in sales as panicked buying led customers to purchase frozen and canned foods, but was optimistic that people would start to transition back.\nPorts and Transportation\nShipment volumes at Fifth District ports fell sharply relative to last year. Exports were hit especially hard, declining further in recent weeks from already low levels. Imports were down over the year but recovered somewhat since our previous report as China resumed shipments. Automotive shipments were particularly weak as manufacturers were shut down and low oil prices softened the West African market for used vehicles. Contacts expected both imports and exports to remain low in the coming months.\nTrucking companies had a moderate drop in volumes since our previous report, and said volumes were down significantly from a year ago. Firms lost business from customers who were temporarily closed or faced decreased demand. Retail clothing, wine and convention-related shipments were especially soft. Some weakness was also attributed to supply-chain disruptions from overseas. Declines were partially offset by increased shipments of food, building materials, medical and cleaning supplies, and cardboard shipping boxes. Spot market rates fell sharply, and some companies had to remove trucks from the road.\nRetail, Travel, and Tourism\nRetail sales in the Fifth District remained low in recent weeks and decreased greatly on a year-over-year basis. Many retailers were required to shut down temporarily, but were able to conduct business online or by appointment. Retailers expressed concerns about demand and looked for ways to encourage customers to safely return once they reopened, such as requiring and providing masks, extending hours, and implementing measures that allow for social distancing inside stores. Clothing retailers struggled with a build-up of seasonal inventory that will be hard to move in the coming months.\nTravel and tourism remained extremely weak since our last report, with sharp declines reported on a year-over-year basis. Many hotels closed temporarily and those that were open saw low occupancy, which mainly came from healthcare workers and construction workers. Some contacts expected demand for tourism to come back strong because of pent-up demand. In parts of the Fifth District, advanced hotel bookings were up over the year for later this summer. Restaurants struggled as some were able to continue carry-out business, but others had to close. As restaurants were allowed to reopen with limited capacity, some opted to remain closed as operating at low capacity would not be profitable.\nReal Estate and Construction\nFifth District home sales declined moderately since our last report. Contracts that were underway before the health crisis moved forward, but fewer new sales were initiated. Inventories, which were already low, declined as potential sellers were reluctant to list and show their homes. There were a few reports of deals falling through because buyers failed to qualify for a mortgage as banks increased credit score requirements. Existing construction projects continued, but speculative building slowed, and contractors reported supply chain disruptions. Realtors also reported logistical challenges with electronic and curbside closings.\nFifth District commercial real estate leasing softened moderately in recent weeks. Landlords worked with tenants on rent deferments. Retailers, restaurants, and salons were especially likely to miss payments. Office leasing was also weak, as many tenants asked for deferments, and businesses did not look for new space. Current projects continued, but speculative construction softened. Demand for industrial leasing, on the other hand, was high. Multifamily leasing also remained strong, and some landlords allowed tenants to extend leases without added fees.\nBanking and Finance\nOverall, loan activity declined slightly for this period. Respondents indicated tepid conditions for conventional commercial lending, but strong demand for Paycheck Protection Program (PPP) loans. Residential mortgage demand declined compared to the first quarter but was higher than a year ago, while mortgage refinance lending continued to grow moderately. Auto loans declined sharply on a year-over-year basis. Deposit growth was strong, mainly due to proceeds from federal aid disbursements. Overall, credit quality remains good; however, a few bankers noted an uptick in 15-30 day past due payments and numerous requests for loan extensions, deferrals, and mortgage forbearances.\nNonfinancial Services\nOn balance, nonfinancial services firms saw a moderate decline in demand and revenues since our previous report. Hospitals and health care service providers reported sharp declines in revenues and total volumes, overall, because of the limitations on non-COVID-19-related services such as elective surgeries. Higher education institutions in the Fifth District also reported declines in revenues, largely due to reimbursements made to students for forgone room and board.\nDemand for professional services were mixed. For example, an accounting firms saw a modest reduction in business while a marketing company said sales were up, although the number of clients was down.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"May 27, 2020\nSummary of Economic Activity\nEconomic activity continued to decline into May according to First District business contacts. Many retailers and almost all hospitality businesses reported low to nil activity levels because of the pandemic. Responding manufacturers and staffing firms cited ongoing fall-offs in sales or revenue in recent weeks, but mostly still at sustainable levels. Commercial and residential real estate markets continued to be on pause, with some retail tenants reportedly having difficulty paying rent. Many firms furloughed or laid off workers, but some, involved in \"essential\" or pandemic-fighting businesses, retained staff and even continued hiring. Near-term outlooks were highly uncertain and generally downbeat.\nEmployment and Wages\nEmployment was generally down among business contacts. At auto dealers, many sales workers were furloughed as transactions moved online. Many employees at year-round tourist operations were laid off. Eight of 10 manufacturers said they had frozen or largely frozen hiring; the two exceptions cited increased output. Some manufacturers laid off or furloughed workers and some implemented pay reductions but, for the most part, headcount and pay remained at pre-pandemic levels. Many firms reported providing hourly supplements for production workers because of work-related risks. While their overall bookings declined, staffing contacts reported that hiring employers were generally offering increased pay to candidates, as much as 25 percent to 30 percent higher than before the pandemic; they expect these higher pay rates to be temporary.\nPrices\nFew contacts mentioned pricing. Auto dealers reported financing incentives for cars. No manufacturing contacts cited any unusual pricing, except that milk prices collapsed because of reduced sales to restaurants.\nRetail and Tourism\nRespondents continued to report major disruptions related to COVID-19. Weekly automobile sales in Connecticut dropped 60 percent from February to mid-April, though rebounds began in the final week of April; nonetheless, weekly sales remained down about 30 percent. All sales since the shutdown were online; once in-person sales resume, they are optimistic that transactions will recover further. One retailer continued to see year-over-year increases in sales and profits from online sales, with a large increase in first-time online users.\nRestaurants across Massachusetts effectively halted service in mid-March. Upwards of 200,000 workers in Massachusetts restaurants were either furloughed or laid off since then. Fewer than half of full-service restaurants attempted takeout business and many found it not sustainable or profitable. Social distancing rules mean that most restaurants will be able to operate at only 35 percent to 40 percent of capacity, which may not be profitable for many establishments.\nTravel industry contacts reported a 65 percent decline in hotel occupancy across New England, and a decline in excess of 80 percent in Greater Boston for April; those figures exclude hotels that were shuttered. Large conventions have been canceled through early fall, and over 200,000 hotel room nights will be lost as a result. In summer destinations, concerns heading into Memorial Day weekend remained high. A contact for one coastal area reported a stark increase in inquiries about bankruptcy procedures from small retailers. Some optimism remains that visitors driving-distance away will satisfy their pent-up vacation demand locally.\nManufacturing and Related Services\nExperiences varied widely among 10 responding manufacturers. Four firms reported higher sales than a year earlier. For two semiconductor firms, demand for consumer electronics remained strong. For a diagnostic equipment maker, the mix of demand changed, with less from universities and more from hospitals and other institutions on the front line of the fight against COVID-19. A dairy firm saw \"tremendous growth\" in March as households stocked up. The explanations for firms with weaker sales ranged from demand reductions from the auto industry and commercial aviation to productivity declines related to COVID-19 prevention.\nNine of the ten contacts said that all their facilities were open and only a few reported that any plants were shut at any point since the pandemic started. These firms' processes were well-suited to social distancing, with well-defined schedules and activities that required no contact between workers. Six contacts, including one with rising sales, reported negative revisions to capital spending.\nThe outlook was pessimistic for almost all manufacturing contacts. A veterinary products maker said they expected demand to pick up this summer. By contrast, most respondents said they were very uncertain about when or even if demand would return to previous levels.\nStaffing Services\nOverall demand and placement activity at New England staffing firms slowed compared to pre-pandemic levels, but did not halt. Labor supply was mixed: one firm saw three or four times as many replies to a job posting as before COVID-19; others described supply as volatile. A majority of contacts noted that for some people, unemployment benefits could outweigh a salary, providing less incentive to find a job. Some employers were interviewing and onboarding direct-hires virtually in the past six weeks\u2014a sign that companies were looking beyond the current situation.\nFirms reported finding ways to cope with the challenges brought on by COVID-19, with new business strategies or new sales people in some cases. All contacts who were eligible for the Payroll Protection Program received funding, which they regarded as vital support; businesses were also lining up other credit lines and resources in the face of uncertainty. The majority of contacts reported no major structural or compensation changes within their organizations due to COVID-19.\nOverall, contacts expressed optimism, \"excited\" (as one put it) to facilitate hiring during the upcoming recovery.\nCommercial Real Estate\nCommercial real estate activity in the First District came to a halt in March because of the COVID-19 shutdown. There were no leasing and investment sales activities except for a few time-sensitive transactions or lease renewals in Boston, Providence, and Hartford. Most office and industrial tenants were able to pay April rents, but retail tenants struggled. May rent collection was expected to be challenging, and lenders and landlords have been considering payment relief measures. Many tenants were also trying to renew their leases with shorter terms. Business sentiment was cautious and observant.\nIn the Boston market, renewing tenants were likely to have their rents lowered. Construction in and around Boston was mostly put on hold, except for some essential building projects. In the Hartford area, tenants asked to renew leases for very short periods or to postpone renewal decisions. In the investment sales market, projects in progress still happened, but new projects were pulled off the market or not initiated.\nResidential Real Estate\nResidential real estate markets in the First District slowed down in March and April due to the outbreak of COVID-19. For single family homes, closed sales decreased in all reporting areas and Rhode Island and New Hampshire experienced double-digit drops in pending sales. (Rhode Island, New Hampshire, and Maine reported year-over-year changes from April 2019 to April 2020. Massachusetts and Boston reported statistics only through March. Connecticut and Vermont data were unavailable.) For condos, sales declined in all reporting areas but Boston. Nonetheless, a seller's market prevailed, with median sales prices increasing and inventory dropping substantially in all reporting areas for both single family homes and condos.\nThe pause in market activity was expected by many contacts, since COVID-19 restrictions limited the availability of showings and squelched many sellers' moving plans. Looking forward, contacts expressed generally optimistic views on the post-pandemic outlook but considerable concern about near-term uncertainty related to lifting economic restrictions associated with the pandemic.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"May 27, 2020\nSummary of Economic Activity\nNinth District economic activity declined further after falling substantially in the previous report, due to the COVID-19 pandemic and response. Employment fell significantly, and wage pressures fell overall due to the steep decline in activity, while price pressures remained modest on balance. The District economy saw declines in consumer spending, tourism, services, construction and real estate, manufacturing, energy, mining, and agriculture.\nEmployment and Wages\nEmployment fell significantly since the last report. Two surveys in May by the Minneapolis Fed found that April employment fell among a significant number of firms, and many expected additional staffing cuts by the end of the month. Although initial unemployment claims have fallen significantly in recent weeks, they remain much higher than normal levels. Mass layoff events have slowed after a deluge in April. For example, there were more than 60 mass layoff announcements in Wisconsin in April, many involving multiple locations. Through mid-May, there have been only a handful of such announcements. Mass layoffs in Minnesota have followed a similar pattern. April job postings fell steeply in Minnesota and North Dakota. However, states that track job postings every week are showing evidence of a recent bounce-back. After dropping from mid-March through mid-April, job postings in South Dakota and Montana jumped significantly in late April and early May. Seasonal hiring has resumed with the gradual lifting of operational restrictions facing some businesses, but at a much lower level than normal. A Montana firm that normally hired 4,000 summer employees reported that it expected only about 1,000 this year. Ironically, staffing firms with job orders reported difficulty finding workers.\nWage pressures fell due to the steep decline in overall activity. A Districtwide survey of firms found that more than one-quarter have implemented some level of wage cuts, and a similar share of firms expected additional wages cuts over the coming three months. Firms in Minnesota had a higher incidence of wage cuts, while firms in the Dakotas saw a notably lower share. A Minnesota manufacturer cut wages by almost 4 percent for most workers, with senior management and managers taking pay cuts of 10 percent to 20 percent.\nPrices\nPrice pressures decreased on balance. Trucking firms reported that freight rates have fallen, in many cases dramatically, due to a contraction in demand for shipping. North Dakota crude oil prices as of mid-May were down 50 percent from their levels a month earlier. However, retail fuel prices in District states ticked up in recent weeks after declining in April and were roughly unchanged as of mid-May relative to the previous report. Manufacturing contacts continued to report that prices for raw material inputs were stable; however, a beverage bottler reported concerns that supply chain disruptions for plastic and aluminum would feed through to container prices. Recent spot prices for livestock and dairy have fallen precipitously, and restaurant and institutional food service shutdowns have roiled the agricultural supply chain.\nConsumer Spending\nConsumer spending declined significantly since the last report due to shelter-in-place guidelines and other factors that limited normal activities. Multiple surveys have shown steep revenue declines at restaurants, bars, lodging, and retail establishments. A survey in late April found that one-third of Minnesota tourism firms reported no revenue over the past 30 days. Hotel occupancy in Minneapolis-St. Paul has hovered around or below 20 percent for the past two months. Hotel bookings in Montana were also reported to be very low in April and May. Consumer spending conditions appeared to be less severe in the Dakotas, where businesses faced fewer operating restrictions. Nonetheless, South Dakota tourism tax receipts were down by almost 30 percent in April. There were modest signs of uptick\u2014from very low levels\u2014in some consumer spending areas. For example, vehicle titles and liens registered in Wisconsin have risen for four consecutive weeks. TSA screenings at airports Districtwide were showing small improvements after a freefall in passenger activity. Some hotels in Montana and other high-tourism areas reported improvements in reservations toward the end of June and into July. Activity at restaurants and other consumer-facing businesses was also returning slowly in May as District states lifted restrictions at varying rates.\nServices\nActivity in the services sector decreased. In a recent survey of Ninth District businesses, 75 percent of professional services firms reported decreased sales in April relative to a year earlier. A railroad reported that total April volumes were down more than 20 percent from a year earlier. A strong majority of trucking firms reported that sales decreased by 25 percent or more in April relative to a year earlier; expectations for May activity were slightly positive compared with April, but substantially down from May 2019. In contrast, a contact in the Great Lakes maritime shipping industry reported that orders remained strong.\nConstruction and Real Estate\nCommercial construction fell since the last report. An industry tracker of construction projects showed a modest dip in activity in April and early May. But other sources suggested a bigger decline. More than two of three respondents to a mid-May survey of Minnesota construction firms said they have had recent or future projects canceled, and an even higher share have seen other projects delayed. Respondents also reported a reduced number of new projects out for bid. Some major projects also moved forward, including a $1 billion project to reconstruct shipping locks on the eastern edge of Lake Superior. Residential construction was lower, but showed some positive signs. The aforementioned survey suggested that many Minnesota housing contractors were seeing project delays. At the same time, single-family permitting remained active in many of the District's larger markets, with Minneapolis-St. Paul, Sioux Falls, S.D., and Bismarck and Fargo, N.D., all seeing healthy growth in April permits compared with a year earlier.\nCommercial real estate activity fell since the last report. Slower economic activity was negatively affecting all real estate categories, but particularly retail and office space. Vacancy rates were expected to increase across the board as leasing activity slowed. Among industry subsectors, industrial space was reported to be faring the best, in part because of increased e-commerce demand for warehouse space, both currently and going forward. Rent collections were \"top of mind,\" among contacts. A multifamily property manager reported that rent delinquencies were elevated in May, but by less than expected, and reflected an improvement over April levels. Residential real estate was mixed. Home sales in Minnesota rose 1 percent in April over a year earlier. Sales elsewhere over this period were higher in northern Wisconsin, Fargo, Sioux Falls, and Great Falls, Mont., but lower in western Wisconsin, Grand Forks, N.D., and Missoula and Bozeman, Mont.\nManufacturing\nManufacturing activity decreased further. An index of manufacturing conditions indicated substantially decreased activity in April compared with a month earlier in Minnesota and the Dakotas; employment contracted sharply. Three in five manufacturers responding to a survey of District firms reported decreases in sales by 25 percent or more in April compared with a year earlier. Suppliers of inputs to the oil and gas industry reported a severe contraction in demand.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions worsened. Reports continued to surface of producers euthanizing animals or placing them on restrictive diets due to pandemic-related closure of livestock slaughter plants. More than two-thirds of Ninth District agricultural lenders reported that farm incomes decreased in the previous three months relative to a year earlier, with a similar share reporting decreased capital spending, according to the Minneapolis Fed's first-quarter (April) survey of agricultural credit conditions. Oil and gas activity, already in decline prior to the pandemic, contracted severely as demand fell. The number of active drilling rigs in the District as of early May was less than half the level during the previous reporting period. Multiple District iron ore production facilities shut down operations as domestic steel production declined.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nMay 27, 2020\nSummary of Economic Activity\nTenth District economic activity declined substantially since the previous survey, and contacts remained pessimistic about activity levels in the months ahead despite some easing of restrictions related to COVID-19. Consumer spending decreased at a faster pace in April and early May, with particularly weak sales at auto, restaurant, tourism and healthcare establishments. Manufacturers reported a record drop in activity as production plunged at both durable and non-durable goods plants in April. Transportation, wholesale trade, and professional and high-tech services contacts also reported lower sales, and additional declines were anticipated in the months ahead. Residential and commercial real estate activity dropped significantly, and construction activity fell at a modest pace. Energy activity declined further as firms announced well shut-ins to lower oil production. The agriculture sector also weakened further as disruptions at meat-packing plants worsened and cattle and corn prices declined sharply. District employment fell sharply over the past two months, but the pace of job losses moderated some in the last couple of weeks. Wages fell modestly, and input and selling prices declined across most District sectors.\nEmployment and Wages\nDistrict employment and employee hours were down moderately compared to the prior survey period and were substantially below year-ago levels. After a dramatic spike in initial claims for unemployment insurance in late March and April, the number of new claims declined in recent weeks but remained historically high. However, contacts in all sectors, with the exception of retail trade and real estate, expected continued declines in employment over the next few months, albeit at a more moderate pace.\nA majority of respondents continued to report no labor shortages, but some contacts did note difficulties finding truck drivers and hourly food-service workers. Wages fell modestly, but slight gains were expected in the coming months.\nPrices\nInput and selling prices declined across most District sectors in April. However, retail trade contacts noted modest growth in both input and selling prices. Input and selling prices declined slightly in the restaurant sector, but were expected to rise moderately in the next few months. Transportation contacts reported moderately lower input and selling prices and expected both to fall further in the months ahead. Construction supply respondents noted a moderate decline in selling prices and expected a slight drop in prices going forward. Manufacturers reported slightly lower prices for both finished products and raw materials prices, but expected prices to pick up slightly in the coming months.\nConsumer Spending\nConsumer spending decreased at a steeper pace since the last survey period as regional businesses continued to be negatively affected by COVID-19. Sales declined further in auto, restaurant, and tourism sectors, and most grocers and pharmacies reported some decline since the last survey as well. Activity remained low for District health services, with fewer sales and fewer hours, while input prices were higher than a year ago. Auto sales were down for all contacts compared with a year ago, and contacts expected inventory levels to expand further due to low sales expectations in the near term. Compared with the previous survey and a year ago, restaurant sales and employment levels contracted sharply. The hotel and tourism sector experienced steep losses due to COVID-19 shutdowns of non-essential businesses. Nearly all firms reported taking measures to cover shortfalls in revenues experienced as a result of the COVID-19 pandemic, and over two-thirds applied for the SBA PPP loan program. Expectations for future consumer activity improved only slightly compared with the previous survey period, and remained historically low.\nManufacturing and Other Business Activity\nManufacturing activity fell at a record pace in April as COVID-19 continued to weigh on firms. The decrease in manufacturing activity was steepest at durable goods factories such as primary and fabricated metals, but activity at non-durable goods plants including food and beverage manufacturing also declined. Production, new orders, employment, and raw materials inventories all dropped further compared to the previous survey period and year-ago levels. On the other hand, supplier delivery time increased. More than two-thirds of factory contacts reported applying for SBA PPP loans. However, a number of firms had not received funds by late April. Expectations for future activity rose compared to the last survey period, but remained slightly negative.\nOutside of manufacturing, sales decreased for firms in the transportation sector, and several firms reported layoffs and increased use of paid time off for employees since the previous survey period. Recent sales declined for wholesale trade, but remained around year-ago levels. Sales were also down for professional and high-tech services sectors in April and were below year-ago levels. Expectations in the transportation, wholesale trade, and professional and high-tech services sectors remained very negative, as firms anticipated significantly lower sales, employment levels, capital expenditures, and prices in coming months.\nReal Estate and Construction\nResidential and commercial real estate activity declined substantially since the previous survey, while construction activity fell modestly. Residential sales decreased sharply as stay-at-home orders reduced buyer traffic. New listings also fell significantly, and inventories were well below year-ago levels. Despite a decline in activity, home prices held steady and remained above year-ago levels. Home showings increased significantly over the past couple of weeks as restrictions eased, and residential real estate activity is expected to pick up modestly in the coming months. Residential and commercial construction activity declined modestly, and construction supply firms noted a slight increase in sales due to a pick-up in home improvement projects. Commercial real estate conditions deteriorated as vacancy rates increased, while absorption and sales declined. Access to credit was more difficult than last year, and overall commercial real estate activity was projected to worsen significantly in the next few months.\nBanking\nSince the last survey, loan demand continued to decline modestly and credit standards increased somewhat across most loan categories. Bankers indicated a sharp decrease in the demand for consumer loans and commercial real estate loans, while reporting a modest decrease in agriculture loans and a slight decrease in commercial and industrial loans. By contrast, bankers noted a slight increase in residential real estate loan demand. Loan quality declined moderately from a year ago and was anticipated to decrease significantly over the next six months. Bankers continue to carefully monitor the effects of COVID-19 on the local economy.\nEnergy\nEnergy activity collapsed further since the previous survey, and expectations for future drilling and business activity remained negative. Revenues decreased and capital spending plans declined. The number of active oil and gas rigs in the District fell dramatically to historic lows as firms announced well shut-ins to ease production levels. The sharp drop in demand for energy production due to the global pandemic continued to weigh on the outlook for energy activity. Low oil and gas prices also remained an issue for District firms, negatively impacting profitability. Most firms did not expect energy price levels to pick up significantly in the near term, and expectations for rig counts and employment levels remained subdued.\nAgriculture\nThe farm economy in the Tenth District weakened further alongside developments related to COVID-19. As of the second week of May, roughly a quarter of U.S. meatpacking and food processing plants with confirmed COVID-19 cases were located in the District. As disruptions in meat and food supply chains worsened and a substantial slowdown in ethanol production continued, cattle and corn prices declined sharply through early May. Alongside significant reductions in demand for corn used in ethanol, corn supply also was forecasted to be the largest on record in 2020. Contacts reported that weak market conditions likely will have major implications for producer cash flows in coming months. Despite a more pessimistic environment, farmland values in the region remained relatively steady.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMay 27, 2020\nSummary of Economic Activity\nEconomic activity in the Twelfth District contracted markedly during the reporting period of April through mid-May. Most businesses reported dramatic employment declines, due to disruptions related to the COVID-19 outbreak. Changes in wages were mixed. Price inflation was generally muted with exceptions in a few sectors. Sales of retail goods declined sharply, and activity for providers of consumer and business services contracted noticeably. Manufacturing contracted moderately, and activity in the agriculture sector slowed further. Conditions in residential real estate were mixed, while the commercial market showed a notable decline in activity. Lending activity increased moderately, fueled by Paycheck Protection Program (PPP) loans.\nEmployment and Wages\nBusiness disruptions related to the COVID-19 outbreak caused a surge in layoffs and furloughs over the reporting period. Many nonessential businesses reported double-digit percent reductions in their employment levels as well as cancelled hiring plans. Businesses in the entertainment, food services, retail, and tourism sectors were among the more severely affected. A large specialty retailer laid off or furloughed 85 percent of its employees. Conversely, some banks either maintained or increased hiring levels to accommodate increased demand for PPP loans. Some customer-facing essential businesses mentioned that some separations came at the request of employees who were afraid of contracting the coronavirus. Other contacts noted that some workers' current ability to receive more income through unemployment insurance and other social programs than through employment has hindered employee retention and rehiring efforts. Contacts across the District reported cutting workers' hours. Work arrangements became more flexible where possible, including teleworking and expanded leave periods. A banker in Central California recorded increases in worker absences of up to 10 percent primarily due to a lack of available childcare. A payment processing firm reported that job applications for current openings soared, though many candidates did not have the stated requirements.\nWages declined at some firms, but many reported no changes in hourly rates or salaries. A Southern California hotel reduced workers' pay by up to 40 percent. Building materials manufacturers and transportation providers either suspended or postponed bonuses, merit increases, and cost-of-living adjustments. Some small businesses said that PPP loans helped them maintain their wages at current levels. A Seattle firm reported offering hazard pay bonuses to 87 percent of its workforce.\nPrices\nMost contacts reported stable prices over the reporting period. Uncertainty about the timing of a rebound in activity inhibited price movement overall. However, prices for building materials increased modestly on balance with new construction projects restarting near the end of April in some areas. Hard-to-find products at grocery stores also showed some price increases. In contrast, contacts noted lower prices at gas pumps and heavy discounting at restaurants and hotels. Steel prices declined sharply due to a slowdown in auto manufacturing. Widespread closures at processing facilities generated oversupplies of livestock and dairy inputs and decreases in prices paid to farmers.\nRetail Trade and Services\nRetail sales across a variety of sectors fell by double-digit percentages in general as nonessential brick-and-mortar stores largely remained closed. Sales of many consumer goods have shifted heavily to online platforms, including footwear, pet care products, and seasonal merchandise. Online sales partially attenuated the impact of sharply reduced in-person sales. Big box retailers that remained open faced supply chain disruptions for some goods including paper and cleaning products. Demand for certain specialty home products such as do-it-yourself home improvement supplies and gardening materials remained stable or even increased. Auto dealers in the Mountain West reported a sales pickup in late April and early May compared with prior weeks, especially for larger vehicles such as trucks and SUVs, though inventory remained tight.\nActivity in consumer and business services contracted noticeably. Transportation fell moderately with the exception of residential delivery services. Restaurants remained closed apart from those able to offer take-out alternatives. Hotels, sports venues, in-person educational institutions, daycare centers, and movie theaters remained largely nonoperational. Spending on most discretionary medical services halted, but demand for mental health and veterinary services remained robust. In the Pacific Northwest, consumers avoided cash heavy expenditures such as auto repair services. A contact in the Pacific Northwest also warned of reduced local government revenue collection and its implication for potential cuts in fiscal spending and public services. In the entertainment sector, demand for broadcasting and voice-over services increased.\nManufacturing\nManufacturing activity declined moderately. Reduced global industrial activity negatively impacted sales, availability of raw materials, distribution networks, and capacity utilization. Demand for finished steel products decreased significantly, driven primarily by a suspension in auto production and lower demand from energy producers. A large metal manufacturer in the Pacific Northwest mentioned that capacity utilization is now below the long-term U.S. average. Manufacturers of building products saw reduced sales and limited production schedules, though one producer observed a pickup in demand as construction sites reopened in late April in some areas. Renewable energy machinery manufacturers cut their domestic production by up to half following health and safety concerns for their workers. Fruit, meat, and dairy producers across the District faced supply chain disruptions and production bottlenecks following the closure of many processing and packing facilities.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector slowed further over the reporting period. Domestic demand from the commercial food sector continued to be just a fraction of what it was before the COVID-19 shock. Potato and barley growers in Idaho faced reduced sales to distributors who had retained leftover inventory from the previous season. Fruit growers in California saw some increased demand from food banks, social service providers, and governmental programs, but, a decline overall in domestic demand. Timber producers in the Pacific Northwest also saw a pullback in domestic demand for logs due to the slowdown in manufacturing activity. On the supply side, some producers in Idaho and Arizona have reduced live animal herd sizes in response to bottlenecks at meat processing plants. Agricultural export markets were similarly downbeat. Milk exports declined notably. Slowdowns in the entertainment and restaurant sectors abroad hit exports of nuts and raisins. Energy producers saw steep declines in industrial and commercial demand, but rapid increases in residential usage. Timber loggers witnessed some additional demand from Asian markets facing reduced supply from other western countries.\nReal Estate and Construction\nResidential construction activity was mixed on net. After a temporary halt in construction, residential projects restarted in some areas in late April or early May, depending on local social distancing relaxation schedules. Overall, home sales slowed dramatically and inventories decreased as sellers held back amid in-person home tour restrictions. Nonetheless, a few local markets in California and Idaho continued to see strong home sales, especially within higher price ranges. Uncertainty around future construction and sales remained high. A contact in Southern California mentioned that residential rent prices were flat or even down slightly as tenants sought and gained payment concessions.\nCommercial construction activity declined notably throughout the District. Reports highlighted that weak business prospects for restaurants, hotels, and other commercial venues have severely depressed commercial construction and permitting across a large portion of the District. One contact in Idaho emphasized that commercial projects were only postponed, as opposed to terminated, mostly due to delays in the delivery of building materials.\nFinancial Institutions\nOverall lending activity increased moderately, fueled by PPP loans. Financiers reported that, outside of PPP loans, the level of regular commercial loan origination fell modestly as firms focused instead on drawing down preexisting lines of credit and applying for loans through the federal relief program. Contacts noted that banks' participation in the federal program has increased, though uncertain guidelines have discouraged engagement in the program somewhat. Some banks continued to offer PPP loans to existing customers only. Reports mentioned that loan repayment deferral requests continued to soar. Credit quality remained generally stable though. A banker in Central California did record increased loan write-offs. Refinancing activity for residential mortgages was robust following a decrease in interest rates. Even though application requirements tightened, credit remained widely available for first mortgages and refinances in most areas within the District. Venture capitalists reported they were scrutinizing start-up financing more strictly both for new investment and continued funding.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"May 27, 2020\nSummary of Economic Activity\nThe Fourth District's economy deteriorated further in the current reporting period after it contracted sharply in the previous period. Firms across a broad range of sectors reporting declines in customer demand. The shuttering of physical stores and reduced travel because of the coronavirus pandemic kept sales weak for retailers and hospitality establishments. Reduced foot traffic also hamstrung auto and home sales. Manufacturing orders declined, and producers slashed capital investments, although a number of contacts believe their current backlogs will tide them over until demand improves. The slower pace of construction activity, reduced manufacturing production, and weak consumer spending resulted in low cargo volumes. Relatively strong areas of economic activity included grocery sales and business lending. Firms responded to weak customer demand by reducing staff levels and in some case by cutting wages. Inflation pressures eased because of weak demand and lower commodity prices. A sizeable share of firms believed the worst declines in demand have passed. However, few expect a strong recovery given the uncertainty of the coronavirus's path.\nEmployment and Wages\nEmployment declined in a broad range of sectors as layoffs were widespread and hiring was limited to a handful of firms. Half of contacts reported decreasing staff levels during the current period, compared with about 40 percent that did so in March. Furthermore, only one-third of contacts who reduced staff levels expect to rehire close to the full number of separated staff when their businesses reopen. This expectation suggests employment is unlikely to climb back to pre-pandemic levels quickly after businesses reopen. Firms that held their staff levels flat tended to be in financial services, construction, real estate, or manufacturing. In several cases, firms in these sectors cited the Paycheck Protection Program as enabling employee retention. The few firms that increased staff included grocers, who saw an increase in at-home food demand and curbside pickup, and a couple of large banks that needed back-office support. Some retailers started to recall staff in limited numbers as businesses were allowed to reopen. One staffing firm reported that his clients were starting to increase hours or bring back workers who were laid off.\nMultiple contacts in a variety of industries noted additional labor market challenges, including limited access to child care services keeping workers away from job sites, workers' requesting to stay home out of fear of the virus, and unemployment benefits that disincentivized workers from rejoining payrolls.\nOverall, wage pressures were flat. Although the majority of firms left wages unchanged, one in five contacts reduced workers' pay, a marked increase from the number of contacts who did so in the previous period. Wage cuts were concentrated in retail, real estate, professional services, and civic organizations. Multiple contacts reported wage reductions of at least 10 percent for office workers or nonfurloughed staff. In cases in which wages increased, these increases tended to be for employees at a variety of banks, transportation firms, and manufacturers. These firms raised wages for people who continued to work on site, in a number of cases by $1 to $3 per hour.\nPrices\nFirms reported that input cost pressures eased because of lower prices for commodities such as oil, steel, copper, cotton, and resins. The few cost increases that were reported included those for meat and some inputs for manufacturing and construction firms for which pockets of supply-chains were temporarily disrupted. One in four firms reduced selling prices because of weak customer demand and lower commodity prices. This was the case notably among residential builders who offered discounts on homes, commercial real estate firms that reduced rents, and transportation firms that lowered their rates. Also, department stores and apparel retailers heavily discounted their prices.\nConsumer Spending\nRetail activity remained significantly lower than prepandemic levels. Restaurants saw dramatic reductions in revenue because of the closure of dine-in services. Also, a sharp decline in business travel significantly reduced hotel bookings.\nDepartment stores and apparel retailers saw deep reductions in sales because of the shuttering of physical stores and were unable to fill the gap with online sales. One auto dealer reported that the impact of COVID-19 has been \"unprecedented,\" with total sales down 55 percent year over year. By contrast, grocers saw stronger demand as customers cooked more at home. Many contacts expect customer demand will improve somewhat as restrictions are lifted slowly. However, they feared consumer spending could be dampened if unemployment remained high and concerns about contracting the coronavirus lingered.\nManufacturing\nManufacturing orders continued to slide. Several contacts noted that the shutdown of automotive production was particularly painful; others reported that they anticipated long-lasting and adverse impacts to the aerospace and energy sectors.\nMore than two-thirds of contacts indicated that capacity utilization is below its normal range, citing lack of demand, inefficiency brought on by social distancing, and difficulty convincing employees that it is safe to come to work. Manufacturers believed the worst declines in demand may have passed in April, though the outlook for the rest of the year was still downbeat. Additionally, some contacts were optimistic that their current backlogs would tide them over until demand picks up again.\nReal Estate and Construction\nConstruction activity fell for almost all residential and nonresidential construction firms. Backlogs for nonresidential builders, that were heretofore relatively large, diminished, with one builder's saying the pandemic caused 80 percent of the firm's backlog to be postponed. Real estate agents reported weaker home sales because of slower foot traffic. One custom home builder tried selling homes online with limited success. Demand from first-time home buyers weakened because of a weak job market, and although interest rates are low, potential buyers were having a harder time qualifying for credit. One housing agency reported increased demand for rental and utility assistance.\nLooking ahead to the near-term, residential estate agents were more optimistic that single-family home demand would improve because of pent-up demand, low interest rates, and low inventories of homes. Also, a number of nonresidential builders expect delayed projects would come back online. Downside concerns included reduced infrastructure spending because of declines in state gasoline tax revenues. Also, higher education institutions are facing fiscal difficulties that could lead to canceled projects. Finally, commercial real estate firms worry that relatively high rates of nonpayment of rent and rent deferrals will linger and depress profits.\nFinancial Services\nReports from financial services companies were mixed. Bankers saw large numbers of business-loan requests and draws on lines of credit in the second half of March, and while this activity slowed somewhat in April, it remained robust.\nSeveral banks reported processing large numbers of Paycheck Protection Program loans. On the other hand, demand for consumer loans was down significantly outside of heightened activity in home mortgage refinancing. A wealth management advisor noted that economic uncertainty drove increased demand for his services; however, another contact reported dampened demand for insurance because of declines in business activity and vehicle miles driven.\nProfessional and Business Services\nCustomer demand for professional and business services was mixed. One online shopping consultant reported an increase in demand in recent weeks, as did another contact who provides legal and strategic advice. A corporate strategy advisor reported that customers have recently started enquiring about potential investment projects. By contrast, several contacts in a variety of industries such as advertising consulting, landscape development, robotics, and payroll support reported continuing subdued demand for their services.\nFreight\nWeaknesses in the manufacturing, construction, retail, and energy sectors resulted in weaker cargo volumes for freight companies. Contacts highlighted reduced auto and metal production as particular pain points. The difficulty for transportation firms is exacerbated by the fact that freight volumes were already soft going into the pandemic. The few bright spots in the sector are limited to cargo for groceries and local and short-haul transportation.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"April 15, 2020\nSummary of Economic Activity\nFifth District economic activity declined across many sectors, quite sharply in some, due in large part to the measures taken by businesses and consumers to slow the spread of the coronavirus outbreak. Manufacturers reported a slowdown in shipments and new orders but most were able to keep plants open, albeit at lower levels of production. Producers of essential supplies and food saw an increase in demand. Port contacts reported a moderate decline in import volumes, particularly from China and Europe. Trucking companies saw steady demand as the decline in retail shipments was offset by increases in shipments for other essential supplies. Retail, travel, and tourism firms saw sharp declines in demand and occupancy rates and many restaurants closed or shifted to take-out or delivery only. Residential real estate contacts reported a slowdown in foot traffic and sales while new home construction faced delays. Commercial real estate leasing fell and some tenants looked to break leases or sought relief due to economic hardship. Bankers, on the other hand, saw a moderate increase in demand, mainly coming from residential construction and refinance loans. On balance, nonfinancial services firms saw a modest decline in revenue. Some farmers reported increased demand and more favorable selling prices. Low oil and natural gas prices led energy companies to reduce activity. Employment fell sharply, overall. Price growth remained muted.\nEmployment and Wages\nOn balance, employment declined sharply; however, individual firm experiences varied considerably. Some manufacturers cut production and reduced staff. Others, such as food and personal care products manufacturers, increased hours and employment in response to stronger demand. Some business-to-business services firms reduced weekly hours for employees and cut temporary positions. Many consumer facing businesses like hotels, restaurants, and retail shops reduced staff sharply due to steep declines in demand owing to social distancing guidelines. An outdoor recreation establishment said that they normally hire three to four hundred seasonal staff at this time of year but right now all hiring was on hold. No changes to wages were reported.\nPrices\nOverall, price growth remained muted since our previous report. According to our most recent surveys, manufacturers reported a slight deceleration in growth of prices paid. A couple of producers pointed to recent declines in oil and gas prices as contributing factors to slower input price growth. Service sector firms saw an acceleration in growth of prices paid and prices received. Some agricultural commodity prices, such as soy, wheat, beef, poultry, and eggs rose, in recent weeks.\nManufacturing\nManufacturers in the Fifth District reported declines in shipments and new orders since our last report. Many manufacturers had drops in demand resulting from retailers closing, which led some firms to slow production. Manufacturers also experienced supply chain disruptions, involving inputs from China or Europe. Some were hopeful that supply from China would improve soon but were concerned that demand would decrease further in the U.S. A cabinet manufacturer had a sharp drop in demand, and made plans to consolidate and downsize operations. A food manufacturer, on the other hand, experienced strong demand.\nPorts and Transportation\nFifth District port volumes fell moderately since our last report, driven largely by a decline in imports, especially from China and Europe. Import levels continued to exceed export levels although the gap between the two narrowed. Exports remained strong, particularly agricultural products and lumber. Despite softer imports, inventories built up at ports as companies, particularly car dealers, refused deliveries. Port revenues were hurt by the cancellations of cruises. However, a Fifth District airport saw a slight increase in international cargo flights, which was attributed to a decrease in passenger flights on which some goods are normally transported.\nFifth District trucking companies reported fairly steady business in recent weeks as declines in retail shipments were offset by increased demand from other parts of the market. Shipments of food, laptops, and cigarettes were particularly high. Spot market rates rose slightly as demand shifted across sectors. Some companies struggled to find enough drivers, as a small number of drivers were quarantined and newly trained drivers could not get their licenses while the DMV was closed. Also, low fuel prices helped lower operating costs.\nRetail, Travel, and Tourism\nFifth District retail sales declined sharply since our last report. Many stores were forced to close, and others saw decreased demand. Retailers looked for creative ways to remain open. A clothing store allowed for appointment-only in-store shopping, and a florist switched to curbside pickup. Stores lowered prices and offered free shipping to attract customers and move inventories. Grocery store sales increased. They added workers to stock shelves and warehouses, but struggled to maintain inventories. Retailers that remained open also reported increased cleaning efforts.\nThe tourism industry contracted significantly in the Fifth District in recent weeks. Hotel occupancy fell to unprecedented levels, leading several hotels to close and others to operate with minimal staff. However, some people continued to visit rentals and vacation homes. Many restaurants closed when dining in was disallowed, while others tried to remain open for take-out and delivery. For many restaurants, especially those not structured for takeout, this was not a long term solution but a way for them to sell their perishable inventory.\nReal Estate and Construction\nFifth District home sales declined modestly in recent weeks. Buyer traffic decreased, but some who viewed houses were serious about buying quickly. Inventory levels remained low, as showings decreased since prospective sellers were reluctant to let others into their homes. Builders worried about excess inventories if demand slowed further. Sale prices and days on the market held fairly steady. Construction projects continued but at a slower pace, and new starts fell. One realtor mentioned that appraisals and inspections were delayed as fewer workers were in the field.\nFifth District commercial real estate leasing decreased moderately since our last report. Office and retail leasing declined sharply as companies reported no new leases. Existing office and retail tenants looked to break leases or asked for rent reductions and deferments, with many claiming force majeure. However, industrial leasing remained fairly strong, as companies looked for extra storage space for accumulating inventories during temporary closures. Brokers reported mixed conditions in multifamily. Existing construction projects continued, but new construction starts declined.\nBanking and Finance\nOverall, loan demand grew moderately mainly due to an increase in construction financing and mortgage refinance loans. Respondents indicated tepid demand for commercial real estate and C&I loans, though several banks mentioned that they anticipate strong demand for CARES Act SBA loans. Auto loans declined sharply in recent weeks. Most banks reported that deposits grew moderately despite lower interest rates paid on all accounts; however, they also reported rate compression. Financial institutions noted that credit standards, delinquencies, and credit quality remained solid; however, they expect an uptick in delinquency rates within the next 60 days due to deterioration in the economy caused by the coronavirus outbreak.\nNonfinancial Services\nOverall, nonfinancial services firms indicated a modest decline in revenue and demand in recent weeks, which many attributed to the coronavirus outbreak. Several business-to-business service providers said that clients were putting work on hold or delaying new projects. An HR outsourcing firm in Northern Virginia said that only about half of their field staff had security clearances to work remotely, thereby reducing billable hours. In contrast, a law firm said that they saw an increase in business as clients were looking for help understanding recently passed coronavirus aid legislation.\nNatural Resources\nReports from agriculture and energy contacts were mixed. Some farmers reported increased demand from grocery stores and rising commodity prices. One egg farmer said that this probably saved many farmers as selling prices had been depressed in recent months. Energy contacts, on the other hand, saw declines in extraction and new exploration due to sharp declines in oil and gas prices.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"April 15, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District declined in late February and March, as the spread of the coronavirus caused major economic upheaval. The intensity of the decline varied by industry, but contacts across industries expected a large decrease in activity over the next 3 months and expected the recovery to still be underway a year from now. Consumer spending decreased sharply; business spending, construction and real estate activity, and manufacturing production decreased moderately. Retail and hospitality payrolls plunged, though employment for most contacts was little changed. Wages edged up and prices were little changed. Financial conditions deteriorated substantially, as did prospects for agricultural income.\nEmployment and Wages\nMany retail and hospitality contacts reported large layoffs, though employment for most Beige Book contacts was little changed over the reporting period. That said, contacts reported major changes in work environments. Manufacturers facing slowdowns often reported cutting workers' hours, and many also planned to use the downtime to carry out maintenance or do productivity enhancing projects. There also were widespread reports of workers choosing to stay home for health safety reasons. Most nonessential workers who could began telecommuting. Overall, contacts expected a modest decline in employment over the next 3 months, with few looking to increase employment until the uncertainty created by the coronavirus abated some. Among those still looking for workers, challenges in filling positions persisted at all skill levels. Wages edged up, and contacts expected modest increases over the next 12 months. Benefit costs increased slightly.\nPrices\nPrices were little changed in late February and March, though contacts expected modest price increases over the next 12 months. Both retail and producer prices were flat overall. Input prices were largely unchanged, except for energy prices, which fell some.\nConsumer Spending\nConsumer spending decreased sharply over the reporting period. Overall, nonauto retail sales declined considerably as the coronavirus crisis forced store closures across the District. Sales fell in most segments, particularly in apparel. In contrast, grocery and health and personal care stores saw dramatically higher demand, with numerous reports of runs on items such as household cleaners and toilet paper. E-commerce also expanded significantly. Consumption of services fell precipitously, particularly in the hospitality, entertainment, and food service sectors as the coronavirus crisis led to reduced travel and prohibitions of large gatherings. Vehicle sales fell sharply and dealerships across the District closed. Vehicle service center activity also fell steeply.\nBusiness Spending\nBusiness spending decreased modestly in late February and March. Retail inventories were generally above comfortable levels after sales in most segments fell. There were, however, reports of extremely low inventories of some grocery and household products. Most manufacturers said that inventories were at comfortable levels. Capital spending declined some, and contacts expected spending to decrease slightly over the next 12 months. Outlays were primarily for IT equipment and intellectual property, with numerous reports of spending to support telecommuting. Contacts also noted increased spending on sanitation and other protective health measures for workers. Demand for transportation services decreased slightly overall, as lower long distance volumes outweighed increases in local delivery services. Commercial and industrial energy consumption declined some, with lower usage reported from retail stores, restaurants, hotels, and auto manufacturers.\nConstruction and Real Estate\nConstruction and real estate activity decreased moderately over the reporting period. Residential construction activity fell modestly. Contacts indicated that only a small share of projects had been delayed, though they expected a large decrease in building when active projects are completed. Residential real estate activity decreased substantially. Showings were limited because widespread shelter-in-place orders meant homes could not be viewed publicly. One contact said that only sales that were under contract before the beginning of the coronavirus crisis were being completed. Nonresidential construction activity was little changed. Contacts indicated that, as with residential construction, most projects were continuing. A contact in southern Wisconsin reported greater demand from restaurants for remodeling work as owners anticipated eventually reopening. Commercial real estate activity decreased significantly, particularly for retail and office spaces. Contacts noted that there was strong pressure on landlords to give rent forbearance, but that landlords were having difficulty obtaining forbearance from their lenders. Contacts also noted that the commercial property purchase process had slowed because permits and titles were taking longer to obtain with government workers telecommuting.\nManufacturing\nManufacturing production decreased moderately on net in late February and March. Auto production declined substantially as the coronavirus crisis led many assemblers and suppliers to shut down. Steel production slowed significantly, driven by large declines in autos, oil and gas, and construction. Demand for specialty metals decreased moderately, as reduced orders from autos and aerospace outweighed slight increases from the medical and defense industries. Orders for heavy trucks continued to decline from a peak at the end of last year. Food manufacturers reported a substantial increase in demand, as did manufacturers of shipping materials. Manufacturers of building materials saw a slight increase in shipments as greater demand from commercial builders more than made up for less demand from residential builders.\nBanking and Finance\nFinancial conditions deteriorated substantially over the reporting period. Participants in the equity and bond markets reported large increases in volatility and large decreases in liquidity across a wide range of asset categories. Business loan volumes decreased moderately as greater uncertainty led borrowers to hold off on new loan requests. That said, many businesses drew on existing lines of credit. Lenders also reported a large number of requests for loan payment deferrals. Lenders indicated that they were actively working to implement the Small Business Administration's Paycheck Protection Program and expected a large volume of applications. Business loan quality deteriorated moderately across most sectors, but especially in the hospitality, retail, and non-profit sectors. Standards tightened some. Consumer loan demand decreased moderately due to a large pullback in requests for auto and home-purchase loans. Contacts noted that consumers were carrying higher credit card balances even though new spending was lower. Mortgage refinancing volumes continued to increase. Reports on consumer loan quality were mixed: most contacts saw no change to date, but others experienced a deterioration in line with rising unemployment. Consumer loan standards tightened modestly on balance.\nAgriculture\nIncome prospects for the agricultural sector deteriorated substantially as the spread of the coronavirus led to a dramatic fall in many commodity prices. A large drop in ethanol prices led ethanol plants to cut production and corn consumption, which pushed corn prices lower. The drop in ethanol production also reduced the availability of corn byproducts needed for nutritional balance in corn-based animal food rations. This led livestock operations to switch to soymeal and helped support soybean prices. In spite of shortages of some meat products in stores, most livestock prices fell as demand from restaurants and other food service providers weakened. Milk sales declined substantially as schools closed, but egg prices spiked. Contacts expressed concern about the health and availability of agriculture workers, particularly for specialty crop production. Access to credit for farm operators was little changed, though loan requests increased.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"April 15, 2020\nSummary of Economic Activity\nOn balance, economic activity in the Sixth District deteriorated from mid-February to late March, and the outlook diminished as a result of the COVID-19 pandemic. Labor market conditions weakened significantly as businesses reported widespread layoffs and furloughs. Nonlabor costs were stable. Retail contacts noted plunging sales of discretionary goods, and surges in spending on essential items. Hospitality and tourism contacts reported significant declines in activity as conventions were cancelled and attractions were temporarily shuttered. Activity in residential and commercial real estate slowed somewhat. Manufacturing activity deteriorated, but new orders held steady or increased as a result of changes in product demand. Overall transportation activity declined. District bankers reported mixed conditions.\nEmployment and Wages\nDistrict labor market conditions deteriorated over the reporting period as the spread of COVID-19 precipitated a sharp contraction in activity leading to layoffs and furloughs, especially in retail, tourism and hospitality. Grocery, home improvement, and discount stores, along with home delivery services, experienced a surge in demand resulting in a strong increase in hiring. Growing restrictions on public gatherings forced many restaurants to pivot to take-out and delivery services in an effort to stay in business and preserve some jobs. Manufacturing and distribution workforces remained largely intact and those producing high-demand products indicated working longer hours. Most firms with the ability to do so transitioned to remote working. In response to a sharp drop in demand, the region's energy sector experienced a contraction in employment. Some businesses noted actively working to connect laid-off or furloughed employees with firms that were hiring.\nSome District firms reported cutting pay, eliminating bonuses, and reducing hours, in efforts to retain employees. However, high demand sectors, such as grocery, distribution, and warehousing announced increases in hourly wages or bonuses. Some companies still hiring have postponed pre-employment background checks like drug tests and finger printing, largely in an effort to reduce physical contact. Many contacts reported relaxing attendance policies and increasing paid time off and leave allowances. Some noted an extension of premium pay to essential workers or employees who deal directly with the public.\nPrices\nMost contacts reported stable input costs over the reporting period with expectations that prices may drop as a result of lower overall demand due to the COVID-19 pandemic. With considerable uncertainty regarding supply chains and demand, most sectors reported an effort to avoid raising prices. Oil price declines benefitted businesses outside of the energy sector, helping defray the rising cost of freight. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.6 percent in March, virtually unchanged from February. Over the next twelve months survey respondents, on average, indicated they expect unit costs to rise 1.9 percent.\nConsumer Spending and Tourism\nDistrict retailers reported sales growth of grocery and household products, office equipment, and home improvement goods, which partially offset some of the steep decline in discretionary consumer spending activity due to COVID-19. E-commerce activity accelerated as brick-and-mortar sales plummeted. There were some reports of supply chain bottlenecking as high-traffic retailers such as grocers, big box, and warehouse chains struggled to manage the influx of shipments to fill empty shelves.\nTourism and hospitality contacts reported a massive decline in activity across the District as a result of COVID-19. By mid-March, most major conferences and conventions had been cancelled or postponed, the majority of tourist attractions were temporarily shuttered, and hoteliers reported historically low occupancy rates. Several contacts noted that hotels with locations close to hospitals were being considered for conversion for medical use and shelters for COVID-19 patients or hospital staff.\nConstruction and Real Estate\nAfter a strong start to the year, District housing activity was significantly disrupted by the COVID-19 pandemic. Contacts indicated that since their sales pipeline was strong prior to the outbreak, recent transactions were solid and cancellations were muted. However, market participants anticipate a contraction in second quarter sales as in-person traffic and new sales activity declined significantly since early March. Expectations for potential disruptions in functions such as permitting, appraisals, deed filings, and notarizations due to social distancing were noted, and some reports indicated a tightening of credit and lending standards. Construction and development activity slowed and builders began strengthening cash reserves and guarding balance sheets.\nCommercial real estate (CRE) contacts reported a deceleration in new leasing inquiries amid the COVID-19 pandemic. However, leasing activity that was already in the pipeline appeared to be moving forward. Declining tourism and travel activity significantly impacted CRE in the hospitality and retail sectors. Investment property sales slowed markedly due to issues associated with the slowing of financing from commercial mortgage backed securities and non-bank lenders; however, contacts reported that capital was readily available at banks for the financing of CRE projects. Banks reported that originations continued in the CRE space. Reports of tenants seeking rent relief have begun to emerge.\nManufacturing\nManufacturing firms reported solid overall activity in late February, but indicated conditions rapidly deteriorated in early March due to the COVID-19 pandemic. Despite the decline in activity, some firms suggested that new orders were holding steady or even increasing due to changes in product demand. Supply delivery times were reported to be increasing.\nTransportation\nDistrict transportation contacts continued to report varying levels of activity, and the majority noted some degree of negative impacts to business due to COVID-19. Activity for logistics, trucking, and freight brokerage firms held steady on average as consumer demand for discretionary products declined and demand for essential items increased. However, according to railroad contacts, overall rail traffic fell by near double digits as compared with year-earlier levels, driven by declines in the movement of grain, coal, aggregates and iron and steel scrap, and motor vehicles and parts. Intermodal traffic also fell. Air cargo contacts cited a continued deterioration in freight volumes over the reporting period. Sizeable declines in revenue and massive shifts in costs, including implementing pay cuts across the board to help offset some of the revenue losses, were mentioned. Ports saw year-over-year declines in container activity as imports from Asia slowed, and significant declines in overall freight activity for the foreseeable future are anticipated.\nBanking and Finance\nFinancial institutions expressed concerns about the potential increase in delinquencies and the impact on both earnings and capital due to uncertainties around the COVID-19 outbreak. Slower loan growth was reported and some indicated they were being more careful about underwriting, especially with residential and some commercial real estate properties. Financial institutions reported contacting customers in industries most affected by the pandemic to determine borrowers' potential needs for accommodations. These industries included travel and hospitality, retailers, restaurants and their suppliers, transportation and logistics, and health care providers. Given declines in market value of some institutions, goodwill impairments were being considered. Liquidity remained stable. Some financial institutions reported growth in deposits while others experienced large cash withdrawals.\nEnergy\nGlobal demand for crude oil and liquefied natural gas fell over the reporting period primarily as a result of the COVID-19 pandemic, in spite of the fall in oil prices. As a result of price declines, broad cost-cutting measures, including reductions in major capital spending plans, suspension of share buybacks, delays of onsite scheduled maintenance, hiring freezes, and the dismissal of contractors were reported. Industrial plant and construction contacts reported delays in some petrochemical new build and expansion projects. Utilities firms noted that power usage declines among commercial business lines were nearly offset by a spike in residential power usage, as people spend more time at home. Utilities firms anticipate a further drop in power demand, particularly from the industrial segment, as budget cuts make their way through the sector.\nAgriculture\nAgricultural conditions remained mixed. Most of the District remained drought free, with the exception of much of Florida and other parts of the Gulf coastal region, which experienced abnormally dry conditions. On a month-over-month basis, the March production forecast for Florida's orange crop was down from both last month's forecast and last year's production while the grapefruit production forecast was down month-over-month but remained ahead of last year's production. Contacts reported the COVID-19 pandemic has resulted in recent significant price increases for corn, rice, soybeans, milk and eggs, and an increase in demand for Florida oranges. Contacts also reported that some District states modified trucking weight and hour requirements in response to COVID-19, which has had a positive effect on getting product to market more quickly.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"April 15, 2020\nSummary of Economic Activity\nThird District business activity fell severely during the current Beige Book period, as the COVID-19 pandemic gripped the mid-Atlantic region. From March 19 through March 24, our three states ordered all nonessential businesses to close; by April 1, statewide stay-at-home orders were in place. As of March 29, over two-thirds of the firms reported that their new orders (or sales) had fallen in excess of 5 percent \u2013 one-fifth in excess of 30 percent \u2013 and one-fourth had shut down. Declines varied by sector; none were spared. Manufacturers were more likely to be essential and operating, but some closed after employees tested positive. Firms furloughed or laid off workers in record numbers. Still, contagion fears and at-home child care needs contributed to no-shows at existing jobs and kept workers from filling open jobs. The wage path is unclear \u2013 some firms offered hardship pay, while others imposed salary cuts. Price pressures eased as oil prices cratered and demand slumped. Uncertainty clouds outlooks as firms wait for the COVID-19 threat to subside\nEmployment and Wages\nEmployment contracted sharply. At the end of March, one-fourth of the firms reported that they had shut down \u2013 a few shutdowns were permanent. In other responses to the crisis, one-half of the firms ceased all hiring. Employee furloughs, reductions of temporary or contract workers, and reductions of employees' average work hours were mentioned in equal measure by one-fourth of the firms.\nOn average, payrolls of staffing firms' placements appear to be down 40 to 50 percent across the District. Even business associated with essential food manufacturing and distribution was down over 10 percent. A Pennsylvania contact noted that a food manufacturer shut down for two weeks after an employee tested positive. Some staffing firms have trimmed their own staff; others have guaranteed staff full pay through June.\nMultiple staffing contacts and firms from varied sectors reported that rising layoffs have not made it easier to attract and retain labor. Contagion fears and at-home child care needs have led some workers to stop showing up for work; those concerns plus unemployment benefits are also keeping workers from seeking other jobs.\nFirms have reported a mix of wage strategies. Some firms reduced pay for their executives and/or managers; some issued annual raises and bonuses early. Other firms have added \"appreciation\" pay or \"hazard\" pay for hourly workers who must still report to work. Many salaried workers can telecommute \u2013 three-fourths of the firms noted an increase in their use of telecommuting. Contacts expect wage growth to moderate in the future.\nPrices\nIn contrast to wages, firms were more unified in their belief that prices were stabilizing, if not falling. At mid-March, firms reported moderating prices compared with the prior period. Since then, prices have eased further. Aside from occasional price gouging, most commodity prices have stabilized; some construction materials have begun to fall. Contacts pointed to low oil prices and slumping demand as factors supporting their expectations that prices would moderate further.\nManufacturing\nAs March progressed, manufacturers reported weaker new orders \u2013 resulting in a moderate overall decline. At mid-March, one-half of the firms reported no change; of the remainder, twice as many noted decreases as noted increases. By the end of March, one-third of the firms reported no change; of the remainder, five times as many noted decreases (or shutdowns) as noted increases. Almost one-fifth of the firms saw orders drop by more than 30 percent of prior expectations. Nearly one in 10 firms shut down.\nAccording to several firms with global perspectives, supply chain issues with China have eased, and China is mostly back to work. One contact did note that a few plants shut down again, as demand from foreign customers waned. These contacts noted substantial declines of demand in southern Europe and several weakening sectors across the U.S., including oil field services, light metals, and food production and distribution that was oriented toward restaurants and group dining facilities.\nConsumer Spending\nNonauto retail sales plummeted, as a majority of retail stores and restaurants closed, plus essential stores and takeout restaurants faced limited demand under statewide stay-at-home orders. One food and beverage chain furloughed 700 employees without pay or benefits; another lost 90 percent of its usual sales overnight \u2013 it hopes to grow its takeout service to recoup a fraction of its sales. Two food-oriented retail chains were able to stabilize sales with losses of 30 percent or less.\nSales of new and used cars appear to have fallen by as much as 50 percent from February to March. From March 19 through March 26, our three states ordered dealers to stop sales, although they permitted selling parts and servicing vehicles. Delaware and New Jersey subsequently allowed limited sales.\nTourism has virtually stopped. A majority of hotels, resorts, and attractions have reported closing and laying off tens of thousands of employees. Most of Atlantic City's 26,450 casino workers were laid off when the casinos were shut down. As of March 28, a tourism analyst estimated that weekly travel spending had fallen 80 percent in New Jersey and Pennsylvania, and 70 percent in Delaware.\nNonfinancial Services\nLike manufacturers, broad service sectors also reported weaker new orders/sales as March progressed \u2013 resulting in a severe overall decline. At mid-March about one-fourth of the firms reported no change; of the remainder, one and a half times as many noted decreases as noted increases. By the end of March, a tenth of the firms reported no change; of the remainder, six times as many noted decreases (or shutdowns) as noted increases. Almost one-fifth of the firms saw orders drop by more than 30 percent of prior expectations. Nearly one in three firms shut down.\nFinancial Services\nBy March 25, reports from financial firms were starting to show signs of financial stress among firms and households. Volumes of credit card debt and of auto loans began falling after March 11. In contrast, over the same two weeks, volumes grew rapidly for two lending categories in which firms and households are able to draw down on or request extensions of existing lines of credit: commercial and industrial loans and home equity lines.\nCommercial real estate lending and home mortgages did not appear to be impacted yet. Bankers and brokers indicated that most deals that were already scheduled were completed. However, contacts expect fewer deals to be brought to the table going forward.\nBanking contacts were busy negotiating loan modifications and loan deferrals, while deciphering new Small Business Administration rules and other programs available in the Coronavirus Aid, Relief, and Economic Security Act recovery package, as fast as the regulations were being written. The bankers stated that liquidity was not a problem but would be a concern if the shutdown dragged on.\nReal Estate and Construction\nHomebuilders were sidelined in Pennsylvania, but construction continued in Delaware and New Jersey. Nevertheless, projects were slowed by supply disruptions, transactions that were complicated by disrupted local government services, and a reluctant workforce facing contagion fears. Buyers have not canceled existing contracts, but new orders are nonexistent.\nReal estate firms also noted extra hurdles with title work and inspections required to close transactions. However, most scheduled closings were finalized. Showings and sales have dropped off considerably in Pennsylvania despite switching to virtual showings. Contacts note that activity has held up in Delaware.\nPhiladelphia's commercial real estate construction fell 70 percent by the end of March \u2013 some contractors have no projects. After initially being shut down in Pennsylvania, commercial construction was allowed an exemption. Unfortunately, worker attendance is less than 50 percent on some projects. On the commercial leasing side, tenants are seeking lower rents, whether they need it or not. As with residential construction, deals already in the works have been finalized, but fewer new projects are coming forward now.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"April 15, 2020\nSummary of Economic Activity\nThe coronavirus pandemic slowed business activity markedly in some First District sectors, notably retail and tourism, while having mixed effects on others, as of the end of March. Most responding retailers closed stores and saw sales drop significantly in recent weeks, while tourism plummeted. Software and information technology services firms reported first-quarter growth above expectations, but a sharp drop-off in orders from new customers. Almost all the First District manufacturers responding in this round said their sales were rising, in large part because of pandemic-related demand; a furniture maker, by contrast, shut down production because demand fell to zero. Commercial real estate activity halted abruptly across the region in March. First District residential real estate contacts expect March data to show a pause. Manufacturers had cautiously positive outlooks, but other sectors expressed considerable uncertainty.\nEmployment and Wages\nEmployment and wage changes across sectors largely reflected demand patterns. The retailers who closed brick and mortar stores furloughed the store workers. Two retail contacts reported pay reductions for corporate staff; one progressively from 5 percent to 30 percent based on pay level, and the other 20 percent across the board, which came with a four-day work week rather than five. Only one manufacturer, a furniture maker who halted production, reported laying off workers. Most manufacturing contacts had not revised their employment plans as a result of COVID-19. A packaging firm said headcount fell but that was planned long before the pandemic. A frozen fish manufacturer was hiring to meet added demand but was concerned -- because they were union workers -- that the firm would not be able to reduce headcount when demand returned to normal. Employment at software and IT services firms remained steady through the first quarter, although most contacts reported plans to do replacement hiring only for critical roles as they moved into the second quarter. All the responding software and IT firms have moved to a work-from-home posture which, so far, has allowed them to maintain full employment and full salaries.\nPrices\nContacts cited few changes in the pricing environment. No responding manufacturers noted any unusual pricing pressure. A frozen fish firm said that it eliminated substantial promotions in response to much stronger demand, meaning that prices to consumers were higher. A drug company said that the COVID-19 pandemic led it to cancel a planned price increase. Despite pockets of softness in demand, software and IT services contacts said they currently had no plans to alter selling prices.\nRetail and Tourism\nRetail respondents for this round mostly reported substantial drop-offs in sales, which were attributable to COVID-19 store closings. A contact who closed stores during the third week of March saw online sales quadruple in the final week of March, which had traditionally been a small portion of their total sales, but the increase did not fully offset the in-store decline. Another contact who closed stores in the third week of March reported a decrease in online sales of roughly 25 percent. One contacted retail chain could keep all stores open, and their sales were up dramatically in the first three weeks of March; by contrast, sales in the final week of March dropped by mid-single-digit percentages from a year ago. An online retailer saw sales grow more than 50 percent as workers settled into working from home and demanded more home-office furnishings as well as other home goods. All contacts reported they had stronger sales in January and February than in recent years.\nTravel industry contacts reported that the volume of passengers and flights fell drastically in March. Hotel occupancy and room rates in the Boston area dropped dramatically throughout March as large conferences and other travel plans were cancelled. One tourism contact reported that coastal communities that rely on seasonal business are cautiously optimistic about a snap-back in visitors who are driving-distance away soon after advisories are lifted, reflecting pent-up demand from cancellation of planned vacations throughout the spring.\nManufacturing and Related Services\nOf 11 firms contacted this cycle, 10 reported higher sales despite, or in many cases, because of the pandemic. The one exception was a furniture manufacturer who sells largely through company-owned stores; as of March 27, they had shut down manufacturing and closed all their retail stores because of COVID-19. Other contacts saw rising sales for a variety of reasons, most linked to COVID-19 and its associated effects on the economy. A frozen fish manufacturer and a cardboard box company attributed recent strong results to brisk sales in grocery stores. The fish company said that the increase in demand had left it with essentially no inventories. A toy company said sales were good because social distancing meant people were spending more time at home with children. A medical goods manufacturer had a ten-fold increase in orders for portable ventilators. A manufacturer of membranes used in ventilators and N-95 masks, not surprisingly, had strong sales. The membrane manufacturer also sells into the auto industry and said that declining auto production freed up production for the medical market.\nThe outlook was generally positive. Even the furniture maker was hopeful that workers could return soon and was also investigating government programs for relief. Several contacts were generally optimistic but said they were more cautious than before the pandemic.\nSoftware and Information Technology Services\nSoftware and IT services firms reported growth that exceeded expectations for the first quarter, but indicated there was uncertainty looking ahead to the second quarter. Two contacts reported that first quarter revenues were up 20 percent to 24 percent year-over-year, and all respondents noted strong demand in the first two months of 2020. During March, new bookings declined drastically across-the-board and one contact mentioned that they had zero new bookings for that month. While contacts remain cautious about maintaining cash flow, they plan to reduce operating expenses by limiting travel and cancelling large annual events through the end of the year. Overall, firms expressed uncertainty regarding the duration of this downturn but remain cautiously hopeful in their relationships with existing customers and the decisions they have made to limit expenses going forward.\nCommercial Real Estate\nCommercial real estate activity in the First District had continued to strengthen before the COVID-19 outbreak but fell sharply afterwards. Before the outbreak, the Boston leasing market was robust in both the office and industrial sectors, and rents were increasing. In the Providence leasing market, vacancies were low and rents were steady. In the Greater Hartford area, both the leasing and investment sales markets were slow but steady. The COVID-19 outbreak began affecting commercial real estate markets across the District in mid-March, with a near-total freeze in new office leasing activity, collapse of some sales in progress, growing disturbances in credit markets, and steep declines in construction activity. Retail tenants were especially hard hit, enacting store closures and mass layoffs, and many have received at least temporary forbearance on rent payments. In contrast, the industrial sector experienced increased demand for warehouse space to support e-commerce in response to the outbreak. Contacts on balance were cautious and observant, but all expressed significant concerns about the near-term outlook for commercial real estate activity in light of the COVID-19 pandemic.\nResidential Real Estate\nResidential real estate markets in the First District continued to experience very low inventory levels in February (the latest data available for Rhode Island, Massachusetts, Boston, New Hampshire, and Maine, with no data available for Connecticut and Vermont). For single family homes, sales were up in February from a year earlier in Rhode Island and Maine but down in Massachusetts, Boston, and New Hampshire. For condos, sales rose in Rhode Island, Massachusetts, and Boston while dropping moderately in New Hampshire and Maine. Median sales prices generally increased and inventory declined substantially for both single family homes and condos. Contacts from Rhode Island, Massachusetts, Boston, and Maine all noted that inventory levels have been \"desperately\" low.\nContacts said they expect March 2020 data to show a pause in housing market activity caused by the COVID-19 outbreak, a pause they expect will continue throughout the pandemic-related economic slowdown.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2020/2020-04-sf

"Beige Book Report: San Francisco\nApril 15, 2020\nSummary of Economic Activity\nEconomic activity in the Twelfth District contracted notably during the reporting period of mid-February through March. Many businesses reported employment or wage declines due to disruptions related to the outbreak of coronavirus disease 2019 (COVID-19). The rate of price inflation decreased modestly. Sales of retail goods and vehicles declined precipitously, and activity for providers of consumer and business services slowed sharply toward the end of the reporting period. Manufacturing contracted moderately, and activity in the agriculture sector slowed somewhat. Conditions in residential and commercial real estate were mixed, though the residential market saw slight growth on balance. Lending declined moderately.\nEmployment and Wages\nDue to disruptions stemming from the outbreak of COVID-19, many businesses reduced employment levels, and others scrapped plans to expand employment. Developments such as these were reported across various skill levels and industries, though most occurred for lower hourly wage jobs in the retail, food services, and tourism industries. A freeze on television and film production in the District resulted in widespread layoffs in the entertainment sector. A major hotel chain in Southern California put 80 percent of employees on furlough and reduced hours for remaining employees. A restaurant-chain owner in Seattle laid off several hundred employees. Some businesses reported no change in employment levels but expected to have to cut jobs in coming weeks if mandated business closures continue. One metal manufacturer in the Pacific Northwest anticipated reducing payrolls as new orders have declined significantly. A financial technology company in Northern California put on hold a plan to hire 1,500 additional staff members.\nWages declined at some employers. The Southern California hotel company also cut managers' pay 10 to 15 percent in response to a severe decline in occupancy rates. A building supplies manufacturer in Northern California cut wages somewhat to contain costs. One restaurant chain in Washington reported salary cuts of up to 20 percent for office and administrative staff.\nPrices\nThe rate of price inflation decreased a bit. Prices for building materials declined moderately on balance as new construction projects were put on hold. Some contacts reported lower fuel and energy costs along with lower airfares. Changes in prices of agricultural products were mixed. For some growers, prices were stable with solid demand from domestic grocery stores. Selling prices for other growers, especially those dependent on exporting, fell as demand from abroad remained subdued. Many businesses expected heightened slack in the labor market going forward, eliminating any prior upward pressure on wage and price growth. Steel manufacturers in the Pacific Northwest reported no changes in input or selling prices. There were a few reports of price gouging on essential household goods in short supply.\nRetail Trade and Services\nWith few exceptions, contacts reported that sales of retail goods and vehicles declined precipitously on net over the reporting period; this decrease was due to mandated closures of nonessential businesses in all District states in mid- to late-March in response to the spread of COVID-19. Activity came to a standstill for most retailers in California, Hawaii, Idaho and Washington, with exceptions reported for grocery stores and some building product retailers. In Idaho, vehicle sales along with sales of parts and accessories fell from a solid level in late-February and early-March to near zero in mid-March. Some business owners anticipated that retail sales will decline further as job losses decrease incomes. Additionally, lasting impacts of the COVID-19 outbreak could accelerate the trend towards online sales, hurting small retailers with brick-and-mortar stores. Many respondents deemed concessionary government loans essential to prevent widespread small business closures.\nActivity for providers of consumer and business services also declined sharply toward the end of the reporting period. Restaurant sales fell sharply. Pivots to take-out operations did not compensate for lost dine-in revenue. A hotelier in Southern California reported that occupancy rates entered free fall in mid-March, and many hotels decided to close temporarily. This contact had previously expected stable growth in the first quarter of the year. The tourism industry in Hawaii essentially shut down in March, a blow to the state's economy. A major shipping and logistics company reported that small business shipments slowed markedly, and international volumes fell by almost half. Home deliveries from big box stores held solid though. Television and film production in Southern California halted. A contact in the health-care industry in Nevada reported that providers were facing limited supplies of essential items like masks, gowns, and ventilators and have been forced to begin rationing care for COVID-19 patients.\nManufacturing\nActivity in the manufacturing sector contracted moderately. Most manufacturers, while still operating, noted that the supply chains that deliver raw material inputs have been negatively affected by the outbreak of COVID-19. A contact in Southern California reported that manufacturers of components for renewable energy production have seen decreases in the supply of raw materials. A metal fabricator in Oregon had a healthy backlog of orders but noted emerging difficulties in obtaining inputs and a decline in new orders. A building products manufacturer in the Mountain West saw a severe drop in demand from retailers, who instead bought in smaller quantities from intermediary wholesalers.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector slowed somewhat as growers grappled with disruptions due to the COVID-19 outbreak. Several contacts noted that most agriculture businesses in states with shelter-in-place orders, like California and Washington, were designated as \"essential\" and allowed to continue operations. Therefore, some farming contacts in Central California and Eastern Washington reported that activity was broadly stable, sales to grocery stores were solid, and production inputs and labor supply were generally available. However, a bulk food producer and distributor noted that starting in mid-March sales to restaurants across the District were virtually nonexistent. Washington fruit growers and Idaho corn growers saw a noticeable decline in domestic demand, which has severely jeopardized profitability for some businesses. A contact in Eastern Washington noted that production could be disrupted if the flow of migrant workers from Mexico is impacted by restrictions on Mexico-U.S. border crossings. On the export side, fruit and nut growers in California have seen continued weak demand from China, though wheat growers in Idaho saw an increase in new orders from China in the past few weeks. In general, contacts noted that the strong dollar also hampered export sales.\nReal Estate and Construction\nResidential real estate activity was mixed but grew slightly on balance. Contacts reported that most in-progress home building continued throughout March, while the future status of residential construction vis-\u00e0-vis nonessential business closures was unclear. In most states, construction is expected to continue, though the demand outlook for new residential projects is highly uncertain. Reports also painted a mixed picture of sales activity in the District. Buyer response to the COVID-19 outbreak varied by local market as did local government restrictions on selling. Some reports for Idaho, Oregon, California, and Washington indicated that sales activity and prices were stable around recent levels. Other reports for Idaho and California indicated that sales fell severely in the second half of March.\nConditions in commercial real estate markets were mixed. In Southern California, major infrastructure projects proceeded amidst the statewide shelter-in-place order though some reports emphasized that continuation depends on maintaining a healthy workforce. In the Mountain West, commercial projects generally proceeded though new project proposals declined noticeably. Some reports highlighted the potential for building owners to face strain if commercial tenants are unable to make rental payments.\nFinancial Institutions\nLending activity declined moderately amidst ample liquidity. Reports noted that new loan origination fell sharply, and many banks received payment deferral requests from small business borrowers. Several banks readied emergency credit lines and expected credit quality to deteriorate as broad economic conditions turn for the worse. A few lenders expressed concern that new government lending programs would not allow speedy distribution of funds to small businesses. Venture capital investing slowed severely and investors are expected to become highly selective regarding new funding opportunities. Home mortgage refinancing activity was robust following decreases in the federal funds rate in early March.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"April 15, 2020\nSummary of Economic Activity\nThere was sudden and broad-based weakening of the Eleventh District economy during the reporting period. Many firms reported a sharp reduction in activity, resulting from business disruptions and closures due to the COVID-19 pandemic. Activity in the energy, retail, and service sectors was the hardest hit. Overall factory output and new orders plunged, though production in food and printing-related manufacturing increased. Loan demand contracted broadly and credit quality eroded slightly, except in residential real estate lending. Housing demand held up through mid-March but has declined notably since then. Employment and hours worked plummeted, resulting in downward wage pressures. Input costs were flat to down, and selling prices dipped amid declining demand for many products and services. Outlooks worsened markedly and uncertainty surged, as the economic impact of the COVID-19 pandemic and related containment measures intensified.\nEmployment and Wages\nEmployment declines were steep, particularly in retail, transportation, administrative and waste management, and accommodation and food services, as stay-at-home orders led to widespread business disruptions and closures. A March Dallas Fed survey of 400 Texas businesses in the services and manufacturing sectors showed that one-third of respondents had either temporarily or permanently laid off workers, and 56 percent noted that additional layoffs were likely if the situation did not improve. Some firms noted needing financial assistance to maintain their payrolls, while others were adjusting hours and/or salaries. Airlines were also offering a voluntary leave option. Energy contacts said they expect industry employment to fall sharply in tandem with oilfield activity. By contrast, a few firms said they were taking this opportunity to hire due to increased demand or a desire to bring on more qualified employees.\nThere were generally downward pressure on wages outside of manufacturing and construction.\nPrices\nPlunging demand for products and services led to widespread declines in selling prices, including for used cars and energy. Airlines reported increasing the quota of lower-priced tickets. Rates on rail shipments of some commodities rose, but pricing for most others dipped. Input costs were flat in services and down in energy, manufacturing, and retail.\nManufacturing\nFactory activity deteriorated sharply in March, following a broad-based acceleration during the previous reporting period. Many firms noted a significant reduction in demand and/or a rise in order cancellations, resulting from business disruptions caused by shelter-in-place mandates. Some contacts also cited weak oil prices as a headwind for growth. In contrast, pandemic-related increased demand for food and protective equipment boosted output in food and printing-related manufacturing.\nRefiners and chemical producers indicated softening global demand and downward pressure on margins due to the coronavirus pandemic. Firms noted delaying large construction projects and lowering utilization rates as demand for fuels dropped and inventories rose.\nOverall outlooks turned negative, with many manufacturers expecting business activity to be adversely impacted because of COVID-19 for at least three to six months.\nRetail Sales\nRetail sales plummeted over the reporting period as a drop-off in consumer discretionary spending and widespread business closures\u2014many mandated by local governments\u2014precipitated steep declines in revenues. Auto sales plunged, while a few healthcare and general merchandise stores noted higher demand. Outlooks deteriorated notably as businesses re-evaluated plans in the face of rising uncertainties.\nNonfinancial Services\nActivity in the service sector was negatively affected by the coronavirus outbreak, with firms overwhelmingly seeing or expecting to see lower demand as customers reduced spending and were forced to cut back or cancel previously planned purchases or events. The few who saw stronger demand were tied to the grocery or professional services industries which are largely able to continue operating. Accommodation and food services and arts and recreation industries were among the hardest hit. Airlines saw a dramatic decline in demand. Trip cancellations were outpacing new passenger bookings, and demand is expected to deteriorate further. Rail and air cargo volumes decreased. Most staffing firms saw a significant drop in orders, though there were reports of increased demand for workers in healthcare, nursing, and pharmaceuticals. Service sector outlooks were largely pessimistic due to uncertainty surrounding when things would return to normal.\nConstruction and Real Estate\nHousing demand held up through mid-March, but sales and traffic have dropped off markedly since then, particularly in Houston. Builders reported a higher-than-normal cancellation rate, though some said they had managed to meet their March sales goal due to strong demand in the earlier half of the month. Showings dipped as many sellers took their homes off the market. Several new land and lot deals were on pause, and builders were renegotiating existing lot contracts. Outlooks weakened considerably, with sales and starts expected to slow because of the coronavirus outbreak.\nMultifamily contacts said impacts from the spread of COVID-19 will become evident in the months ahead as interruptions in household incomes compel many tenants to seek relief on rent payments. Expectations are for the low and high end of the market to be the most impacted. Commercial leasing activity was beginning to be affected, with conditions in the retail sector deteriorating rapidly. The investment climate is uncertain, making it difficult to price deals. A number of land and commercial real estate transactions have been delayed or cancelled as investors take a wait-and-see approach.\nFinancial Services\nLoan volumes contracted broadly, led by declines in commercial and industrial lending. The only exception was residential real estate loan demand, which increased during the reporting period. Loan pricing continued its marked decline, and credit standards tightened. Credit quality eroded across most loan types and most bankers expect further deterioration. About 25 percent of bankers reported increased use of existing lines of credit and 26 percent noted higher demand for new ones, and most said they have plans in place to meet the higher demand. Business activity tumbled, and expectations for activity in the next six months worsened notably.\nEnergy\nEleventh District drilling and completion activity fell sharply toward the end of the reporting period in response to a collapse in West Texas Intermediate crude oil prices. Many producers are evaluating which wells need to be shut-in, particularly as physical storage capacity for oil depletes rapidly. Firms said they are unable to access capital through credit markets, prompting concerns about a sharp increase in bankruptcies. U.S. crude production is projected to decline by year end, but there is wide disagreement on how far it will fall.\nAgriculture\nRecent rainfall remedied drought conditions across most of the district. Wheat demand and prices rose due to increased purchases of breads and pastas during the coronavirus pandemic. Contacts expect some farmers will switch away from cotton to wheat or other grains this year, as cotton prices have plummeted and could slip further as people pare back discretionary spending on clothing. On the livestock side, pasture conditions were favorable and prices for cattle ready for feedlots rose because of pandemic-related increased demand for beef. Meatpackers have seen higher revenues in recent weeks as grocery stores increased orders and beef and chicken prices have risen.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"April 15, 2020\nSummary of Economic Activity\nThe Fourth District economy contracted sharply in the second half of March as business disruptions resulting from COVID-19 mitigation efforts spread quickly. Consumer spending decreased materially, with restaurants, tourism, and nonessential retail spending particularly hard hit. Residential realtors and builders noted that stay-at-home orders curbed walk-in traffic, and pending home sales fell. Meanwhile, many new nonresidential projects were delayed, and commercial realtors expressed concern that cash flow will suffer as tenants defer rent payments. Manufacturers' orders declined amid virus-related work stoppages along with pullbacks in capital equipment spending. Banking and a few business services sectors saw activity pick up as a result of the pandemic, but, on balance, service sector activity was down. Reports from freight and logistics firms were mixed. Looking forward, contacts generally expected economic conditions to worsen further in coming months. Consequently, many planned to conserve cash by reducing capital spending and cutting staffing levels in the months ahead. Weakening demand across industries generally resulted in less upward pressure on costs and prices.\nEmployment and Wages\nFourth District employment fell significantly in recent weeks as firms realigned their staff with suddenly diminished demand for their goods and services. There was very little new hiring taking place and contacts in most industries reported cutting hours, staff, or both. Of those firms that were cutting staff, the majority indicated that they were furloughing workers rather than firing them outright, with the hope of bringing them back once business activity resumes. Employers appeared eager to do everything in their power to help underutilized workers. Many reportedly increased wages temporarily for essential workers whose hours had been cut, while others were extending healthcare benefits to furloughed workers or offering them help finding new employment. Banks, grocery stores, and health services firms were among the few industries that were not cutting back on staffing. Outside of the temporary pay increases, upward wage pressures generally diminished. Looking forward, greater than one in two surveyed firms expected staffing levels to fall in coming months, compared to fewer than one in 10 that expected them to rise.\nPrices\nSelling prices generally declined in recent weeks, while nonlabor input costs increased at a noticeably slower pace. For the first time since late 2015, more contacts reported that selling prices had declined compared to those who said they had increased. Those who said that prices decreased generally cited reduced demand resulting from COVID-19 mitigation efforts. While this trend was evident across most industries, it was particularly pronounced among nonessential retailers, many of which had been seeing increased pricing power during the past several reports. By contrast, freight haulers noted higher selling prices. At the same time, a considerably smaller share of contacts reported higher prices for nonlabor input costs compared to the prior Beige Book period. While firms in most industries expected cost pressures to remain muted in coming months, some manufacturers and construction contacts said that supply chain disruptions may push prices up for some materials.\nConsumer Spending\nRetail activity in the Fourth District declined sharply as a result of social distancing measures taken to mitigate the spread of COVID-19. With a large number of dine-in restaurants and nonessential retailers ordered to close, many establishments lost a significant portion of their expected revenue. A national restaurant group indicated that revenues were lower by 60 percent year over year, even as stores remained open for takeout and delivery, while a smaller regional holding group shut down all of its establishments because costs far exceeded revenues. Meanwhile, one luxury auto dealer reported that while its doors remained open with reduced hours, it had not sold a car in the second half of March. By contrast, a handful of essential grocery stores saw a large spike in demand recently as consumers stocked up on food and home supplies. Contacts in the retail sector generally expected economic distress to persist into the summer, followed by a slow and gradual recovery.\nManufacturing\nManufacturing conditions worsened as more than half of contacts reported that demand had declined during the last two months. Contacts noted a pullback in capital spending along with work stoppages because the spread of COVID-19 reduced orders. Several contacts noted in particular that the two-week shutdown of US auto production would have ripple effects throughout their supply chains. More than a third of manufacturers reported that capacity utilization was below a normal range because demand had weakened and because employees were increasingly missing work because of illness, concern about the virus, and school closures. Although a few contacts noted an uptick in demand because of precautionary behavior, they expected that demand would drop off in the future as customers work through their built-up inventory.\nReal Estate and Construction\nReports from realtors and builders (residential and nonresidential) indicated that activity fell sharply in mid-March. On the residential side, real estate professionals suggested that sales in 2020 had been off to a very strong start through the first half of March, but they weakened subsequently. Thus, while existing home sales were relatively robust in the first quarter, pending sales fell notably in March. Builders indicated that work on homes under contract continued, although sales had slowed. However, one builder noted that cancellation rates had increased, and another was concerned that homes under contract may not close in coming months if rising unemployment befalls some of his buyers. Nonresidential real estate professionals indicated that demand fell recently. Moreover, several contacts suggested that tenants have reached out to ask for rent deferrals or concessions. Nonresidential builders reported that work continued on large projects that were underway in areas that allowed it, but they have seen some job postponements and cancellations. Contacts on both the residential and nonresidential sides expected demand to weaken further in coming months.\nFinancial Services\nLoan demand grew substantially; one banker described it as \"unprecedented,\" saying that one-month growth was likely to match what would typically be expected in a year. Corporate clients drew down credit lines to keep cash on hand in light of COVID-19-related revenue shocks, while consumers rushed to refinance home mortgages at lower rates. This activity largely offset declines in demand for auto loans. Delinquency rates remained low as banks worked to assist clients in these unusual times, although many contacts speculated that delinquency rates will climb in the coming months as economic duress persists.\nProfessional and Business Services\nContacts in the professional business services sector reported a significant decline in demand for their services in recent weeks. Multiple firms indicated that clients have delayed the implementation of new projects in addition to cancelling some projects already underway. However, there were a couple of firms that provide legal, human resources, and online commerce consulting services that reported an increase in demand in recent weeks. Overall, the majority of firms interviewed expected economic conditions to remain significantly subdued through the second quarter.\nFreight\nReports from the freight sector were mixed. While freight activity as a whole had declined since the onset of COVID-19, firms that ship consumer staples such as food, cleaning supplies, and medical supplies saw a significant increase in demand. However, freight firms that typically ship manufactured or imported goods continue to see reduced volumes. Because manufacturing output is expected to remain weak and the elevated demand for consumer staples is expected to wane, contacts in the freight sector generally anticipated that business conditions will worsen further in the second quarter.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

/beige-book-reports/2020/2020-04-kc

"Beige Book Report: Kansas City\nApril 15, 2020\nSummary of Economic Activity\nAfter holding fairly steady in the first half of March, Tenth District economic activity deteriorated sharply later in the month as the spread of COVID-19 negatively impacted consumer spending and business activity. Most contacts expected additional declines in the months ahead. Consumer spending slowed significantly since the previous survey, with markedly lower sales in the auto, restaurant and tourism sectors. After some stabilization earlier this year, manufacturing activity contracted sharply in March and expectations fell to levels last seen in early 2009. Transportation and wholesale trade contacts reported an increase in sales, but anticipated sharply lower sales in the next few months. Professional and high-tech sales declined slightly and were anticipated to fall further. Residential real estate conditions continued to hold fairly steady, but commercial real estate conditions worsened moderately. The decline in energy activity accelerated in the District as oil prices fell further below profitable levels. The agriculture sector weakened as cattle and corn prices fell sharply and credit conditions worsened. District employment fell slightly in March, but layoffs and furloughs increased significantly over the past two weeks suggesting worsening employment levels in the months ahead. Selling prices declined slightly in both the services and manufacturing sectors and additional declines were anticipated.\nEmployment and Wages\nDistrict employment was down slightly in March, while employee hours declined modestly. However, employment conditions deteriorated significantly throughout the month, including a dramatic rise in unemployment insurance claims in the final week of the month, and contacts expected additional declines in employment and employee hours in the months ahead. Respondents in all sectors reported lower employment levels except for retail trade and real estate which noted modest job gains. Similarly, retail trade and real estate, along with health services were the only sectors with employment above year-ago levels.\nFor the first time in several years, a majority of contacts did not report labor shortages. Many respondents noted uncertainty surrounding the spread of COVID-19, leading them to layoff or furlough workers and to implement hiring freezes. A majority of respondents reported that they did not have to raise wages more than normal to attract or keep any types of workers. Overall wages rose slightly, but declines were expected in the months ahead.\nPrices\nInput prices rose modestly and selling prices declined slightly in the services sector, while both input and selling prices fell slightly in the manufacturing sector. Contacts in both the manufacturing and services sectors expected prices to decline in the months ahead. Respondents in the retail trade sector noted strong growth in both input and selling prices since the previous survey period. Contacts in the restaurant sector noted a slight increase in input prices, while selling prices edged down. In the transportation industry, input prices fell moderately and selling prices declined slightly. Selling prices held steady for construction supplies after rising in the previous survey period. Manufacturers reported slightly lower prices for both finished products and raw materials prices, and anticipated modest declines in the next few months.\nConsumer Spending\nConsumer spending decreased significantly since the previous survey as regional businesses were negatively affected by COVID-19. While some retailers, like grocers and pharmacies reported increased sales, sales were markedly lower for the auto, restaurant and tourism sectors. Although some health services experienced higher levels of activity, most healthcare services firms reported slower sales and a decline in employment levels due to the decrease in elective procedures. Auto sales were down substantially compared with a year ago, and inventories were expected to rise. Restaurant sales were significantly lower compared with the previous survey period. Tourism sales fell sharply in March and were well below year-ago levels. Over half of contacts expected lower levels of employment in 2020 due to COVID-19 and recent market volatility, and an even greater share of firms were concerned about cash availability.\nManufacturing and Other Business Activity\nManufacturing activity contracted sharply in March, with declines in both durable and nondurable goods plants. Production, new orders, employment, and raw materials inventories all decreased compared to the previous survey period and fell below year-ago levels. Around 60 percent of manufacturers faced delayed payments from customers, and 54 percent had concerns about cash availability. Expectations for future activity fell to levels last seen in early 2009, and contacts reported putting capital investments on hold.\nOutside of manufacturing, firms in the transportation sector experienced slightly higher sales, though sales were still below year-ago levels. Sales increased moderately for wholesale trade and remained above year-ago levels. However, sales declined slightly for professional and high-tech services sectors compared to the previous survey period and were down from a year-ago. Contacts in the transportation and wholesale trade sectors anticipated significantly lower sales in the coming months, and expectations for the professional and high-tech services sector were also negative.\nReal Estate and Construction\nResidential real estate activity generally held steady in March, while commercial real estate conditions deteriorated moderately. Residential sales and inventories were flat compared to the previous survey despite a typical seasonal pickup, and were below year-ago levels. Home prices edged up. However, sales, starts, traffic of potential buyers, and prices were expected to decline in the coming months. Commercial real estate activity decreased moderately in March. Vacancy rates increased, while absorption, completions, construction underway and sales declined. Several contacts also reported that access to credit had become more difficult. Over the next few months, commercial real estate activity was expected to deteriorate further.\nBanking\nDistrict loan demand declined modestly in recent weeks, with decreases in commercial real estate loans, commercial and industrial loans, and consumer installment loans. Loan demand rose modestly for residential real estate, while agriculture loan demand remained steady. Many bankers reported tightening of credit standards, primarily confined to commercial real estate and commercial and industrial loans. Loan quality was modestly below a year ago, but was expected to deteriorate sharply in the next six months. Cash withdrawals increased, and bankers have been able to meet that demand. Overall, bankers had a guarded outlook as they kept a close watch on virus developments and moved toward a more risk-averse position. Many banks have moved to remote work arrangements, and were limiting most customer interactions to drive-through service.\nEnergy\nDistrict energy activity decreased at a faster pace compared with the previous survey period. Expectations for future drilling and business activity worsened, with many firms not expecting rig counts or employment levels to pick up in the near term. Revenues and profit levels declined significantly, and most firms decreased their plans for capital expenditures or put them on hold. The number of active oil and gas rigs in the District fell further. The sharp drop in commodity prices from the Saudi-Russia supply shock increase coupled with the decrease in demand due to the global COVID-19 pandemic has weakened the outlook for energy activity. March 2020 price levels were not profitable for District contacts and if oil prices remained below $40, respondents expected only 60-65 percent of firms to remain solvent in the next year.\nAgriculture\nAgricultural economic conditions weakened in March. Macroeconomic developments related to COVID-19 were expected to put downward pressure on prices for many agricultural commodities, despite sharp increases in short-term demand for retail food products. Cattle prices declined rapidly in mid-March which reduced profit opportunities for producers. Corn prices also decreased sharply as demand declined alongside a substantial drop in ethanol production. Credit conditions weakened modestly from the prior survey period, and while many farm lenders cited uncertainty about the extent of the impact, most expected conditions to deteriorate further in coming months. Contacts connected to food processing and retailing reported supply chains have been well maintained despite rapid increases in demand.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"April 15, 2020\nSummary of Economic Activity\nEconomic activity in the Ninth District fell substantially since the last report due to the COVID-19 outbreak and pandemic response. Employment fell significantly, and wage pressures fell overall due to layoffs, while price pressures remained modest on balance. The District economy saw declines in consumer spending, tourism, services, construction and real estate, manufacturing, and energy. Agricultural conditions were steady at low levels.\nEmployment and Wages\nEmployment fell significantly since the last report. Conditions in February were quite positive, with continued strong hiring demand across much of the District. However, conditions changed dramatically over the course of March with the spread of the coronavirus and related government actions for sheltering in place and the forced closure of many nonessential businesses. Applications for unemployment benefits in March easily hit record levels among all District states. Over the last two full weeks in March, more than 225,000 workers in Minnesota filed for unemployment, roughly 30 times the level seen over the same period in 2019. Numerous surveys by the Minneapolis Fed and other external organizations found that a wide swath of firms were laying off workers. Two Districtwide surveys of firms by the Minneapolis Fed (one in mid-March, one in early April) found that layoffs were occurring across all sectors, though with some variation. Cutbacks were highest among firms in food, accommodation, entertainment, health care, and retail sectors, and lowest in banking and finance, followed by manufacturing and professional and technical fields. Reported workforce cutbacks were seen among firms of all sizes, with slightly higher percentages among small firms. Mass layoff events tracked by District states rose, though some states track only those related to permanent closure, of which there were still comparatively few. Information from Minnesota, Montana, and Wisconsin, which track a broader set of layoffs, suggested more widespread layoffs, with the large majority considered temporary by employers.\nWage pressure fell overall due to the unprecedented increase in worker layoffs. Among firms cutting workers, there were also some reports of wage freezes and cuts for remaining workers. For certain industries seeing strong demand\u2014grocery chains, manufacturers of critical equipment\u2014there were isolated reports of wage increases to meet customer demand and to compensate workers for greater health risks.\nPrices\nPrice pressures were modest on balance since the previous report, with the notable exception of surge pricing for some consumer goods in high demand due to the pandemic. A large majority of respondents to a late-March survey of District firms reported unchanged or only slightly increased prices for inputs and in the prices charged for their products or services relative to a year earlier. Manufacturing contacts reported that prices for raw materials such as steel and plastic were stable. Retail fuel prices fell briskly in District states relative to the previous reporting period. Prices received by farmers in February increased from a year earlier for corn, soybeans, dry beans, lentils, milk, hogs, and turkeys, while prices for wheat, chickpeas, canola, hay, cattle, chickens, and eggs decreased.\nConsumer Spending\nConsumer spending declined significantly since the last report, due to coronavirus concerns and related stay-in-place guidelines from federal and state authorities that shut down many consumer-oriented businesses, either directly or indirectly. Surveys of tourism and hospitality firms in Minnesota and Montana showed notable virus-related declines in sales already in early March, and worsening by month's end. Expectations from Minnesota tourism-based businesses were for conditions to decline further in April, which is typically the start of the busy season for many firms. Hotel occupancy has seen a steep decline, plunging to 17 percent in Minneapolis-St. Paul at the end of March. Airline traffic in the District has seen a similarly large drop in passenger demand in March, with some airports reporting declines of 80 percent or more.\nServices\nActivity in the professional services sector decreased, though the severity varied widely. A quarter of services firms responding to a survey reported no impact on March sales, though nearly all of the remainder saw modest to severe decreases. The transportation sector saw a similarly mixed impact, with a majority of trucking firms surveyed reporting a decline in activity due to closures of clients, while others saw demand surge from the grocery and other sectors.\nConstruction and Real Estate\nCommercial construction fell since the last report, though some underlying optimism remained. A survey of Minnesota construction firms by the Minneapolis Fed found that a significant number of firms had seen some delays in existing or expected projects. The majority of delays stemmed from concern by owners about project viability given the virus outbreak. But delays also stemmed from supply-chain disruptions, labor shortages, and the lack of availability of some government workers\u2014due to shelter-in-place orders\u2014for permits, inspections, and other approvals necessary to keep projects moving. The overall outlook of the industry has shifted negatively, the result of both known delays and a large amount of uncertainty about future work. However, the designation of the industry as essential in most District states was perceived as a boost, as was the coming of warmer weather so more work could take place outside of confined spaces. Residential construction was modestly lower. In Minneapolis-St. Paul, March single-family permits were higher compared with a year earlier. However, the aforementioned construction survey found that a high share of home builders were experiencing project delays.\nCommercial real estate was lower since the last report. Significant layoffs and slower overall activity in March was expected to continue into the coming months, creating upward pressure on vacancy rates and downward pressure on leasing costs across all real estate categories, but particularly for retail and office space. However, the swiftness of changing market conditions made it hard to discern the full effects across different property categories and geographic regions. Residential real estate was modestly lower, but varied geographically. Home sales in rural parts of Minnesota are reportedly \"very busy\u2014as if there was no pandemic in place,\" said an industry contact. At the same time, Minneapolis-St. Paul and other metro centers in the state were seeing \"significantly reduced activity.\"\nManufacturing\nManufacturing activity in the District contracted sharply relative to the last report. An index of manufacturing conditions indicated substantially decreased activity in March compared with a month earlier in Minnesota and the Dakotas; production and employment in particular fell sharply. A majority of manufacturers responding to a large survey of District firms conducted in early April reported decreased sales in March compared with the previous months, with more than a third reporting declines of 25 percent or greater. Impacts of the pandemic and response on manufacturers varied by market segment. Producers of construction materials reported disruptions in demand as construction activity was curtailed in some regions. However, processed food manufacturers reported brisk increases in demand for many products, as did suppliers of inputs to that industry.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were steady at low levels. Some contacts described the COVID-19 pandemic as a potential \"perfect storm\" for an already struggling rural economy. Early reports suggested that District farmers intended to plant less wheat and more corn and substantially more soybean acres this year. District oil and gas exploration activity fell moderately from the previous report. The number of active drilling rigs as of late March was down slightly from the last report, but contacts in the oil-producing region of the District reported layoffs in oil fields and substantial reductions in capital spending. Contacts in nonferrous mining reported that a slowdown in international demand due to the COVID-19 outbreak in China may have abated somewhat in recent weeks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nApril 15, 2020\nSummary of Economic Activity\nEconomic activity has declined sharply since February. Essentially all contacts reported some degree of slowdown in activity due to COVID-19. In the worst cases, firms are expecting zero revenue in April and possibly May. Many firms reported moderate to severe temporary layoffs, furloughs, or paid time off. A considerable share of contacts reported reducing employee pay, particularly the pay of salaried employees with higher-than-average wages at their firms. Planned capital spending has been cut back at most firms to preserve cash, as even those firms in high-demand sectors are expecting delayed payments on goods during the coming quarter. At this point, there were no reports of abrupt cancellations of ongoing construction projects. Residential real estate conditions have held steady through March, and District agriculture conditions improved modestly from the previous reporting period.\nEmployment and Wages\nDistrict firms reported moderate to severe temporary layoffs, furloughs, or paid time off. Hotels and hospitality contacts reported workforce reductions of around 90% of staff. Reported reductions at specialty retailers, auto dealers, and restaurants have ranged from 50% to 70%. Staffing contacts reported reductions in new job openings of between 20% and 80%. Firms with a high demand for their products or services have not reported layoffs but have experienced challenges maintaining current employment levels. A grocer mentioned significant absenteeism; a manufacturing contact noted about 10% of its workforce required changed or reduced hours due to school closures or other challenges. Firms also reported difficulties and/or delays in onboarding new employees, often relaxing or temporarily removing background checks and drug tests.\nA considerable share of contacts reported reducing employee salaries, particularly for salaried employees with higher-than-average wages at their firms. One payroll firm reported that its most-affected clients have cut salaries on non-furloughed staff between 5% and 25%. However, broad-based pay cuts have been relatively rare, with firms prioritizing layoffs over broader wage reductions.\nPrices\nSignificant changes in the demand for some products and services and the proliferation of new product offerings have complicated the measurement of consumer price inflation. Restaurants have moved from dine-in to take-out options with increasingly unique promotions. Contacts reported increasing the prices of necessity items, such as the price of eggs doubling. Prices for premium food products, by contrast, seem to be falling due to decreased demand. One grocer noted turning unsold premium steaks into ground beef (which was out of stock), but charging a higher price than is typical ground sirloin. Auto dealers report significantly lower used car prices and a greater tendency to sell new cars for less than their sticker price.\nConsumer Spending\nConsumer spending activity in early March was generally robust, followed by steep declines starting in the second half of the month after stay-at-home regulations were enacted. Areas in the District without these orders as well as rural areas reported a slower rate of decline. Restaurants and specialty retailers have generally lost at least half of their revenue. Reports from auto dealers were very weak; dealers generally expect March sales to be lower than one year ago, with sales close to zero in April.\nHospitality contacts reported cancellations of nearly all major events and conferences though June 1. Events scheduled for later in the year are currently still in place. Tourism venues reported strong business during the first weeks of March, but closures brought down overall business activity for March.\nManufacturing\nReports from manufacturing contacts indicate declines in overall production, but the rates of decline vary considerably by firm. A notable number of contacts (particularly those related to autos and other durable goods) have temporarily shut down, but manufacturers of food products, chemicals, and medical devices continue to operate with extremely high demand. However, these firms are generally reporting 5% to 10% reductions in production due to supply chain disruptions and adjustments to workers' arrangements. For example, contacts report multi-day temporary shut downs for deep cleaning, increased time between shifts for additional cleaning, and staggering break times to reduce cafeteria occupancy.\nNonfinancial Services\nActivity in the nonfinancial services sector has worsened since the previous report. Major hospitals in the District report significant declines in revenue as elective procedures are postponed due to the COVID-19 outbreak. The transportation industry has remained relatively stable since the previous report\u2014the exception being passenger traffic, as airports report steep drops in enplaning. Courier services report increased demand, causing backlogs at fulfillment centers of up to one week. Contacts in this industry report difficulty keeping facilities adequately staffed.\nReal Estate and Construction\nResidential real estate conditions have held steady through March. Contacts report very strong sales during the first half of the month. A contact in the St. Louis area reported that their March sales were up 24% from one year ago. Due to delays, many March sales are expected to close in April. A drop in sales is expected to occur around late April or May. Various contacts expect this drop in sales to be somewhere between 8% and 25% relative to one year ago. One contact reported about 5% of their existing listings were pulled off the market during mid-March. Contacts reported decreases in property showings of around 75% of their normal average weekly showings from early March to the end of March.\nReports of residential construction activity showed little change, as projects were generally allowed to continue. There were reports of some, but not many, households backing out of pending construction contracts due to current uncertainty. Many contracts at this point, for both home sales and new construction, are including language related to COVID-19.\nBanking and Finance\nReports from District banks indicate substantial and widespread increases in demand for banking services since February. Demand for cash and for other forms of liquid assets has increased. In early March, banks reported that some of their larger clients were responding to future uncertainty by drawing down on lines of credit and depositing the funds in their checking accounts. Demand for residential mortgages remained elevated during the early part of March, and banks reported strong refinancing activity. While the pipeline for these loans remains strong, new activity has slowed and many rates have not yet been locked.\nDuring the first week of April, the attention of banks abruptly turned to the SBA/PPP loan program, with bankers feeling overwhelmed by the program and unclear on how to approve firm applications and administer the loans. Banks report operational difficulties as many staff are working remotely or in decentralized branches to protect worker health.\nAgriculture and Natural Resources\nDistrict agriculture conditions improved modestly from the previous reporting period. The number of acres planted in the District for corn, cotton, rice, and soybeans increased 8% compared with last year. All states in the District increased their number of acres planted as planting season in 2019 was severely affected by poor weather. Corn, rice, and soybeans were planted in greater quantities compared with last year. Southern parts of the District have planted fewer acres of cotton and more of rice.\nDistrict contacts stated that the COVID-19 pandemic has had a relatively muted effect on the agricultural sector to date. Several contacts reported that farmers and agricultural suppliers do not have current plans to reduce output or employment at this time. Contacts cited continued trade disputes with China, weather, commodity prices, and deteriorating credit conditions as sources of uncertainty for the industry.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nApril 15, 2020\nThis report was prepared at the Federal Reserve Bank of Boston based on information collected on or before April 6, 2020. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nEconomic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic. The hardest-hit industries\u2014because of social distancing measures and mandated closures\u2014were leisure and hospitality, and retail aside from essential goods. Most Districts reported declines in manufacturing, but cited significant variation across industries. Producers of food and medical products reported strong demand but faced both production delays, due to infection-prevention measures, and supply chain disruptions. Some other manufacturing industries, such as autos, mostly shut down. The energy sector, suffering from low prices, reduced investment and output. Districts reporting on loan demand said it was high, both from companies accessing credit lines and from households refinancing mortgages. All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months.\nEmployment and Wages\nEmployment declined in all Districts, steeply in many cases, as the COVID-19 pandemic affected firms in many sectors. Employment cuts were most severe in the retail and leisure and hospitality sectors, where most Districts reported widespread mandatory closures and steep falloffs in demand. Many Districts said severe job cuts were widespread, including the manufacturing and energy sectors. Contacts in several Districts noted they were cutting employment via temporary layoffs and furloughs that they hoped to reverse once business activity resumes. The near-term outlook was for more job cuts in coming months. No District reported upward wage pressures. Most cited general wage softening and salary cuts except for high-demand sectors such as grocery stores that were awarding temporary \"hardship\" or \"appreciation\" pay increases.\nPrices\nThe general direction of price inflation was down for both selling prices and non-labor input prices, as Districts reported either slowing price growth, flat prices, or modest to moderate declines in prices on balance. These trends were seen as reflecting weaker demand for many goods and services in the wake of the COVID-19 pandemic. Four Districts also reported further declines in energy prices. In contrast, supply chain disruptions and shifts in the composition of demand led to significant price increases for some essential services\u2014such as freight\u2014and some agricultural commodities and consumer goods. While expectations concerning agriculture prices were mixed, the outlook calls for further downward pressure on prices on average.\nHighlights by Federal Reserve District\nBoston\nEconomic activity slowed markedly in March, except among manufacturing firms in the region whose products saw increased demand because of the pandemic. Retailers and tourism contacts cited dramatic fall-offs in demand and they laid off customer-facing workers. Soft-ware and IT services firms continued to see strong demand, but few new customers. Real estate activity in the region paused in March.\nNew York\nThe regional economy deteriorated sharply since the last report, with many companies implementing partial temporary shutdowns and widespread staff reductions, and some reducing wages. Selling prices were flat to down modestly. The leisure & hospitality and retail sectors were particularly hard hit, while the wholesale trade and information sectors showed more resilience. Financial firms reported weaker activity.\nPhiladelphia\nBusiness activity fell severely during the current Beige Book period, as the COVID-19 pandemic gripped the mid-Atlantic. No sector was spared. Rapidly rising joblessness has not made hiring easier, as contagion fears and child care needs keep workers at home. Prices tend to be falling, but the wage path is muddied, and firm out-looks are clouded by uncertainty.\nCleveland\nEconomic conditions deteriorated rapidly in the second half of March as COVID-19 mitigation efforts curbed demand across a wide array of industries. In response, firms sought to conserve cash by cutting staff and capital spending. Looking forward, business contacts generally expected conditions to worsen further in coming months.\nRichmond\nThe Fifth District economy contracted as negative effects of the coronavirus outbreak were reported across most segments of the economy, leading to many businesses to scale back operations and employment. The few positive reports mainly came from producers and transporters of essential supplies. Overall, employment declined sharply and price growth remained muted.\nAtlanta\nEconomic activity declined, and the labor market deteriorated due to COVID-19. Non-labor costs remained stable. Retail sales for non-discretionary products grew as sales of non-essential items fell. Tourism and hospitality contacts reported significant declines in activity. Housing activity softened, and commercial real estate decelerated. Manufacturing declined, but new orders held steady. Banking activity was mixed.\nChicago\nEconomic activity declined, but the intensity of decline varied by industry. Consumer spending decreased sharply; business spending, construction and real estate activity, and manufacturing production decreased moderately. Retail and hospitality payrolls plunged. Wages edged up and prices were little changed. Financial conditions deteriorated substantially, as did prospects for agricultural income.\nSt. Louis\nEconomic activity has declined sharply since February. Many firms reported moderate to severe temporary layoffs, furloughs, or paid time off. Reports from District banks indicate substantial and widespread increases in demand for banking services.\nMinneapolis\nNinth District economic activity decreased sharply due to the pandemic. Employment fell significantly, and wage pressures declined as a result. While effects varied widely, most sectors contracted, with tourism and hospitality seeing effects sooner. Though designated an essential industry in most District states, many commercial construction projects were put on hold due to uncertainty about viability or supply chain disruptions.\nKansas City\nAfter holding fairly steady in the first half of March, economic conditions declined sharply in recent weeks. Consumer spending slowed significantly as auto, restaurant and tourism sales plummeted. Manufacturing activity contracted sharply, and energy and agricultural sectors deteriorated as commodity prices fell sharply. Employment levels fell slightly, but layoffs accelerated late in the month.\nDallas\nEconomic activity contracted broadly, but declines were the steepest in energy, retail, and non-financial services. Home sales rose through mid-March but have dropped off since then. Employment fell sharply, resulting in downward wage pressures, and selling prices buckled amid falling demand for most products and services. Outlooks deteriorated rapidly as the economic impact of the coronavirus pandemic intensified.\nSan Francisco\nEconomic activity in the Twelfth District contracted notably. Employment declined due to virus related disruptions. Price inflation fell a bit. Sales of retail goods and vehicles fell precipitously, and consumer and business services activity declined sharply. The manufacturing sector contracted moderately, and activity in the agriculture sector slowed somewhat. The residential real estate market was mixed, but grew slightly overall. Lending actively declined moderately.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nApril 15, 2020\nSummary of Economic Activity\nThe Second District economy deteriorated sharply in the latest reporting period, amidst widespread shutdowns related to the coronavirus pandemic. The job market weakened substantially, and wages were flat to lower. Businesses reported that input prices leveled off and that selling prices were flat to down modestly. Activity fell sharply in nearly every sector, except wholesale trade, where activity was essentially flat. Business contacts in manufacturing and most service industries also expressed fairly widespread pessimism about the outlook. In general, there is great uncertainty and concern about the duration of the coronavirus pandemic and its economic effects. Consumer spending has fallen sharply, with a significant proportion of purchases going online. Tourism and travel ground to a halt, with many hotels closing, and those still open seeing sharp drops in occupancy rates. Home sales and rentals, commercial leasing, and construction activity have all largely stopped. Finally, financial sector contacts noted deteriorating conditions, and banks reported widespread weakening in loan demand, tighter credit standards, and higher delinquency rates but have been more lenient on existing loans.\nEmployment and Wages\nThe labor market has weakened sharply, as hiring largely stopped and layoffs were widespread. A major New York City employment agency, specializing in finance and professional services, noted that most activity has ground to a halt, but that they have not seen many layoffs other than temp workers. An upstate agency described it as business as usual for many essential businesses, while other businesses have eliminated their temporary staff and some have shut down. A major payroll firm noted that its business has remained steady but is expected to slip in the months ahead.\nReports from business sectors were mostly quite negative to varying degrees. Contacts in manufacturing, retail, and leisure & hospitality reported particularly widespread staff reductions, while businesses in the information, finance, wholesale, and professional & business services indicated steady to modestly declining staffing levels. Many contacts noted that these reductions were largely furloughs or temporary layoffs.\nLooking ahead, contacts in manufacturing, finance, and professional & business services said they expect staffing levels to hold steady from current levels, but businesses across all other sectors expected further staff cuts, on net.\nWages have been flat to lower since the last report. Businesses in the hard-hit leisure & hospitality and retail trade sectors reported fairly widespread reductions in wages, while contacts in other service industries indicated that wages were generally flat to down slightly.\nPrices\nFirms generally reported that input costs were flat, while their selling prices were steady to down modestly. Businesses in construction & real estate, finance, information, and leisure & hospitality noted declines in their selling prices, while firms in other industries generally reported steady prices. Looking ahead, businesses in most sectors projected that their prices would be little changed in the months ahead. However, information and finance businesses anticipated lower selling prices, while those in education & health services said they expect to raise prices modestly.\nConsumer Spending\nRetailers reported widespread drops in sales in March, and the vast majority reported at least a partial temporary shutdown. However, most do not anticipate a full shutdown, with many shifting to mostly or completely online sales. Non-essential retail storefronts across the District were ordered to close in the latter part of March. Food and personal care stores tended to fare better but even these were seeing mixed results. Retailers expected sales to weaken further in the months ahead.\nVehicle sales dropped to near zero in the second half of March, according to auto dealers in upstate New York, as the state shut down non-essential businesses. Many of these dealers hope to at least partially re-open before the end of April. While essential dealer service departments remained open, business for these services also slowed considerably.\nManufacturing and Distribution\nManufacturers reported a widespread drop-off in business activity and new orders in recent weeks. Transportation firms also reported widespread declines, but wholesalers reported that activity was flat, on balance.\nLooking ahead, manufacturers said they expect activity to be unchanged from current levels, on balance, while wholesalers and transportation firms anticipate weakening activity. Businesses generally have slashed capital spending plans, with potential implications for some durable goods producers.\nServices\nService industry contacts reported weakening activity to varying degrees. Leisure & hospitality business fell particularly sharply, as tourism plummeted and restaurants shut down for dining-in service. Health service contacts noted a comparably widespread drop-off in activity and revenues. Businesses in education, professional & business services, and information reported more moderate, but still fairly widespread, declines in both activity and revenues. Contacts in all these sectors report that a majority of their staff is working from home\u2014ranging from about half in leisure & hospitality to nearly everyone at information firms.\nStay-at-home directives have largely brought both leisure and business travel to a halt. An expert on New York City's tourism sector noted that almost nobody is visiting the city, and that New York City's hotel occupancy fell from roughly 72 percent to 15 percent by the end of March. Many hotels have closed temporarily, while others have repurposed some rooms as excess hospital space, and some as isolated office space.\nLooking ahead, business contacts expressed great uncertainty, though there was fairly widespread pessimism. Those in leisure & hospitality expressed the bleakest expectations, while those in professional & business services tended to be the least pessimistic.\nReal Estate and Construction\nHome sales and rental markets across the District have largely paused, and many residential rental and sales listings have been removed, reflecting stay-at-home directives. Real estate agents were reclassified as essential in early April, though traffic has been weak and largely limited to virtual showings.\nA major appraiser noted that selling prices of New York City co-ops and condos were continuing to decline through mid-March, especially at the high end. Given the lack of activity since, though, it is difficult to gauge more recent changes in prices and rents. Landlords are reportedly concerned about how many tenants are going to be delinquent on their April rent\u2014particularly in New York City, where a majority of residents are renters.\nCommercial real estate markets across the District have also ground to a halt, with office, industrial, and retail leasing activity largely ceasing. Office availability rates and rents have not changed noticeably thus far, but real estate contacts have noted concern about collecting rent from commercial tenants.\nNew construction starts have essentially fallen to zero, and ongoing construction projects have paused, except where considered essential.\nBanking and Finance\nFinancial service businesses have noted widespread declines in activity and revenues. Though only moderately pessimistic about the near-term outlook, finance sector contacts expressed widespread concern about maintaining adequate cash flow and collecting payables from customers. A majority of small- to medium-sized banks across the District reported lower loan demand across all categories. Bankers also reported tighter credit standards and narrowing loan spreads across the board. Higher delinquency rates were reported across all categories\u2014particularly commercial & industrial loans. Bankers were also asked, in light of the coronavirus pandemic, if they had adopted more lenient policies on loan repayments. The vast majority said they had done so on residential mortgages, compared with about half on commercial & industrial loans, and a somewhat over half on commercial mortgages.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"March 4, 2020\nSummary of Economic Activity\nThe Eleventh District economy expanded moderately over the reporting period. Solid growth continued in nonfinancial services, and expansion in the manufacturing sector picked up to a more moderate pace. Housing demand continued to rise broadly, and sharply higher residential real estate lending boosted overall loan growth. Retail sales growth stalled out over the reporting period, and activity in the energy sector eroded slightly. Employment growth slowed to a modest pace, with a majority of hiring firms noting difficulty finding qualified workers. Upward wage pressures remained elevated. Input prices continued to rise while selling prices were mixed\u2014holding steady in manufacturing but increasing in the service sector. Outlooks generally improved, though the coronavirus introduced new uncertainty into the business environment.\nEmployment and Wages\nEmployment growth slowed to a modest pace overall. Hiring continued at a moderate pace in the services sector but stalled in manufacturing, and layoffs continued in the oil and gas sector. Most energy contacts expect headcounts to fall further, albeit only slightly. A February Dallas Fed survey of roughly 375 Texas businesses in the services and manufacturing sectors showed that nearly two-thirds were currently trying to hire. However, 80 percent of those trying to hire were having problems finding qualified workers. Some contacts noted that lack of labor availability was a drag on business growth. However, there were scattered reports that softness in the energy sector has alleviated some labor pressures in the low-skilled and contract worker segments.\nWages continued to increase, with upward wage pressures holding slightly above average. The energy sector is an exception, as contacts report no wage pressure. Some contacts said they implemented cost of living adjustments to supplement their recruitment and retention efforts, and one contact said labor costs increased due to overtime pay for existing staff.\nPrices\nInput prices continued to rise outside the energy sector. However, in manufacturing, upward pressure on raw materials costs remained below average. Selling prices were largely flat in manufacturing but have started rising again in the service sector after stalling out late last year. Particularly strong price increases were seen in retail in February. Airline ticket prices were up compared to a year ago, partially due to the grounding of the Boeing 737 Max, which has constrained capacity.\nManufacturing\nExpansion in the manufacturing sector picked up to a moderate pace in January and February. Several firms reported a stronger than expected start to the year, and the acceleration spanned both durables and nondurables. Refinery utilization increased over the reporting period. Machinery manufacturing was a weak spot, with declining output over the reporting period. Also, softness continued at cross-border manufacturing plants in the El Paso area, with contacts saying they don\u2019t expect significant increases in activity or capital spending plans following the ratification of the USMCA.\nSeveral contacts noted that the coronavirus was negatively impacting their supply chain, particularly in high-tech and chemical manufacturing. While companies\u2019 outlooks were slightly more optimistic than they had been over the past few months, uncertainty picked up.\nRetail Sales\nRetail sales growth stalled out over the reporting period, with weakness led by autos and sales among nondurable goods wholesalers. An auto dealer remarked that maintaining a positive margin on new vehicle sales is impossible. Overall retail outlooks weakened slightly, with some contacts voicing concern over the coronavirus and its impact on supply chains and overall demand.\nNonfinancial Services\nSolid expansion continued in the nonfinancial services sector, with many contacts reporting strong momentum at the start of 2020. Growth was led by professional and business services. Staffing services contacts noted solid broad-based demand, though most reported weak demand growth year over year. Multiple staffing contacts said that companies are slowing down hiring due to election uncertainty. In transportation services, airline demand remained strong and air and ground cargo volumes increased. A railroad contact voiced concern that the coronavirus could reduce shipments from China.\nOutlooks continued to improve, though the coronavirus and the upcoming presidential election were noted as increasing uncertainty.\nConstruction and Real Estate\nHousing demand continued to rise broadly, with contacts noting that sales were off to a good start this year and ahead of year-ago levels. Some builders were able to push through price increases to cover higher construction costs, though this exacerbated affordability problems in some metros. Rain delayed development and building activity in some areas. Outlooks remained favorable.\nConditions in the apartment market were stable, though contacts noted ongoing rent concessions due to supply-driven softness in Class A properties. Industrial demand remained robust and construction elevated. Office demand stayed solid in Dallas but was mixed in Houston.\nFinancial Services\nGrowth in loan demand increased moderately over the reporting period. Overall, loan volumes increased, driven primarily by a sharp rise in residential real estate loans. Commercial and industrial loan volumes decreased over the reporting period. Loan pricing continued its marked decline, and a majority of bankers continued to report no change in credit standards. Growth in general business activity picked up notably, and expectations for activity in the next six months improved significantly.\nEnergy\nDrilling and well completion activity in the Eleventh District eroded slightly over the reporting period, but most contacts contend that activity is likely at or near a soft bottom. The industry remained distressed with limited access to capital. Contacts noted that the coronavirus has pushed oil prices down and is a big source of uncertainty. Most contacts expect that oilfield activity will hold roughly near December 2019 levels through the end of 2020, and they express modest optimism about 2021.\nAgriculture\nMore than a third of Texas remained abnormally dry or in drought, though recent rainfall in some areas prompted optimism among producers heading into the new crop season. Row crop prices declined over the reporting period while cheese and milk prices trended higher. Agricultural lenders said farmers generally came out of 2019 in pretty good shape with the help of government support payments, but that there is some concern going forward as income from government assistance has been on the rise the past couple of years, making farmers more vulnerable to policy changes. Contacts said uncertainty regarding demand and prices for agricultural commodities was discouraging, and while producers were optimistic about trade developments, there is still a fair amount of concern about follow through in the Phase One deal with China as well as the impact of the coronavirus on commodity prices.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"March 4, 2020\nSummary of Economic Activity\nEconomic activity in the Ninth District increased moderately since the last report. Employment rose moderately, and wage pressures were also moderate overall, while price pressures remained modest. The District economy saw growth in consumer spending, tourism, commercial and residential construction and real estate, and manufacturing. Energy activity held steady, while agricultural conditions were stable at low levels.\nEmployment and Wages\nEmployment rose moderately since the last report. Hiring demand appeared to be quite strong to start the year. Job postings rose across District states, with North Dakota seeing a double-digit increase in January over a year earlier. Two January hiring indexes saw notable improvements in Minnesota and the Dakotas over the previous month. Multiple surveys and ad hoc polls in January by the Minneapolis Fed had similar findings. A poll of firms across the District found a greater share were increasing employment levels compared with those reporting decreases. An ad hoc poll of St. Paul-area businesses found that 75 percent were hiring or expecting to hire in the coming six months. A large majority of construction firms polled in Minnesota and Wisconsin said they were trying to add to their head count, with varying success rates given tight labor markets. Surveys of manufacturing, tourism, and hospitality businesses in Minnesota in January found that hiring demand was more muted, but still solidly net-positive overall. Initial unemployment insurance claims fell by almost 8 percent across District states over the first five weeks of the year (through early February), with Minnesota and Wisconsin both seeing steep declines compared with the same period a year earlier. The number of mass layoff events, as well as the number of workers affected, were lower in Minnesota and Wisconsin in January compared with the previous year.\nWage pressures were moderate overall. A majority of firms across multiple surveys and ad hoc polls in January reported that wages grew by less than 3 percent over the past year, and they reported similar expectations for the coming year. There was variation in each poll, however. A small majority of construction firms said wage increases were above 3 percent, but increases were more modest at manufacturing, tourism, and hospitality firms. Benefit increases were also reported. A Montana accounting firm reported that more businesses were starting to put in retirement plans to help recruit workers, and a nonprofit in that state implemented half-day Fridays in lieu of salary increases \u201cas a creative way to keep staff.\u201d\nPrices\nPrice pressures remained modest since the previous report. Three in five respondents to a recent survey of tourism and hospitality contacts reported that retail prices increased by 2 percent or less over the past year. However, some contacts in the industry reported that they were passing increased labor costs on to customers, particularly in food service. Retail fuel prices as of late February were slightly lower in most areas of the District relative to the previous reporting period. Prices received by farmers in December increased from a year earlier for corn, soybeans, dry beans, milk, cattle, hogs, and turkeys, while prices for wheat, lentils, hay, chickens, and eggs decreased.\nConsumer Spending\nConsumer spending increased modestly overall since the last report. January gross sales in South Dakota and Wisconsin both grew about 1 percent to 2 percent compared with a year earlier; January sales tax receipts in Minnesota were also slightly higher than forecast. A handful of regional airports reported that January activity showed strong increases over the previous year, with most seeing double-digit increases. Preliminary results of a survey of Minnesota tourism and hospitality firms showed that activity from December through mid-February was soft overall compared with a year earlier, but firms were optimistic about expected activity in the coming months. Vehicle sales at dealerships in the western portion of the District rose modestly overall in December and January (year over year), with new vehicle sales seeing slightly better performance over the two-month period. However, sales of both recreational and powersport vehicles were lower across District states in the fourth quarter.\nSnow conditions have generally been favorable across the District, benefiting snowmobile and ski tourism. However, ice conditions have been less favorable this season in Minnesota and Wisconsin, cutting into spending from fishermen and snowmobilers in areas where trails cross lakes. The Montana ski season has reportedly been good. One resort had to discontinue selling walk-up tickets because it had \u201ctoo many customers.\u201d Accommodation and lodging taxes in Montana were also slightly higher in January versus a year ago.\nConstruction and Real Estate\nCommercial construction grew moderately since the last report. Construction starts in December and January increased compared with a year earlier, according to industry figures. The number of new and active projects as of mid-February was slightly lower than the same period a year ago, but still at strong levels. Ad hoc polls of construction firms in Minnesota and Wisconsin found higher overall activity of late compared with the same period a year earlier. A large majority also expected the first half of 2020 to be stronger than last year. Anecdotally, contacts were reporting strong project backlogs, and January commercial permits offered additional evidence, with Rochester, Minn., Bismarck, N.D., and Sioux Falls, S.D., all seeing strong activity. Residential construction was modestly higher on the strength of the Minneapolis-St. Paul market, which saw strong January gains in single-family permits compared with a year earlier. Elsewhere in the District, however, residential building was mostly flat or slightly lower for the month.\nCommercial real estate was modestly higher. Industrial property in Minneapolis-St. Paul continued to see strong demand, pushing vacancy rates to very low levels. Despite strong multifamily development across the District, vacancy rates remained very low in most markets, and rent growth has been healthy. The office market in Minneapolis-St. Paul has been seeing redeveloped properties come back onto the market, which has pushed up vacancy rates somewhat, but overall leasing and space absorption rates have been healthy, according to industry sources. Retail markets continued to experience flux. A national retail chain announced the closure of 15 stores across the District. Residential real estate was modestly higher. Higher January home sales were seen across Minnesota, northern and western portions of Wisconsin, and Sioux Falls. But lower or flat sales were seen in Fargo, N.D., and larger Montana markets.\nManufacturing\nDistrict manufacturing activity increased moderately relative to the last report. An index of manufacturing conditions indicated increased activity in January compared with a month earlier in Minnesota and the Dakotas. Several electronic component producers reported a substantial uptick in orders and production recently. Producers of home fixtures and residential building inputs continued to report solid business. In contrast, a manufacturer of food truck and mobile concessions equipment noted that new orders fell.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions were stable at low levels. More than half of Ninth District agricultural lenders reported that farm incomes decreased in the previous three months relative to a year earlier, while 60 percent reported decreased capital spending, according to the Minneapolis Fed\u2019s fourth-quarter 2019 survey of agricultural credit conditions (conducted in January 2020). District oil and gas exploration activity held steady since the previous report. The number of active drilling rigs as of mid-February was up slightly from the last report, but the most recent figures (as of December) indicated that oil production decreased slightly from its recent peak. District ethanol producers reported steady demand and increased production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nMarch 4, 2020\nSummary of Economic Activity\nTenth District economic activity was largely unchanged in January and February, but was expected to expand in the months ahead outside of the energy and agriculture sectors. Consumer spending slowed slightly since the previous survey, but retail, restaurant and tourism sales were well above year-ago levels. After declining for several months, manufacturing activity appeared to be stabilizing with a slight uptick in activity in February, despite nearly half of firms noting some negative effect from the coronavirus spread. Transportation and wholesale trade contacts reported higher revenues and sales, while professional and high-tech sales rose in January but slowed slightly in February. District real estate conditions continued to hold steady, but contacts expected activity to edge higher moving forward. District energy activity declined further, and expectations were generally downbeat about the months ahead. The agriculture sector also remained subdued, but showed signs of stabilizing as farmland values rose slightly. District employment held steady since the previous survey period, while employee hours expanded modestly. Wages continued to rise at a modest pace, but gains were expected to increase in the months ahead. Both services and manufacturing contacts reported modestly higher input and selling prices.\nEmployment and Wages\nOverall District employment held steady since the previous survey period, while employee hours increased modestly. All reporting sectors, with the exception of manufacturing, retail trade, auto sales, and professional and technical services, noted higher employment levels, and a majority of contacts expected a faster pace of employment gains in the months ahead. Employee hours picked up modestly across most sectors.\nA majority of contacts continued to report labor shortages across all skill levels. Specifically, respondents noted shortages for truck drivers, auto-technicians, hourly food-services positions, IT personnel, nurses, accountants, and skilled-construction and machinist trades. Additionally, a majority of respondents reported that they had to raise wages more than normal to attract or retain workers for some positions. Overall wages rose at a modest pace, and strong gains were expected in the months ahead.\nPrices\nInput and selling prices continued to grow modestly in January and February in the services and manufacturing sectors, and contacts in both sectors expected prices to rise further in the months ahead. Retailers noted strong growth in input prices and moderate growth in selling prices since the previous survey period. Input and selling prices rose modestly in the restaurant sector, and both were strongly higher than year-ago levels. Similarly, manufacturers reported modestly higher prices for both finished products and raw materials, and anticipated modest gains in the next few months. Construction supply respondents noted a slight increase in selling prices after a slight decline during the previous survey period.\u00a0 However, transportation contacts noted moderate declines in both input and selling prices, with continued decreases expected in the coming months.\nConsumer Spending\nConsumer spending declined slightly compared to the previous survey period, but sales were well above year-ago levels in most sectors. Retail sales grew slightly compared to the previous survey period but were strongly above year-ago levels. In addition, contacts expected sales to increase at a faster pace in the coming months. Auto sales edged down compared to the previous survey period and declined modestly compared to year-ago levels. Respondents anticipated auto sales to continue to decline in the months ahead. Small SUVs sold well, while sedans and large SUVs sold poorly. Restaurant sales were down modestly compared to the previous survey period, but were strongly above year-ago levels. Tourism sales fell slightly compared to the previous survey period, but also remained well above year-ago levels. Both restaurant and tourism contacts expected strong sales growth in the coming months.\nManufacturing and Other Business Activity\nManufacturing activity was mostly unchanged in January, followed by a slight uptick in February. The increase in recent activity was across both durable and nondurable goods factories, despite nearly half of firms reporting some negative effect from the coronavirus spread. Expectations for future activity also remained positive. Order backlogs declined for District manufacturers, but new orders improved in February, especially for durable goods firms. Capital spending was above year-ago levels, with positive growth expected over the next six months.\nOutside of manufacturing, firms in the transportation and wholesale trade sectors reported increased revenue and sales. Sales for professional and high-tech services sectors grew in January but slowed somewhat in February. Sales for all three sectors remained above year-ago levels. Contacts in the transportation sector anticipated sales to edge down in the coming months, whereas sales were expected to rise in the wholesale trade and professional and high-tech services sectors.\nReal Estate and Construction\nDistrict real estate activity held steady in January and February, and contacts expected activity to inch up in the months ahead. Residential sales increased compared to the previous survey period and year-ago levels. However, residential construction activity was mixed as housing starts and traffic of potential buyers both rose slightly while construction supply sales continued to fall. Contacts in the residential construction sector expected activity to increase in the months ahead. Commercial real estate activity continued to edge up as absorption, completions, construction underway and sales increased while vacancy rates remained flat. Commercial real estate contacts anticipated overall activity to continue expanding at a slow pace over the next few months.\nBanking\nOverall loan demand declined modestly in the District since the previous survey due to modest decreases in the demand for consumer, commercial real estate, and commercial and industrial loans. Bankers indicated less movement in the demand for agricultural and residential real estate loans, with a slight downtick in the demand for agricultural loans and a slight uptick in the demand for residential real estate loans. Loan quality improved modestly over the past year, and bankers expected a slight increase in loan quality in the next six months. Compared to the previous survey period, credit standards remained stable and deposits increased modestly.\nEnergy\nDistrict energy activity continued to decline since the previous survey period. Expectations for future drilling and business activity remained negative, with many firms not expecting rig counts or employment levels to pick up in the near term. While the number of active oil rigs in the District was unchanged, the number of active gas rigs eased slightly. Production levels remained high, but regional oilfield services firms have begun to feel the effects of fewer rigs operating across the District. Low prices for oil, natural gas, and natural gas liquids continued to negatively affect firms and were listed as a primary factor driving future business plans. Energy contacts also listed sluggish credit conditions, smaller profit margins, and less drilling and business activity as concerns.\nAgriculture\nThe District farm economy remained subdued but showed signs of stabilizing. Farmland values strengthened slightly in the most recent survey period, providing some stability for the sector. Regional contacts reported that farm income and agricultural credit conditions generally remained weak, but deteriorated at a slower pace than previous survey periods. However, despite some signs of stabilization, geographic disparities persisted across the region. Farm real estate values increased modestly on the eastern side of the District, while farm income and credit conditions were moderately weaker in the western portion. Some bankers commented that trade relief payments provided notable support to farm finances, but many also indicated that ongoing financial challenges continued to be driven by low agricultural commodity prices.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"March 4, 2020\nSummary of Economic Activity\nFirst District firms continued to report increases in economic activity heading into 2020. Retailers reported mixed but mostly positive results, while restaurateurs saw solid revenue gains. Most manufacturers experienced revenue increases ranging from mid single-digit percentages to more than 20 percent, but two respondents cited revenue declines, both attributed in part to disruptions related to the coronavirus outbreak in China. Staffing firms continued to report moderate to strong revenue gains, although a couple cited slowing growth or fewer job requests compared with last year. Residential real estate markets remained tight in the region, with inventories of both homes and condos decreasing as sales and prices rose. Commercial real estate markets were mixed across sectors and locations. Outlooks continued to be positive, with the coronavirus and the presidential election cited as risk factors.\nEmployment and Wages\nLabor markets in the First District remained tight. Retailers noted that minimum wages went up in some states; those increases, in combination with a generally tight labor market, have pushed up operating costs. Employment increased year-over-year at five contacted manufacturing firms; headcount was down modestly year-over-year at one manufacturer and flat at four. Almost all the manufacturers who were actively hiring reported difficulties finding workers for nearly all positions ranging from skilled executive assistants to experienced wood-workers and engineers; competition was said to be particularly fierce for higher skilled jobs in northern New England. Staffing firms reported that low unemployment rates gave workers less incentive to look for new temporary or permanent positions; at the same time, a dearth of fresh college graduates and young workers with two to three years of experience further limited the available pool of qualified talent. A majority of contacted staffing firms reported bill and pay rates that were either holding steady or rising only modestly in line with inflation or increases in benefits costs.\nPrices\nPrices were mostly unchanged or up modestly. Retailers said prices largely remained steady in recent months. Restaurateurs noted that menu prices were up 3.1 percent year-over-year, while wholesale food prices rose 1.6 percent, a spread that caused some consumers to reduce spending on eating out. Prices at most manufacturing firms stayed level since last quarter, and were flat or up in the very low single digits year-over-year. One notable exception was a dairy producer who reported increased input costs of 6 percent over the past quarter, following a 9 percent increase the prior quarter; they expect prices to level off into 2020.\nRetail and Tourism\nFirst District retail respondents reported comparable-store sales ranging from a decrease of a few percentage points to increases in the mid-single digits year-over-year. Two retail contacts plan significant business expansion, as reflected in their capital spending plans for 2020. One retailer noted that their inventory levels were impacted by the coronavirus in China, which slowed production at some manufacturing plants. Consumer sentiment remained strong.\nAnecdotally, Massachusetts restaurant sales through the first seven weeks of 2020 have been good, fueled by the redemption of gift cards and mild winter weather. Through December\u2014the latest month with hard data on state meals-tax receipts\u2014Massachusetts restaurants saw total sales increase 4.2 percent year-over-year. But when adjusting for the record number of restaurant units in operation, the underlying sales trend is likely a much more modest 1.1 percent increase. Industry contacts remained concerned that the intense competition for customers amid rising operating costs means that the current number of restaurant units is not sustainable. The outlook for 2020 is cautionary, as the higher advertising costs associated with a presidential election year increase operating expenses.\nManufacturing and Related Services\nReports from manufacturers were mostly positive, with seven of ten respondents reporting increased sales compared to the same period last year. Two semiconductor-related manufacturers reported the greatest gains: driven primarily by a buildup in 5G-related technology, revenues were up more than 20 percent compared to last year. A veterinary care supplier and a dairy manufacturer both reported revenue growth around 11 percent year-over-year. Two other contacts reported low double-digit growth from a year ago, including a furniture manufacturer, who cited large hotel orders as well their most successful Presidents' Day weekend in several years. A biotech firm saw sales and revenue growth in single digits. On the down side, a textile manufacturer reported flat sales, and two firms, in advanced sensors and chemicals, pointed to disruptions related to uncertainty and supply chain challenges from the coronavirus as factors leading to their slower 2020 start. Seven of ten manufacturers did not mention disruptions from the virus to date. A handful of contacts pointed to uncertainty related to the election as a potential risk factor later in the year.\nStaffing Services\nNew England staffing firms ended 2019 on a positive note: some contacts reported higher-than-projected revenue growth; one firm cited a year-over-year growth rate of 47 percent. Some companies saw declines in revenue growth; they indicated the slowdowns were within a tolerable range. Most contacts cited a steady and healthy demand for labor, still outweighing labor supply. Two firms cited a slight drop in the total number of job requests compared to a year ago. One contact shared anecdotally that help-wanted signs were prevalent at a range of local businesses. A number of firms shared favorable projections and most are guardedly, if not highly, optimistic going into the second quarter.\nCommercial Real Estate\nCommercial real estate contacts in the First District reported mixed performance across market sectors, with strong demand for industrial space, mixed office leasing activity across locations, and troubles in the retail sector. Evidence of the latter is coming partly from value write-downs for national mall operators, but contacts also saw rising retail vacancy rates in both the greater Boston and greater Hartford areas. Industrial space remains in high demand throughout the region: the Hartford area saw significant large-format warehouse leasing and construction activity, and in Rhode Island the combination of robust demand and scarce inventory contributed to increases in industrial property values on the order of 40 percent in the past two years. Office leasing activity varied across markets: stable but very limited in the Hartford area, resulting in slightly negative absorption for 2019, moderate but slowing in greater Providence, and robust in Boston. A Boston contact reported with astonishment that office rents had increased by up to 50 percent in just the past 3 to 4 years and office vacancy rates are as low as 4 percent in some urban neighborhoods.\nInvestment sales demand was seen as stable throughout the District and remained stronger in Boston than in other areas. Speculative office construction activity increased further in the Boston area\u2014although completions are still a few years off; in other parts of the District, construction activity was dominated by multifamily and mixed-use developments. Contacts expected conditions to remain stable for the most part, although the retail sector is expected to see further weakness and downside macroeconomic risks were cited in relation to the coronavirus outbreak and the presidential election.\nResidential Real Estate\nResidential real estate markets in the First District ended the year of 2019 on a strong note. Rhode Island, Massachusetts, and Boston reported year-over-year changes from December 2018 to December 2019, while New Hampshire and Maine reported January statistics. Connecticut and Vermont data were unavailable.\nClosed sales increased by double-digit percentages in all reporting areas for both single-family homes and condos. Median sales prices generally increased. Inventories of both homes and condos decreased in all reporting areas, with home inventories dropping sharply.\nContacts noted that 2019 was a strong year for real estate, citing a favorable interest rate environment and positive economic conditions as the main reasons. However, low inventory and high demand pushed prices up. Looking forward, contacts expressed optimistic outlooks.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"March 4, 2020\nSummary of Economic Activity\nThe Fifth District economy grew at a moderate pace since our previous Beige Book report. Manufacturers\u2019 shipments and new orders increased modestly. They were encouraged by recent trade negotiations with China, but expressed some concerns about the coronavirus delaying some shipments of inputs. This sentiment was echoed by port contacts despite their reporting strong growth in volumes over the past several weeks. Meanwhile, trucking volumes rose slightly and shipping rates remained soft. Retail sales grew moderately, while travel and tourism strengthened further in recent weeks. Realtors said that 2020 was off to a stronger start than 2019 and that existing home sales picked up modestly. Also, a low inventory of homes for sale along with low interest rates reportedly contributed to the strong demand for new residential construction. In addition, commercial real estate leasing improved moderately while construction of industrial and multifamily properties remained strong. Bankers reported a slight increase in loan demand, overall, with more activity coming from residential real estate and consumer lending than commercial lending. Nonfinancial services firms reported moderate growth in revenues and demand in recent weeks. Employment increased at a modest rate, overall, while wages grew moderately. Prices of finished goods decelerated, as raw materials price growth eased and competition and pricing transparency made it difficult for firms to raise prices.\nEmployment and Wages\nOverall, employment increased at a modest rate in recent weeks. Firms indicated that the demand for labor was strong and turnover rates declined slightly; however, employment growth was being restrained by a tight labor supply. Difficulties filling open positions were cited by employers across a wide variety of industries. One employment agency said that they encouraged clients to seek direct hires because it was harder to recruit workers without a guarantee of a full-time job. Wage growth remained moderate, overall, with higher wage growth reported for certain occupations in high demand. In addition, there were continued reports of firms offering non-wage benefits, such as flexible work schedules, to recruit and retain workers.\nPrices\nSince our previous Beige Book report, price growth slowed to a modest rate. According to our most recent surveys, growth slowed for prices paid and for prices received in both the manufacturing and service sectors. A few service firms said that it was difficult to raise prices because of competition and because customers can go online and compare prices. In contrast, a metals manufacturer said that steel prices had risen in recent months and a landscaping company raised prices after keeping them flat for several years.\nManufacturing\nOn balance, manufacturers in the Fifth District reported a modest increase in shipments and new orders in recent weeks. Food, auto parts, and furniture manufacturers reported stable, strong demand. Several manufacturers were encouraged by trade negotiations with China. However, many firms noted that while conditions were improving, their markets remained soft. Some manufacturers were able to raise prices. Others reported higher costs of inputs in some cases due to tariffs that squeezed profit margins. Also, the coronavirus led to concerns about delays in the arrival of inputs.\nPorts and Transportation\nFifth District ports had strong growth in shipment volumes in recent weeks. Growth of export volumes was particularly strong, with notable increases in plastic, meat, and auto exports. Import volumes also increased, but more modestly, as several ports saw an increase in blank sailings\u2014that is shippers cancelling ports of call\u2014 particularly from China. Port officials were optimistic about recent trade negotiations with China but expressed concern over the potential impact of the coronavirus on imports, although they were currently uncertain about the magnitude of that impact.\nTrucking volumes increased slightly since our last report but remain lower than a year ago. This trend was consistent across industrial and retail shipments. Spot market activity rose slightly, while rates remained fairly soft. Most firms were optimistic about the coming year. One company looked to invest in new equipment and another considered hiring after a year of reducing staff. A few firms expressed concerns about market competition, low profit margins, and uncertainty associated with an election year.\nRetail, Travel, and Tourism\nRetail sales in the Fifth District grew moderately since our last report. While customer traffic was soft in some places, demand, sales, and profitability were generally higher. Some retailers continued to struggle with higher costs of products resulting from tariffs, but others saw relief after trade negotiations. Sales of both new and used autos were strong, although dealers expressed uncertainty from elections and the coronavirus.\nTravel and tourism strengthened slightly in recent weeks. Hotel occupancy and room rates increased. In Asheville, North Carolina, growth in hotel revenue surpassed growth in short-term rental revenue. In contrast, a Virginia ski resort struggled with slow business resulting from warm weather. The greatest concern among most tourism contacts was lack of staffing, which in some cases led services to be cut. In the District of Columbia, some groups canceled travels because of the coronavirus. Firms around the Fifth District were fairly optimistic about continued strength in the coming year.\nReal Estate and Construction\nFifth District home sales increased modestly since our last report. Realtors said that 2020 was off to a stronger start than 2019 and noted particularly strong demand in the low to mid-price range but a low inventory of these homes. Buyer traffic remained strong, but days on the market increased slightly in some areas, returning to more normal averages. Single family construction was strong amid low inventories. One contact noted that a low inventory of rentals was causing difficulties for people looking for somewhere to live while waiting to close on homes. Home prices were fairly stable but growth rates varied across locations and home types.\nThe Fifth District commercial real estate leasing increased moderately in recent weeks. Demand for industrial space was high across the District, with little vacant space in some markets. Both speculative and built to suit construction for industrial spaces were solid. Office occupancy rates were high, leading to low supply and increasing rental rates. Brokers reported strong multifamily construction. Demand for retail space was fairly stable, although one contact noted that many large chain restaurants were closing and were replaced by new restaurants that occupied less space.\nBanking and Finance\nOverall, loan demand grew slightly since our previous Beige Book. Bankers indicated that commercial real estate and commercial and industrial lending improved slightly, though several banks mentioned that much of commercial borrowing now is outside the traditional banking system and that most of their new lending was for refinancing existing debt rather than new capital expenditures. Residential mortgage lending, auto loans, and demand for other consumer credit grew moderately, attributed in part to low rates. Meanwhile, credit standards, delinquencies, and credit quality were reportedly unchanged at good levels. Despite several bankers citing fierce competition, deposits increased modestly in recent weeks.\nNonfinancial Services\nOn the whole, nonfinancial services firms indicated a moderate increase in revenue and demand in recent weeks. There were some reports of strong growth from firms engaged in construction-related services, legal services, advertising, and IT consulting services. Contacts in the healthcare sector also saw solid growth. One hospital administrator said that they were investing in brick and mortar facilities to meet demand, and in IT infrastructure for productivity gains. Also, a product design firm said that entrepreneurship was at a 20-year high, and the number of patents issued last year was up considerably.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMarch 4, 2020\nSummary of Economic Activity\nEconomic activity in the Twelfth District continued to expand at a modest pace during the reporting period of January through mid-February. The labor market remained tight, employment increased somewhat, and wages rose further. Reports on prices suggested inflation was largely stable. Sales of retail goods increased markedly, and activity in consumer and business services was up somewhat. On balance, commerce in the manufacturing sector contracted minutely, and activity in the agriculture sector picked up slightly. While the residential real estate market expanded modestly, commercial real estate activity was mixed. Lending grew further.\nEmployment and Wages\nThe labor market remained tight, with persistent worker shortages reported across various skill levels and industries. Hiring increased somewhat, despite limited availability of workers. Businesses in several sectors, including information technology, finance, payment processing, and legal services, reported larger payrolls. Other contacts in the construction, utilities, manufacturing, and health-care sectors reported that the pace of hiring was flat. They attributed the lack of additional hiring primarily due to continued difficulties in finding and employing workers. Some businesses mentioned seeking new hires to fill only positions vacated due to retirements or voluntary departures. A few contacts highlighted their firms\u2019 efforts to avoid having to rehire workers in the future, with a manufacturer in the aerospace sector reducing layoffs to a minimum despite weakened activity, and a transportation services provider keeping typically seasonal employees on the payroll during the off-season. Others reported increasing their investment in offshoring and automation to combat labor shortages. Some employers characterized low worker availability as a significant deterrent to business expansion.\nWages continued to rise over the reporting period, as companies tried to attract and retain qualified workers. The reported main drivers behind increased compensation pressures were heightened labor market competition and increased minimum wage requirements. Some employers mentioned failing to match wage and benefit packages requested by candidates. A health-care provider reported being unable to attract individuals from outside the labor force and into entry-level positions due to unattractive wages. A hotelier in Southern California raised concerns about wage compression resulting from new minimum wage legislation, highlighting smaller wage increases for middle-level staff than those for either entry-level or top-level workers. A few employers in the finance sector noted slightly lower wage pressures for specific sets of expertise due to improved labor availability in those particular skill areas.\nPrices\nBusiness contacts suggested that price inflation was mostly unchanged from the previous reporting period, on balance. Many reports mentioned no significant changes in prices, including those from the finance, energy, health-care, and professional services sectors. Other businesses, such as builders, hotels, and food service providers, experienced some uptick in prices due to increases in input costs. In the agriculture and natural resources sectors, some grape and lumber producers reported a more noticeable rise in prices over the reporting period, while grain and potato prices remained stable. A contact in Washington highlighted double-digit price increases for professional landscaping services. A banker in California mentioned negotiating with vendors to lower automatic price increases, specifically to bring those increases more in line with the national inflation rate.\nRetail Trade and Services\nSales of retail goods increased markedly. Most reports indicated that consumer demand was robust over the reporting period. Retailers continued to note that online sales grew faster than brick-and-mortar sales. Auto dealers reported a brisk rise in activity, especially in the used vehicle market. Specialized retailers focused on home improvement products, pet care items, or pharmaceuticals also reported continued solid activity. One contact in California mentioned some difficulty in replenishing inventory due to lingering trade tensions.\nActivity in consumer and business services increased somewhat. Food service providers reported continued solid activity but noted that the rate at which new restaurants opened has decelerated somewhat due to higher input costs. Tourism was mixed, with some decline in airline travel associated with the COVID-19 outbreak. Nonetheless, a hotelier in Southern California reported modest growth expectations for early 2020. A legal practitioner in Hawaii and a health-care provider in Nevada highlighted generally stable conditions within their respective sectors.\nManufacturing\nActivity in the manufacturing sector contracted minutely, on balance. Energy use by manufacturers in the Pacific Northwest increased, and across the District, production and sales of manufactured wood products and building materials accelerated due to increased construction of residential units. However, activity in the aerospace sector weakened following the announcement of delays in planned production from a large Northwestern manufacturer. Additionally, the COVID-19 outbreak led to decreased aircraft demand from China and Southeast Asia, with one supplier reporting no orders received in January. Solar energy equipment manufacturers also experienced delayed order fulfillment due to supply chain disruptions related to the COVID-19 outbreak.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector increased slightly, on net, with domestic sales remaining at healthy levels. Log and lumber sales benefited from attractive mortgage rates and a pickup in residential construction across the District. Export sales continued to falter somewhat due to international developments. On the one hand, contacts welcomed international trade deals and the prospects of easing tariffs on products including dairy sold to the Chinese market. On the other hand, reports mentioned that the COVID-19 outbreak has already started to negatively affect exports of nuts and other California crops. One contact in central California mentioned that precipitation levels so far this year are lagging somewhat relative to historical averages, which could affect future almond and cherry yields. In the energy sector, reports noted generally flat sales, expectations for increased capital expenditure to bolster resiliency, and low capacity utilization apart from renewable sources.\nReal Estate and Construction\nResidential real estate activity grew modestly. Contacts from most areas within the District continued to report brisk buyer demand, low inventories for single-family homes, and high occupancy rates for multi-family units. Construction activity increased on the back of agreeable weather, but at a somewhat slower pace than the previous reporting period due to labor and land costs constraints. A financier from the Pacific Northwest noted that construction activity in rural areas also expanded recently. A few other areas within the District reported less robust sales and flat construction activity. Home prices accelerated in many regions, intensifying affordability concerns.\nConditions in commercial real estate markets were mixed. Some contacts continued to highlight sluggish demand for retail and office space. Reports out of California pointed to higher retail vacancies, as well as longer periods in between leases. A building materials supplier mentioned the conclusion of large construction projects connected to the technology sector in the San Francisco Bay Area, leading to expectations of slower activity in the immediate future. Industrial construction and warehouse leasing activity in some other areas increased somewhat. One contact in the Pacific Northwest noticed brisk commercial construction activity in the area.\nFinancial Institutions\nLending activity grew further. Reports noted stronger demand for new mortgages, refinancing credit, and auto loans. Lending to the commercial sector also increased relative to the previous reporting period, especially for industrial real estate. Agricultural lending weakened in the Pacific Northwest. Overall, capital levels and asset quality remained high. Tighter competition for loans narrowed net interest margins and profitability. Credit availability was generally stable, and underwriting standards tightened somewhat. An investment financier in California reported stable private equity conditions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"March 4, 2020\nSummary of Economic Activity\nSixth District business contacts reported that economic activity grew modestly from January to mid-February, and the outlook remained positive, on balance. Reports of tightness in the labor market persisted. A majority of firms noted a steady pace of wage growth outside of specialized jobs and those in high demand. Nonlabor costs continued to increase modestly. Retail and automotive contacts noted flat sales growth over the reporting period. Hospitality contacts saw year-over-year increases in the number of visitors to the region. Residential home prices remained steady and demand was healthy. Commercial real estate conditions were solid. Overall manufacturing activity weakened as new orders and production levels declined. District financial institutions reported stable conditions; loan growth, while positive, moderated somewhat.\nEmployment and Wages\nA majority of firms continued to report tight labor market conditions. A shortage of workers for lower-skilled positions, as well as for some specialized occupations such as software developers, nurses, and engineers, was noted. The continued lack of available construction labor was said to be lengthening project timelines. Many employers noted productivity concerns as the lack of available skilled labor required more in-house training and supervision.\nMost contacts expect overall wage growth to remain steady, with larger wage increases going to positions in high demand or those deemed critical.\nPrices\nMost contacts continued to report modest increases in nonlabor costs while tariff concerns lessened over the reporting period. Some contacts noted having pricing power with select goods and services, but most reported difficulty in passing through rising costs. The Atlanta Fed\u2019s Business Inflation Expectations survey showed year-over-year unit costs were up 1.5 percent in February. Over the next twelve months, survey respondents indicated they expect unit costs to rise 1.7 percent, and the majority of firms expect overall costs to put moderate upward pressure on prices.\nConsumer Spending and Tourism\nOn balance, retail contacts and auto dealers reported flat sales growth since the last report. Contacts from both segments expect an increase in uncertainty in their industries over the next few months due to sourcing constraints for merchandise and auto parts from China.\nDistrict travel and hospitality contacts reported a healthy start to the year, with an uptick in the number of visitors to the region over the first five weeks of the year compared with the same period last year. Although no material impacts have yet been seen, tourism contacts are closely watching for potential negative effects on the industry resulting from the coronavirus outbreak.\nConstruction and Real Estate\nLow mortgage rates and heathy job growth continued to support demand for housing in the District. Price appreciation was firm while single-family sales activity was constrained by limited inventory and lower levels of housing starts. Despite low interest rates, concerns over affordability remained as many expect price appreciation to continue and inventories to remain limited. Although mortgage loan quality remained stable, some markets saw a slight uptick in delinquencies over the past year and a rise in the share of mortgages with higher debt-to-income ratios.\nCommercial real estate (CRE) contacts reported steady leasing and sales activity throughout the District during the reporting period. Data indicated that sector vacancy rates increased slightly across most major markets in the District; however, contacts noted a recent acceleration in leasing and sales inquiries. Local market conditions, such as growth in population and jobs, continued to positively influence CRE activity. Overall, most CRE segments experienced positive dynamics as rents continued to grow at a modest pace. Contacts noted that growing construction costs were impacting the start of some new projects, although capital was readily available via banks and non-bank entities for financing CRE projects. Non-bank entities remained aggressive in financing both construction and stabilized CRE projects. Modestly growing amounts of leverage and some loosening in underwriting standards were reported.\nManufacturing\nManufacturing firms reported a decline in overall activity. Contacts indicated that new orders and production levels decreased since the last reporting period, while purchasing managers indicated little to no change in supply delivery times. Finished inventory levels continued to decline, but at a somewhat slower pace since the previous report. Optimism for future production levels was reflected, however, in over one-half of contacts expecting higher levels of production over the next six months.\nTransportation\nDistrict transportation firms reported varying levels of activity since the previous report. Air cargo contacts noted healthier year-over-year volumes and revenues from increased exports. However, due to the coronavirus, cancelled flights to China have reduced air cargo capacity significantly, which is expected to negatively affect first quarter revenues. Port contacts saw continued strength in container traffic, but weakness in breakbulk cargos, particularly steel and aluminum, owed to tariffs. Railroad contacts reported sustained declines in shipments of industrial freight, mostly non-metallic minerals, metallic ores and coal; intermodal shipments were also down from year-earlier levels. Most transportation contacts remain somewhat confident in their outlook, despite geopolitical uncertainties.\nBanking and Finance\nConditions at financial institutions remained stable. Margins at banks were steady as lower loan yields were offset by a decline in interest expense. Loan growth was positive but continued to moderate as demand for commercial and industrial loans weakened, and banks tightened underwriting standards for credit cards and vehicle lending. Loan growth was lowest among smaller community banks. Asset quality remained strong, as there was little change in the level of nonperforming assets.\nEnergy\nThe continued rise in global supplies of crude oil and liquefied natural gas (LNG) was further augmented by slowing demand from China in the wake of the coronavirus outbreak. Chemical plant and refinery expansions continued to pick up across the District. Utilities companies reported steady demand in commercial and industrial segments, as well as increased infrastructure investments, largely in electric segments, but also in renewables units and nuclear projects. Solar plant construction projects, particularly in Florida, continued to develop.\nAgriculture\nAgricultural conditions remained mixed. Most of the District remained drought free, but recent heavy rain resulted in some flooding conditions. On a month-over-month basis, the February production forecast for Florida's orange crop was down while the grapefruit production forecast increased; both forecasts remain ahead of last year's production. On a year-over-year basis, prices paid to farmers in December were up for corn, soybeans, beef, and milk but down for cotton, rice, broilers, and eggs. On a month-over-month basis, prices increased for corn, cotton, soybeans, beef, broilers and milk but declined for rice and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nMarch 4, 2020\nThis report was prepared at the Federal Reserve Bank of Richmond based on information collected on or before February 24th, 2020. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nEconomic activity expanded at a modest to moderate rate over the past several weeks, according to the majority of Federal Reserve Districts. The St. Louis and Kansas City Districts, however, reported no change during this period. Consumer spending generally picked up, but growth was uneven across the nation, including mixed reports of auto sales. Overall, growth in tourism was flat to modest. There were indications that the coronavirus was negatively impacting travel and tourism in the U.S. Manufacturing activity expanded in most parts of the country; however, some supply chain delays were reported as a result of the coronavirus and several Districts said that producers feared further disruptions in the coming weeks. Transportation activity was generally flat to up slightly aside from some Mid-Atlantic ports that saw strong volume growth. U.S. nonfinancial services firms generally experienced mild to moderate growth. Overall loan growth was flat to up modestly, according to most Districts; notable exceptions were St. Louis, New York, and Kansas City, where declines were reported. On the whole, residential home sales picked up modestly. Nonresidential real estate sales and leasing activity varied across Districts. Agricultural conditions were little changed in recent weeks while some declines in natural resource extraction were reported. Outlooks for the near-term were mostly for modest growth with the coronavirus and the upcoming presidential election cited as potential risks.\nEmployment and Wages\nEmployment increased at a slight to moderate pace, overall, with hiring constrained by a tight labor market. Insufficient labor lowered growth for many firms and led to delays in construction projects. Several employers changed from temporary to permanent workers in order to attract talent, and firms made efforts to retain workers such as keeping seasonal workers on staff in the off-season. While employment grew across most sectors, manufacturers, retailers, and transportation companies reported lower demand for labor in some Districts. Wages grew at a modest to moderate rate in most Districts, similar to last period, and contacts expected wage growth to continue in this range. Firms reported that the tight labor market and minimum wage increases were putting upward pressure on wages. Companies also spent more on benefits, as the cost of benefits rose and as employers expanded benefits to attract and retain workers.\nPrices\nMost Districts reported modest growth in selling prices, as well as in nonlabor input prices. Some firms, particularly manufacturers, were optimistic that the Phase One trade deal with China would reduce goods prices, but some still struggled with tariffs and were concerned about how the coronavirus might affect prices. Oil and gas prices decreased across the country, which was largely attributed to weak demand from China because of the coronavirus. Retail prices were up in much of the country although some retailers had lower costs due to improved trade conditions. Meanwhile, agriculture price changes varied.\nHighlights by Federal Reserve District\nBoston\nThe regional economy continued expanding in early 2020. A majority of manufacturers and retailers reported revenue increases from a year earlier. Staffing firms also reported revenue growth; some said growth was slower than in recent past periods and some said it was faster than expected. Business contacts continued to mention tight labor markets but little wage pressure. Prices stayed flat to up slightly. Outlooks remained positive.\nNew York\nGrowth in the regional economy picked up to a moderate pace. With tight labor markets, wage growth picked up but job creation remained sluggish. Both input prices and selling prices rose moderately. Housing markets firmed, while commercial real estate markets weakened further. Business contacts have grown somewhat more optimistic about the near-term outlook.\nPhiladelphia\nOn balance, business activity resumed a modest pace of growth during the current Beige Book period after a lull last period. Tight labor markets continued to constrain employment growth to slight increases, but wage pressures ebbed to a modest pace. Price increases remained modest, and firms optimistic, but the coronavirus has increased uncertainty about future growth.\nCleveland\nEconomic activity in the Fourth District increased modestly thanks to growth in retail and professional and business services. Manufacturing demand held steady, but firms noted weaker demand because of the Boeing 737 Max production halt and concern about COVID-19's impact on supply chains. Home and auto demand increased. Employment and wages rose modestly overall. Inflation pressures remained modest.\nRichmond\nThe Fifth District economy grew moderately in recent weeks. Manufacturing activity picked up, as did port volumes and retail sales; however, some concerns were expressed about the coronavirus lowering imports of inputs and retail goods from China in coming months. Also, employment increased and wages continued to rise. Price growth for inputs and selling prices, on the other hand, slowed to a modest rate.\nAtlanta\nEconomic activity grew modestly. The labor market remained tight and wages were steady, on balance. Nonlabor costs continued to rise. The pace of retail and auto sales growth was flat. Home prices were steady, and commercial real estate activity continued to grow. Manufacturing declined, as new orders and production levels fell. Banking activity was stable.\nChicago\nEconomic activity increased modestly. Consumer spending and employment increased modestly, while construction and real estate activity increased slightly. Business spending and manufacturing were little changed. Wages increased modestly, prices increased slightly, and financial conditions were unchanged. Farmers' income prospects deteriorated some. The coronavirus outbreak has had little effect to date.\nSt. Louis\nReports from contacts indicate that overall economic conditions have been mixed but are generally unchanged since our previous report. Overall inflation pressures increased slightly, although there were some signs of further softening. Reports from manufacturing contacts indicate somewhat of a rebound in activity after consecutive reports of slowing growth.\nMinneapolis\nNinth District economic activity grew at a moderate pace. Employment and wages increased moderately. Following a slowdown in 2019, manufacturing activity appears to have increased recently. Favorable snow conditions across much of the District boosted winter tourism, with some exceptions. Commercial and residential construction and real estate increased. Agricultural conditions were stable at low levels.\nKansas City\nThe District economy was largely unchanged in January and February, but activity levels were above year-ago levels in most sectors. Consumer spending slowed slightly and construction activity held steady, while manufacturing activity edged up in February for the first time since last summer. Energy activity continued to decline due primarily to low oil and natural gas prices, while the agriculture sector remained weak.\nDallas\nEconomic activity expanded moderately, with broad-based growth seen in services (excluding retail) and manufacturing but declining activity in the energy sector. Housing demand continued to rise broadly. Employment growth slowed to a modest pace. Input prices continued to rise while selling prices were mixed. Outlooks generally improved, though the coronavirus introduced new uncertainty into the business environment.\nSan Francisco\nEconomic activity in the Twelfth District expanded at a modest pace. Employment increased some and wages rose further. Price inflation was stable. Sales of retail goods increased markedly, and consumer and business services activity was up somewhat. The manufacturing sector contracted minutely on net, but activity in the agriculture sector increased slightly. The residential real estate market expanded modestly, while commercial real estate activity was mixed. Lending grew further.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"March 4, 2020\nSummary of Economic Activity\nAggregate Third District business activity resumed a modest pace of growth during the current Beige Book period, after a lull last period. Growth for manufacturing and nonfinancial services firms picked up to a modest and moderate pace, respectively. Financial services and residential construction continued to grow modestly, as did nonauto consumer spending; however, auto sales and tourism slowed from a slight pace of growth to a modest decline and to no change, respectively. Residential construction and existing home sales grew modestly, while nonresidential construction and leasing activity held steady. Labor markets remained tight throughout the District, generating slight employment increases, while wage growth appeared to ebb to a modest pace. Overall, price pressures remained modest. A positive outlook for modest growth over the next six months tended to narrow among nonmanufacturing firms and broaden among manufacturers; however, contacts expressed concerns about potential supply chain disruptions from the coronavirus.\nEmployment and Wages\nEmployment continued to grow slightly during the current Beige Book period; however, a slower pace is evident, as the share of firms reporting staff cuts edged up. Nearly two-thirds of the firms reported no change in staff. Average work hours held steady at manufacturing firms and edged up at nonmanufacturing firms.\nDifficulty hiring and retaining qualified workers remained a common thread from many firms as they continued to report tight labor market conditions, but the comment was less frequent. Some firms reported offering more competitive wage and salary packages; many firms are automating where possible.\nStaffing firms continued to report demand for new job placements from clients and an insufficient supply of qualified labor to fill the orders. One staffing contact noted that many clients were converting current temporary workers to permanent staff and not placing new temp orders.\nOn balance, firms reported modest wage growth \u2013 slower than the prior period\u2019s moderate pace. The share of nonmanufacturing firms reporting wage and benefit increases fell. One contact noted raising staff wages in January \u2013 earlier than the firm\u2019s typical March adjustment.\nPrices\nMost firms continued to report modest increases for both input prices and prices received for their own goods and services. The share of nonmanufacturers reporting higher prices paid retreated after a sharp rise in the prior period. The share of firms reporting no change in prices remained near three-fourths for manufacturers and rose to about three-fifths for nonmanufacturers.\nLooking ahead six months, the anticipation of higher prices lessened somewhat among manufacturers. About 40 percent of the firms expected higher prices; about 5 percent expected prices to fall. This was true for prices firms expected to pay as well as for prices firms expected to receive for their own goods.\nManufacturing\nOn balance, manufacturers reported modest growth, with steadily improving reports throughout the period versus the slight growth reported during the prior period. The percentage of firms reporting increases in shipments and new orders rose to nearly one-half, and the percentage reporting decreases in new orders edged down.\nPositive expectations of activity over the next six months broadened among manufacturers. Nearly three-fifths of the firms expected shipments and new orders to increase. However, expectations diminished for future employment and held steady for planned capital spending.\nDespite the growth and bullish expectations, several firms cautioned that the emerging coronavirus may disrupt supply chains in the near future. Two firms have already reported delays in receiving needed production inputs. Inquiries and orders to source parts domestically were increasing because of tariff uncertainty and are continuing because of the coronavirus. However, contacts explain that it can take three months to get a part into production, and longer for testing and redesign.\nConsumer Spending\nRetail contacts continued to report modest growth in restaurants and other nonauto retail sales. Most contacts noted that consumers remained confident but suggested that low gas prices and unseasonably warm weather had also helped sales. Retailers noted no supply disruptions because of the coronavirus.\nNew car sales appear to have declined modestly on a year-over-year basis. In New Jersey, sales fell modestly through mid-February, although sales had been so unseasonably strong in January 2019 that sales through mid-February 2020 were negative by comparison. Pennsylvania auto dealers (of new and used cars) reported modest gains in January.\nTourism activity appeared to hold steady \u2013 after growing slightly in the prior period. A tourism analyst noted that most metrics for the Philadelphia area were positive for 2019, but that national travel was slowing a bit, and the coronavirus was causing headwinds. In addition to fewer tour groups from China, local customers have been avoiding some of Philadelphia\u2019s Asian restaurants and shops, as unfounded fears spread. Area ski resorts have managed with manmade snow, while Atlantic City casino revenues appear to have benefited from unseasonably warm weather in January.\nNonfinancial Services\nOn balance, activity at service-sector firms grew moderately \u2013 a substantial pickup from the prior period. The share of firms reporting increased revenues and new orders rose, and the share reporting decreases in both measures fell significantly. The coronavirus has entered the list of concerns, which still includes tariffs and tight labor markets. One business services firm has already noted disruptions to its vendor\u2019s supply chain. A bank contact was aware of delays that a customer had faced for key production equipment. Over one-half of the firms \u2013 less than in the prior period \u2013 expect growth over the next six months.\nFinancial Services\nFinancial firms continued to report modest growth in overall loan volumes (excluding credit cards) on a year-over-year basis. Credit card lending also remained at a modest pace.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly for commercial real estate and other consumer loans (not elsewhere classified). Home mortgages grew moderately, commercial and industrial loan volumes grew modestly, and auto lending appeared flat. No major category was negative on a year-over-year basis.\nBanking contacts continued to express few concerns over credit quality and lending standards at their own institutions, but some were critical of \u201ccrazy deals,\u201d especially from nonbank competitors. One large bank noted that loan quality was \u201ceerily quiet.\u201d Most banking contacts were optimistic about the overall health of the U.S. economy going forward but expressed concerns over the potential impact of the coronavirus.\nReal Estate and Construction\nHomebuilders continued to report modest growth in contract signings, but with some improvement. One builder noted that traffic through the company\u2019s showrooms was normal but that more people were deciding to buy. Contacts cited low interest rates, warm weather, and a strong stock market as factors spurring purchases. Current sales should keep contractors busy well into September.\nInventory levels for existing home sales dropped to two months \u2013 less in the Lehigh Valley. The constrained low level of sales appears to have hit a bottom, as most local markets reported modest increases in year-over-year sales \u2013 central Pennsylvania sales were strong. Still, an area broker noted that a lack of new single-family home construction and high student debt were constraining supply and demand, respectively.\nOn balance, commercial real estate construction appeared to hold steady at relatively high levels, as did sales and leasing activity. Contacts noted that multifamily development was as busy as ever, architects noted a year-end pickup, and accountants to the industry reported no emerging problems. Construction activity is somewhat constrained by available labor.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nMarch 4, 2020\nSummary of Economic Activity\nReports from District contacts indicate that overall economic conditions have been mixed but generally unchanged since our previous report. Labor market conditions continued to show improvement with modest employment gains and steady wage gains. Overall inflation pressures increased slightly, although there were some signs of softening. Reports from manufacturing contacts indicate a modest rebound in activity after consecutive reports of slowing growth. Reports on consumer spending, real estate, and construction were all mixed. District banking contacts reported slightly weaker loan demand. Overall, the outlook among contacts improved after steadily weakening for seven consecutive quarters. On net, contacts expect conditions in 2020 to be better or somewhat better than in 2019.\u00a0 Contacts were uncertain about the impact of coronavirus on their business; no contacts reported a significant impact, but some have experienced travel and shipment delays.\nEmployment and Wages\nEmployment has increased modestly since the previous report. On net, 18 percent of survey respondents reported that employment was higher than a year ago. Firms spanning several industries\u2014including healthcare, information technology, and manufacturing\u2014reported difficulty hiring workers due to the tight labor market. Employers reported lowering their hiring expectations and coordinating with educational programs to increase their applicant pools. One nursing program in Arkansas recently doubled its student enrollment but characterized the expansion as a \u201cdrop in the bucket\u201d compared with employer demand. Smaller employers particularly continued to struggle to hire, with survey-based measures showing more mixed employment trends among small firms.\nWages have increased moderately since the previous report, though small-firm wage growth has been more muted. On net, 39 percent of survey respondents indicated that wages were higher than a year ago, with multiple contacts ascribing this to the scarcity of workers; contacts reported improving benefits and increasing variable compensation for similar reasons.\nPrices\nPrices have increased slightly since the previous report. On net, just 6 percent of business contacts reported that prices charged to consumers were higher in the current quarter relative to the same time last year. Two-thirds of contacts reported that their price changes over the past three months met expectations. The remaining contacts who had to deviate from their pricing plans were equally split between increasing prices less than planned or cutting prices more than planned. In addition to the slight price growth, business contacts noted that the cost of obtaining funds was lower in the current interest rate environment. On net, 22 percent of contacts reported increasing nonlabor costs. This is below average for the past two years. Several contacts in the manufacturing sector noted tariffs as a source of increased cost. Coal prices are down slightly since the previous report and modestly since last year.\nConsumer Spending\nReports from general retailers, auto dealers, and hospitality contacts indicate consumer spending activity has increased slightly since our previous report. January real sales tax collections increased in Kentucky, Arkansas, and West Tennessee and decreased in Missouri relative to a year ago. District general retailers reported that sales were flat or slightly higher compared with the same time last year. District auto dealers also reported flat or slightly stronger sales in comparison with the same time last year. The overall outlook among general retailers was optimistic for the coming quarter, and the outlook among auto dealers was generally pessimistic. Dealers cited higher new vehicle prices and credit constraints as potential deterrents to consumer confidence. Hospitality contacts indicated mixed tourism activity over the past two months.\nManufacturing\nManufacturing activity has rebounded after a period of weakening growth, which started last summer. In a recent survey, contacts reported a modest improvement in manufacturing conditions. On net, production, new orders, and capacity utilization improved relative to one year ago. Most contacts were optimistic about the next quarter, with net majorities expecting growth in production, new orders, and capacity utilization. Other survey-based indexes indicate that Arkansas and Missouri manufacturing activity expanded moderately from December to January. New orders and production grew at a moderate rate in both states.\nNonfinancial Services\nActivity in the services sector has slightly improved since the previous report. On net, 51 percent of contacts reported similar or greater dollar sales over the past quarter. Also, 68 percent of respondents expect similar or improved sales in the next quarter. In the transportation industry, major logistics firms are conducting job fairs to fill a wide array of positions for existing and planned distribution centers. Overall labor conditions are improving, as professional service job vacancies have risen year-to-year District-wide. In particular, contacts in IT services expect stronger revenue growth due to improving labor supply. In healthcare, expansion and consolidation of hospitals in the District point to favorable conditions, but shortages in personnel continues to be an issue.\nReal Estate and Construction\nResidential real estate activity has been mixed since the previous report. Seasonally adjusted home sales decreased slightly in January across the four largest MSAs in the District. However, most real estate contacts reported an increase in demand for single-family homes relative to a year ago. Contacts indicated that expectations for first-quarter sales had been met. Inventory levels in the region increased slightly relative to the previous month but remained well below levels from a year ago.\nResidential construction activity increased slightly. December permit activity across District MSAs have remained unchanged since the previous month. Survey respondents reported slightly higher construction activity relative to the same time last year and expect continued growth in the next quarter.\nCommercial real estate activity has increased slightly since the previous report. Contacts reported a slight increase in the demand for office and industrial space and a slight decrease in demand for retail space relative to one year ago. Contacts noted slightly higher demand for multifamily properties. A contact in Louisville stated that the increase in remote workers was hurting office building demand.\nCommercial construction activity was mixed. Contacts reported slightly higher demand for office and industrial property construction and slightly lower demand for retail property construction. On net, 30 percent of respondents reported that quarterly sales fell short of expectations. A contact in St. Louis noted a positive effect of low interest rates on construction demand and consumer confidence.\nBanking and Finance\nBanking conditions in the District have weakened slightly since the previous report. Demand for mortgages, commercial and industry loans, and auto loans all decreased slightly relative to one year ago. Bankers expect no change to overall loan demand in the second quarter of 2020. Credit standards were little changed compared with year-ago levels but are expected to tighten slightly in the next quarter. Delinquencies increased on a year-over-year basis and are expected to remain unchanged in the second quarter.\nAgriculture and Natural Resources\nDistrict agriculture conditions have declined slightly from the previous reporting period. The number of acres of winter wheat planted this season declined slightly from acreage planted in 2019. Farmers continue to emphasize the importance of Market Facilitation Program payments for supporting the industry. Contacts raised questions and expressed concerns regarding trade with China, including when the trade agreement provisions will apply and what impact coronavirus will have on commodity prices and agricultural purchases.\nNatural resource extraction conditions declined modestly from December to January, with seasonally adjusted coal production falling 4 percent. January production decreased nearly 16 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"March 4, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District increased modestly overall in January and early February, and contacts expected growth to continue at a similar pace over the next 12 months. Consumer spending and employment increased modestly, while construction and real estate activity increased slightly. Business spending and manufacturing production were little changed. Wages increased modestly, prices increased slightly, and financial conditions were unchanged. The outlook for crop farmers\u2019 incomes deteriorated some. Few contacts indicated that the coronavirus outbreak had affected their business operations to date, but there were concerns about supply chain issues going forward.\nEmployment and Wages\nEmployment increased modestly over the reporting period, but contacts expected a slightly faster rate of growth over the next 12 months. Hiring was focused on professional and technical workers and managerial workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. Manufacturers facing slow demand again reported cutting hours rather than laying off workers because they were worried the tight labor market would make it too difficult to hire when demand recovered. A staffing firm that primarily supplies manufacturers with production workers reported no change in billable hours. Wage growth increased modestly overall, and contacts expected a similar growth rate over the next 12 months. Contacts reported wage increases across most occupations, with multiple contacts again highlighting growing wage pressures for entry-level workers. Benefit costs increased slightly.\nPrices\nPrices increased slightly on balance in January and early February, and contacts expected prices to rise modestly over the next 12 months. Retail prices ticked up, and one contact noted that retailer margins had tightened some, largely due to higher shipping costs. There were again reports of an increase in grocery price inflation. Producer prices were flat. Contacts indicated little change in producers\u2019 input costs on net; for example, one said that increased shipping costs had offset decreased raw materials costs.\nConsumer Spending\nConsumer spending increased modestly over the reporting period, and contacts expected a similar pace of growth over the next 12 months. Nonauto retail sales rose modestly, led by gains in the grocery, apparel, and general merchandise sectors. Contacts again reported solid growth in e-commerce and slow growth for brick and mortar general merchandise stores. New light vehicle sales were flat, while sales of used light vehicles moved higher and leasing activity remained robust.\nBusiness Spending\nBusiness spending was little changed in January and early February. Retail inventories were generally comfortable, though GM dealers indicated that inventories were still not fully replenished following the run-offs that occurred during the UAW strike. Most manufacturers said that inventories were at comfortable levels. Some manufacturing contacts reported low inventories of inputs produced in China due to disruptions from the coronavirus outbreak; while most said the impact had been minimal so far, many expected a larger effect if the disruptions continued much longer. Similarly, one retail industry contact believed that if not resolved soon, the outbreak could affect inventories in the sector during the second half of 2020. Capital spending declined some, though contacts expected spending to increase modestly over the next 12 months. Outlays were primarily for intellectual property and IT equipment. About half of contacts reported that their newly purchased capital was intended to increase capacity. Demand for transportation services was little changed, though there were reports of decreased international trade related to the coronavirus. Energy consumption was slightly lower for both commercial and industrial users, with reports of weakness in manufacturing, particularly in the auto sector.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly overall over the reporting period. Residential construction edged up across all price segments. Contacts in southeast Michigan noted that the price gap between new and existing homes continued to widen. Residential real estate activity increased modestly, with growth primarily coming from homes at low to moderate price points. Home prices and rents moved up modestly. Nonresidential construction increased slightly. Contacts again indicated that rising costs were holding back growth, emphasizing a shortage of skilled workers and rising land development costs. Commercial real estate activity ticked up, led by the office and industrial sectors. Contacts noted that new office space absorption rates had slowed, but remained healthy. In contrast, the retail sector continued to struggle. Overall, commercial rents were unchanged, while vacancies and the availability of sublease space edged up.\nManufacturing\nManufacturing production was little changed overall in January and early February. Auto production was unchanged, but continued at a solid level. Steel production also was flat. Heavy machinery demand decreased overall, as a slowdown in demand in China\u2014apparently due to the coronavirus\u2014more than offset robust demand in the US. Heavy truck demand decreased, but contacts expected a turnaround in growth as the year progressed. Specialty metals orders were flat overall, with reports of lower sales to the auto and aerospace industries. Manufacturers of construction materials reported a slight increase in shipments, in line with growth in home building.\nBanking and Finance\nFinancial conditions were unchanged over the reporting period. Participants in the equity and bond markets reported little change in conditions on balance, citing the positive impact of low interest rates but the negative impact of the coronavirus outbreak. Business loan demand increased slightly overall. Contacts reported increased volumes in the commercial real estate, trucking, construction, and auto sectors, though some of the increase appeared to reflect greater borrowing needs due to lower revenues. Loan quality was little changed overall, though one contact said that the warm winter had led to greater delinquencies for natural gas producers. Lending standards were generally unchanged. Consumer loan demand increased modestly, led by growth in mortgage volumes for home purchases and refinancing; loan quality and standards were little changed.\nAgriculture\nThe outlook for crop farmers\u2019 incomes deteriorated some in January and early February. Corn and soybean prices moved lower, though they remained higher than a year ago. There were reports of farmers holding onto their stocks of crops with hopes of higher prices later in the year. Contacts expressed frustration that Chinese purchases of US agricultural goods had not yet materialized following the announcement of the Phase One trade deal and were concerned that the coronavirus outbreak would be used as an excuse for missing future trade targets. Contacts reported that the Market Facilitation Program was providing crucial income support to cushion the effects of the trade challenges with China and poor 2019 yields in much of the District.\u00a0 Milk and hog prices were down over the reporting period but were up compared to a year ago. Egg prices rebounded some, but cattle prices moved lower.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"March 4, 2020\nSummary of Economic Activity\nEconomic activity in the Fourth District increased modestly, albeit at a slightly slower pace than in the prior round. Manufacturing demand held steady, although some producers noted weaker demand because of the Boeing 737 Max production halt. Others expressed concern about supply-chain implications of factory shutdowns in parts of China caused by the outbreak of COVID-19. Retail demand was relatively strong thanks to mild weather, strong consumer confidence, and low interest rates. Professional and business services, a long-standing bright spot in the District, continued to report strong demand for legal, IT, and advisory services. Loan demand was stable, with some improvement in mortgage lending because of low interest rates. Freight haulers said that cargo volumes remained low. On balance, contacts expected that customer demand will improve slightly in the near term. Hiring and wage growth continued at about the same modest pace as in the previous survey period. Contacts indicated that labor was still in short supply, while often noting that they do not believe larger wage increases will attract more applicants. Both nonlabor input costs and selling prices rose modestly.\nEmployment and Wages\nDistrict employers increased staff levels slightly, and firms expect a similar pace of hiring in the near term. Employment gains were concentrated in services. The majority of professional services firms added workers to meet growing customer demand, as has been the case for a number of months. Banking employment edged up after several periods of losses thanks to a few pockets where loan demand had increased. Retail reports were mixed. Warmer weather led a few food and hospitality firms to increase staff levels. However, one large department store reduced employee numbers as part of a restructuring. Transportation firms continued to pare payrolls because of weak cargo volumes and increased operational efficiencies. Most manufacturers held staff levels steady, and the few that added workers added finance and sales analysts and engineers to design new products.\nWages rose modestly and in line with the trend during the past several periods. A greater share of professional and business services raised wages to attract and retain talent. Retail wages moved up in line with an increase in Ohio\u2019s minimum wage. However, a number of freight haulers held wages flat and reduced hours and benefits. Wage growth did not change meaningfully in other sectors. Despite low unemployment, contacts cite modest inflation as a reason for not granting larger wage increases. Contacts often noted that they do not believe larger wage increases will attract more applicants. Many firms that were hiring workers with general skills were concerned they would not be able to pass through the higher costs to customers. Among firms that were hiring skilled or professional workers, many were enhancing other benefits in lieu of more substantial wage increases.\nPrices\nInflation pressures remain modest. Upward pressure on manufacturers\u2019 input costs softened somewhat, in part because of lower contract prices for steel. Also, a number of manufacturers reported that weaker demand from China weighed on commodity prices, with one global capital goods manufacturer pointing to the factory shutdowns caused by COVID-19 as a cause. Transportation firms reported lower diesel fuel prices. Clothing and department store retailers commented that a reduction in incremental tariffs on Chinese imports eased cost pressures.\nDistrict firms raised selling prices modestly. On balance, manufacturers nudged their prices higher, with producers raising prices modestly on select customers or select products or mixing increases on some products with decreases on others. On the consumer side, competition kept retail, food, and hospitality price increases minimal.\nConsumer Spending\nOn balance, retailers reported relatively strong demand. Contacts highlighted mild weather relative to last year as keeping activity strong after the holiday shopping season. Auto dealers reported strong sales thanks to elevated consumer confidence and low interest rates, although used-vehicle sales were rising more quickly than new-vehicle sales. Apparel retailers reported steady customer demand. One discount food and drug store noted that competition from online retailers had led to lower sales. Retailers were upbeat that strong economic conditions would continue to buoy customer demand in the near term.\nManufacturing\nConditions in the manufacturing sector remained stable. One steel producer noted that the bottoming of steel prices led to an increase in demand. Also, for some manufacturers, demand improved because of a usual seasonal pickup that follows a quiet holiday season. Aerospace parts manufacturers and those who serve them noted dampened demand as a result of the Boeing 737 MAX production halt. Many contacts commented on general sluggishness in the global economy and voiced concern about the outlook given the spread of COVID-19 and the resulting effective shutdown of many commercial centers in China. Just more than a quarter of respondents reported that capacity utilization was lower than normal, citing slower demand and excess capacity in the market as the reasons.\nReal Estate and Construction\nConstruction and real estate contacts indicated that overall demand continued to increase at a modest and slightly slower pace in recent weeks. At least part of the slower growth was attributed to typical seasonal effects. On the residential side, contacts cited a generally strong economy, low mortgage interest rates, and confident customers as contributing to ongoing housing demand. Looking forward, residential realtors and builders suggested that these solid fundamentals would continue to bolster housing demand in the coming months.\nNonresidential building activity remained strong, and firms expected strong conditions to persist well into 2020. A few contacts said that investment capital continued to flow into commercial real estate and development, and one commercial builder indicated that he had seen more bid opportunities in recent weeks as developers began planning for the spring. That said, contacts expect the growth rate of commercial building may slow somewhat after a few years of exceptional growth.\nFinancial Services\nOverall, loan demand was stable. On the consumer side, while some bankers reported that lower interest rates spurred growth in mortgage demand, others noted the usual first-quarter decline in consumer credit card balances. On the commercial side, loan demand was balanced. One banker noted that some new capital projects were initiated at the beginning of the year, while others reported slower demand for commercial credit as trade tensions and weakness in the manufacturing sector weighed on business activity. Some contacts noted a sense of caution among their commercial clients; a few mentioned that the typical first quarter decline in deposits was less severe than usual. Contacts speculated there is a possibility that businesses are holding more cash reserves because of uncertainty about the outlook.\nProfessional Business Services\nActivity in the professional and business services sector remained strong but has moderated somewhat from that of recent months. Contacts noted that favorable economic conditions were encouraging firms to spend on legal, advisory, and IT services. Contacts expect demand for their services to remain strong going into the second quarter.\nFreight\nOverall demand for freight services was stable after declining slightly in the previous period. One logistics firm reported that its customers were replenishing inventories after a successful holiday shopping season. However, some freight executives reported that excess truck capacity and weakness in manufacturing had negatively affected their markets. One contact remarked that new entrants with significant amounts of capital have been taking market share. Transportation firms expressed concern about the potential for supply-chain bottlenecks as a result of COVID-19. The virus aside, transportation firms expect conditions to improve slightly in the near future as rising consumer spending leads to increases of merchandise shipments.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nMarch 4, 2020\nSummary of Economic Activity\nThe Second District economy picked up to a moderate pace of growth in the latest reporting period. The labor market remained tight, and wage growth picked up somewhat, though hiring activity was sluggish. Businesses report that both input prices and selling prices picked up somewhat and rose at a moderate rate. Manufacturing activity picked up noticeably, while most service industries reported some pickup. Consumer spending has remained sluggish, following a mixed holiday season, while auto dealers reported a fairly good start to the year. Tourism has weakened more than the seasonal norm in early 2020. Home sales markets have picked up somewhat so far this year, and the residential rental market has remained tight. Commercial real estate markets have weakened further. New commercial construction has largely dried up, while new multi-family residential construction has been steady at a moderate pace. Banks reported some pickup in loan demand and little change in delinquency rates, while financial sector contacts more broadly noted flat to slightly declining activity. Finally, business contacts in most sectors have grown a bit more sanguine about the near-term outlook.\nEmployment and Wages\nThe labor market has remained stable and tight across the District, while hiring has been restrained. Employment agencies have noted ongoing trouble finding workers in occupations ranging from IT workers to customer service reps. A major payroll firm noted that job growth at small businesses has slowed across New York State. Reports from business sectors were mixed. Retail, finance, and transportation firms reported declining employment, on balance, but contacts in manufacturing, wholesale trade, professional & business services, and information reported modest net hiring.\nLooking ahead, businesses in almost all major industry sectors indicated that they planned to add staff, on net. The one sector anticipating job reductions was retail trade. Businesses in most service sectors, as well as employment agencies, reported that wage growth has picked up a bit. Only in finance did contacts report flat wages. A number of businesses in both the manufacturing and service sectors noted that the latest rise in New York\u2019s minimum wage has had ripple effects, boosting wages even for workers well above the minimum.\nPrices\nBusinesses mostly reported that both input costs and selling prices picked up somewhat, rising at a moderate pace. In terms of prices paid, much of this pickup was reported in manufacturing, transportation, information and retail trade. In terms of prices received, the most widespread acceleration was reported from contacts in transportation, information, and leisure & hospitality. Broadway theater ticket prices have receded slightly in early 2020 and were little changed from a year ago. Looking ahead, businesses in all sectors except finance plan to raise their selling prices, on net, in the months ahead.\nConsumer Spending\nRetailers reported that sales were mostly flat thus far in 2020, and contacts generally expected lackluster sales for the months ahead. Some upstate New York retailers offered a more favorable assessment, characterizing customer traffic and sales as solid, helped by mild weather. Retailers generally indicated that inventories were in fairly good shape, aside from an overhang of cold-weather outerwear.\nSales of both new and used vehicles have remained fairly strong in early 2020, helped by mild winter weather. Consumer confidence in the Middle Atlantic States (NY, NJ, PA) rebounded in early 2020, after falling to a nearly two-year low in December.\nManufacturing and Distribution\nManufacturers reported a fairly brisk pickup in business activity and especially in new orders. On the distribution side, reports were also fairly positive: wholesalers reported continuing moderate growth in activity, while transportation contacts noted a rebound in business.\nLooking ahead, manufacturers indicated that they project moderate growth in the months ahead, while wholesalers and transportation firms foresee more subdued growth. Contacts in these sectors have expressed concern about the latest round of minimum wage hikes, and there has been ongoing concern about tariffs. One manufacturing contact noted problems with supply disruptions and shipment delays related to the coronavirus.\nServices\nService industry contacts generally noted a pickup in activity following flat business in late 2019. However, contacts in the education & health service sector indicated that activity was flat. Tourism activity was mixed. A few contacts reported that the coronavirus has deterred visitors, though New York City hotels have continued to report good business. Broadway theaters reported that business slowed by more than the seasonal norm, following a brisk December. Both attendance and revenues fell well below comparable year-ago levels.\nLooking ahead to the first half of 2020, contacts in most major service industries were fairly upbeat, though businesses in education & health were more guarded in their optimism.\nReal Estate and Construction\nHome sales markets across the District have been mixed but, on balance, a bit firmer since the last report. Prices of New York City condos and co-ops leveled off but remained below a year ago. In particular, a sizable inventory glut at the high end of the market, most notably for new development, has continued to depress prices. However, prices at the lower to middle segments of the market have been steady to up modestly. Suburban markets, in both downstate and upstate New York, have been more robust, with low inventories boosting prices. Sales activity has picked up somewhat across the District.\nNew York City\u2019s residential rental market has been mixed: Manhattan\u2019s market has continued to strengthen\u2014especially at the higher end, as apartment-seekers have shied away from the sales market. In the outer boroughs, however, excess inventories of new rental developments have held back rents. Overall, rents have risen at a roughly 2-3 percent pace, while concessions have receded, except at the high end. An industry contact noted concern among real estate professionals about recent efforts to ban charging fees to new renters.\nCommercial real estate markets across the District have softened further. Office availability rates have climbed modestly across most of New York State, while they have been steady in northern New Jersey, Fairfield County, CT, and the Lower Hudson Valley. Office rents have held steady, on balance, across the District. Industrial markets have been mixed, with both rents and vacancy rates on the rise. The market for retail space has continued to soften, though asking rents have remained somewhat elevated, especially in New York City.\nNew multi-family construction starts have remained fairly robust across the District, and ongoing multi-family construction activity has remained brisk. By contrast, new office construction has weakened, while industrial construction has been mixed, picking up in upstate New York but remaining flat or falling elsewhere.\nBanking and Finance\nFinancial sector contacts reported flat to weaker activity, and expressed ongoing concern about the business outlook. Small to medium-sized banks in the District reported lower demand for consumer loans but higher demand for residential mortgages, including refinancing, as well as commercial loans and mortgages. Bankers reported unchanged credit standards for all loan categories, narrowing spreads on residential mortgages and commercial mortgages, and widespread decreases in the average deposit rate. Finally, bankers reported little change in delinquency rates across the board.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"January 15, 2020\nSummary of Economic Activity\nOn balance, economic activity in the Sixth District expanded at a modest pace since the previous report, and the outlook among contacts remained positive. Labor market tightness continued to limit growth in some sectors. Wage pressures persisted for lower-skilled positions, and some contacts expect higher wages in the coming year. In line with expectations, nonlabor costs continued to slowly rise. Retailers cited healthy holiday sales levels; however, automotive dealers saw relatively flat sales levels compared to a year earlier. District tourism contacts noted strong leisure travel activity. Residential real estate conditions continued to improve, and commercial real estate firms cited steady sales and leasing activity. Manufacturing activity decelerated as new order levels fell slightly and production levels declined. District bankers noted that financial conditions remained healthy, and the pace of loan growth was positive.\nEmployment and Wages\nFirms reported that attracting and retaining quality talent remained a challenge, which, for employers in the construction, banking, technology, and food services industries, continued to limit growth. While some manufacturing contacts also described this as a challenge, other manufacturers reported a slowing pace of hiring over the reporting period. Businesses reported continuing to explore new recruiting and retention tactics, such as offering a variety of benefits, paying for training and certifications, and clearly demonstrating potential career paths. Many firms continued to pursue investments in automation and technology, which are expected to ultimately reduce headcount requirements.\nOn average, firms maintained merit increases of 2.5-4 percent, though wage pressure continued to build for lower-skilled positions. Some contacts indicated they expect wages and health insurance costs to accelerate in 2020.\nPrices\nAs reported previously, nonlabor costs continued to rise, although still in line with expectations. Contacts noted pricing power with goods impacted by tariffs and in construction. Some contacts reported that the use of pricing transparency tools by consumers and businesses was causing downward pricing pressure. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.6 percent in December. Survey respondents indicated they expect unit costs to rise 1.9 percent over the next twelve months.\nConsumer Spending and Tourism\nIn line with expectations, District retailers reported healthy sales levels during the holiday season. Online sales levels continued to dominate overall sales activity. Automotive dealers reported relatively flat sales levels in November compared to the same period last year.\nOn balance, District travel and tourism contacts noted a strong holiday travel season with year-over-year growth in leisure travel. The outlook for 2020 remained positive with healthy advance bookings through the first quarter of the year.\nConstruction and Real Estate\nLow mortgage rates continued to help support demand for housing across much of the District. Price appreciation was firm while single-family sales were up from the previous year. The limited inventory of existing homes for sale, as well as the level of starts, suggested that supply remained constrained. Some contacts noted concerns that further price appreciation and low inventories may adversely affect affordability, despite low interest rates. Mortgage loan quality remained stable across the District, although Mississippi saw a slight uptick in delinquencies over the past year.\nCommercial real estate (CRE) contacts reported leasing and sales activity remained steady during the reporting period, although some contacts mentioned growing uncertainty as a concern. Overall, most sectors experienced positive dynamics as rents continued to grow and vacancies trended downward at a modest pace. However, some CRE contacts did report that continued growth in construction costs was impacting the start of a modest number of new projects. Contacts continued to report that capital for CRE projects was readily available via banks and non-bank entities, with non-bank entities remaining aggressive in financing both construction and stabilized CRE projects. Modestly growing amounts of leverage, loosening of underwriting standards, and an increase in covenant-lite structures were noted.\nManufacturing\nManufacturing firms reported a deceleration in overall business activity since the last reporting period. New order levels fell slightly and notable decreases in production levels were reported. Finished inventory levels declined, and purchasing managers noted that supply delivery wait times were slightly longer. Optimism for future production levels increased among manufacturing contacts, with just over one-quarter of contacts expecting higher levels of production over the next six months, compared to one-fifth in the last reporting period.\nTransportation\nDistrict transportation firms cited mixed results since the previous report. Port contacts reported sustained growth in the shipments of containers, automobiles, and heavy equipment. Logistics firms noted substantial increases in ecommerce activity over the reporting period as compared with year-earlier levels. District railroads, however, noted continued year-over-year softness in freight volumes across most commodities, and further declines in intermodal traffic. Air cargo carriers saw lower year-over-year freight volumes.\nBanking and Finance\nConditions at District financial institutions remained healthy. Earnings improved over the previous quarter as increases in noninterest income helped offset an ongoing decline in the net interest margin. Asset quality remained stable as most financial institutions reported that they resisted loosening underwriting standards despite increased competition. Though moderating, loan growth continued to be positive.\nEnergy\nOil and gas contacts indicated that production was steady to slightly up over the reporting period; however, firms that service oil-producing wells reported slowing activity. Some chemical manufacturers described continued softening in output, largely related to declining activity in manufactured goods sectors in addition to soft global economic growth. Strong growth continued in the renewable energy sector, particularly in wind and solar. Utilities contacts reported slowing momentum among certain industrial segments.\nAgriculture\nAgricultural conditions remained mixed. Recent rains improved drought conditions for most of the District, although parts of Florida, Georgia, and Louisiana experienced abnormally dry or moderate drought conditions. The December production forecast for Florida's orange crop was unchanged while the grapefruit production forecast increased; both forecasts remain ahead of last year's production. On a year-over-year basis, prices paid to farmers in November were up for corn, rice, soybeans, eggs, and milk but down for cotton and broilers; beef prices were unchanged. However, on a month-over-month basis, prices increased for cotton, rice, beef, eggs, and milk but declined for corn, soybeans and broilers.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJanuary 15, 2020\nSummary of Economic Activity\nReports from contacts indicate that economic conditions have slightly improved since our previous report. Firms reported employment levels were unchanged. Overall, wage pressures have increased moderately, with contacts citing minimum wage increases as a contributing factor. Reports on consumer spending were generally positive, although reports on holiday sales were mixed. Activity in the manufacturing sector continued to decline, although there are signs of stabilization. District banking contacts reported positive growth in loan volumes. Agriculture conditions remain unchanged, although overall conditions remain weak in this sector.\nEmployment and Wages\nEmployment has remained largely unchanged since the previous reporting period. Contacts across the District frequently emphasized the tight labor market. Firms continue to raise benefits, lower hiring standards, automate positions, and increase existing employees' responsibilities due to chronic worker shortages. However, many firms are hesitant to invest in training new employees, fearing that they would expend resources developing workers and lose them to better-paying jobs. Small and rural business contacts report having an especially difficult time recruiting workers. Survey-based indicators also continue to show employment declines in Missouri and Arkansas manufacturing. However, overall employment remains strong, with St. Louis contacts emphasizing that employers continue to expand their workforce whenever possible.\nWages have increased moderately since the previous report. Contacts continued to link this to the tight labor market, raising wages to both attract new workers and limit turnover. Firms' reported ability to raise wages remains positively related to their size, with smaller firms struggling to increase wages. Arkansas, Illinois, and Missouri minimum wage increases have also come into effect with the new year. Uncertainty over how this will impact market wages of various positions has led some Missouri contacts to delay hiring for at least a month. An Arkansas contact reported multiple retailers are hiring fewer workers to counteract the increase in labor costs.\nPrices\nPrices have increased slightly since the previous report. Business contacts noted that fuel and energy costs have been declining, and coal prices in particular have shown modest declines since the previous report. Auto industry contacts noted slight increases in the prices of used vehicles, but also the availability of more low-interest financing options with low down payments.\nConstruction contacts reported that prior price increases from tariffs on building materials, such as steel and aluminum, have now been passed on to consumers. Steel prices have increased by 12 percent since the previous report, but are down 26 percent year over year. Contacts in the retail and restaurant industries said that prices were unchanged, but that increasing food prices are putting cost pressures on businesses.\nConsumer Spending\nReports from general retailers, auto dealers, and hospitality contacts indicate consumer activity has improved slightly since the previous report. November real sales tax collections increased in Missouri, West Tennessee, Arkansas, and Kentucky relative to a year ago. Consumer sentiment in West Tennessee regarding both current economic conditions and economic conditions over the next six months has improved since September. Little Rock area general retailers reported slight increases in business activity during the second half of 2019. St. Louis area general retailers had mixed accounts of sales over the holiday season, noting a strong shift toward online shopping. Little Rock area auto dealers reported steady sales over the previous quarter, and they continued to observe particularly strong demand in the used car market. St. Louis region hospitality contacts generally reported that business activity met expectations over the holiday season, and they remain cautiously optimistic about the months ahead, encouraged by several major events taking place in the region during the first quarter of 2020.\nManufacturing\nOverall manufacturing activity has declined slightly since our previous report. Survey-based indexes suggest that Arkansas manufacturing activity remained stable. New orders remained stable, while production decreased slightly from last month. Manufacturing activity in Missouri declined relative to one month ago. New orders and production decreased slightly. Contacts in the steel and landscape equipment industries reported plans to increase capital investment in 2020. One large U.S. manufacturing company announced plans to open a manufacturing/distribution facility in the region.\nNonfinancial Services\nActivity in the services sector has slightly improved since the previous report. The transportation industry has experienced increased activity since the previous report. Major logistics firms plan new distribution centers; however, one firm has announced layoffs. Traffic on waterways and highways is largely unchanged. Contacts noted falling river barge prices resulting from excess supply of river barges due to declining exports of soybeans. However, in airports, passenger traffic increased by 3 percent year-to-year.\nReal Estate and Construction\nResidential real estate activity has decreased slightly since the previous report. Seasonally adjusted home sales decreased modestly from October to November in Little Rock, decreased slightly in St. Louis and Memphis, and were unchanged in Louisville. Inventory levels in the region remained depressed.\nResidential construction activity increased slightly. There was a slight uptick in November permit activity across District MSAs relative to the previous month. Contacts in St. Louis reported that, while year-to-date permit levels are down slightly in the area compared with this time last year, builders remain confident that housing demand will remain robust due to low mortgage rates.\nCommercial construction activity has increased modestly since the previous report. The number of commercial construction projects increased moderately from October to November across most of the states in the District. A contact in Little Rock noted that they had never seen a construction boom as strong and as long-lasting as the current one.\nBanking and Finance\nBanking conditions in the District have improved modestly since the previous report. According to reports from bankers, outstanding loan volumes grew by 4 percent in the fourth quarter relative to one year ago, which was a departure from a recent slowing in the rate of loan growth. Commercial and industrial lending growth remained stable, growing by 2 percent year-over-year. Commercial real estate lending maintained a positive and slightly slower growth rate compared with the previous quarter. Residential real estate lending also increased slowly, which is in contrast to the prior quarter, when lending growth declined slightly.\nAgriculture and Natural Resources\nDistrict agriculture conditions remain unchanged from the previous reporting period. The percentage of winter wheat in the District rated fair or better remained approximately unchanged at 93 percent from the end of October to the end of November. This is roughly the same level of winter wheat rated fair or better at the end of 2018. Contacts reported that continued low crop prices and trade disputes have harmed the industry. Several reports indicated the federal assistance to farmers via the market facilitation program has helped farmers remain in business.\nNatural resource extraction conditions improved modestly from October to November, with seasonally adjusted coal production increasing 1.8 percent. November production declined 7 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nJanuary 15, 2020\nSummary of Economic Activity\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of mid-November through December. The labor market remained tight, employment growth picked up modestly, and wages rose further. Reports on prices suggested inflation was up slightly on balance. Sales of retail goods increased moderately, and activity in consumer and business services was up modestly. The pace of commerce in the manufacturing sector was stable, and activity in the agriculture sector was mixed. While the residential real estate market expanded strongly, commercial real estate activity softened somewhat. Lending grew steadily.\nEmployment and Wages\nThe labor market remained tight, and employment growth was up modestly on balance. Demand for workers remained elevated, though shortages of qualified candidates somewhat stymied hiring growth. Businesses in several sectors including health care, finance, and information technology continued to experience difficulties in hiring high-skilled workers. Similarly, firms in retail, agriculture, and construction reported increased job vacancies across skill levels. A few contacts characterized worker shortages as a significant deterrent to business expansion. Worker turnover remained high, with firms reporting increased investment in job training and automation as ways to enhance productivity. In the Pacific Northwest, business services and manufacturing firms instituted shorter interview processes to counteract the increased competition for workers. Conversely, some firms in the consulting, counseling, and utilities sectors reported stable hiring levels. Community bankers in Oregon and Southern California saw a tick up in hiring after some large banks in these regions laid off some of their high-skilled payroll.\nWages rose further across the District as companies tried to attract and retain qualified workers. Wages picked up across skill levels as labor markets remained highly competitive. In the Mountain West, a contact in the banking sector noted paying more than double the prevailing market rate for some positions. Entry-level wages also rose in many sectors including finance, tourism, and retail despite reports of decreasing labor quality. A few employers in Seattle and Southern California highlighted regulatory increases in minimum wages as an additional source of upward wage pressures. A business services provider in the Pacific Northwest and a hotelier in California each raised concerns about wage compression in the face of increasing entry-level and minimum wages. Employers across the District also observed that benefit packages expanded, further increasing total labor costs.\nPrices\nReports on prices suggested that inflation was up slightly on balance. Many businesses such as professional service providers and financiers reported increased prices due to a pickup in labor costs. Fees for transportation and logistics services continued to increase. Firms in the technology and retail sectors highlighted that brisk competition limited their ability to pass through wage increases to final prices. Prices for telecommunications services, health care, and utilities remained mostly unchanged. Some building materials producers reported lower prices over the reporting period, but others noted being able to charge higher prices following a pickup in construction activity. Contacts in metals manufacturing reported price declines.\nRetail Trade and Services\nSales of retail goods increased moderately. Most reports indicated that consumer demand was robust over the holiday season, with online sales growing faster than brick-and-mortar sales. Retailers attributed strong sales this season to consumers' high disposable income, adequate product inventory levels, and improved in-store services and discounts. Luxury retailers reported a brisk rise in sales, as did those in other specialized markets such as home improvement products and pet pharmaceuticals. A few businesses that depend primarily on brick-and-mortar sales noted a shorter holiday shopping season and less foot traffic relative to previous years.\nActivity in the consumer and business services sectors was modestly stronger. Demand for health services and insurance remained robust across the District, the latter especially boosted by more comprehensive benefit packages in the face of tight competition for workers. Restaurants and food service providers reported solid sales over the holidays, though a major quick service restaurant in the Pacific Northwest witnessed a slight dip in sales over the reporting period. Holiday activity in the tourism sector was mixed, with bookings for leisure cruises and airline travel rising noticeably, while year-end occupancy rates at Southern California hotels were down from earlier in the year.\nManufacturing\nConditions in the manufacturing sector were stable on net. Production in the metals recycling industry increased over the reporting period, though weak sales abroad were still a drag. A more active housing market and less competition from foreign producers stabilized demand for domestic wood products. Contacts reported that productivity increased and capacity utilization was above historical averages. Metal manufacturers in the Pacific Northwest reported healthy domestic demand and less competition from abroad, but activity was down somewhat on net. Activity in the electronics sector declined near year-end due to weakness in new orders.\nAgriculture and Resource-Related Industries\nActivity in the agriculture sector was mixed. Reports from contacts in the Central Valley of California indicated most crop yields performed well despite reported water shortages. Domestic agricultural product sales remained at healthy levels, while sales abroad continued to suffer from issues related to trade disputes and slowing foreign economies. For example, sales of lumber increased domestically following a rebound in the housing market, but lower selling prices squeezed profits from export markets. One report also mentioned slower activity in the market for grapes. Activity in the livestock sector decreased somewhat, with demand for cattle and swine products ticking down a bit. In the energy sector, a contact reported expectations for increased infrastructure investment but also mentioned continued excess generating capacity.\nReal Estate and Construction\nResidential real estate activity expanded strongly. Reports from across the District noted that buyer demand remained robust amid low inventories for both single-family and multi-family housing. Contacts attributed the brisker demand to the low interest rate environment, despite a recent tick up in mortgage rates in some areas. Construction activity was up but somewhat restrained by labor shortages. Some suppliers noticed elevated costs for building materials due to high demand, but a few others noted that materials' availability had improved. Contacts highlighted that home prices grew further, noting that affordability concerns have led some buyers to look for homes outside main urban areas. A financier from Southern California mentioned slower demand for high-end properties, noting that their development was constrained by tighter financing options and longer processing times. A multi-family housing provider in Nevada added that tenant demand for add-ons such as concierge and parcel services had also increased notably, even as rents increased.\nActivity in commercial real estate markets softened somewhat. Demand for retail and office space in California weakened, with some reports noting little new construction. Commercial permitting also decreased in the Central Valley of California over the reporting period, though it remained stable in the Pacific Northwest. In contrast, demand for industrial spaces, like warehouses and distribution centers, remained elevated. Contacts noted that very low vacancy rates and increased leasing costs have spurred construction of new industrial spaces across the District. In the Pacific Northwest, public infrastructure construction also increased.\nFinancial Institutions\nLending activity grew steadily. Most reports noted a further pickup in demand for credit, especially mortgage and personal credit. The commercial lending sector was relatively less active, with most loans focusing on refinancing into lower interest rate contracts as opposed to new investment or construction. In general, capital levels and asset quality remained high, though lower interest rates put some pressure on banks' net interest margins and profitability. Competition for loans continued to be brisk, while that for deposits was comparatively mild. A few banks reported tighter underwriting standards for new loans. A financial technology company that lends primarily to small businesses saw better than expected activity and low default rates.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJanuary 15, 2020\nSummary of Economic Activity\nTenth District economic activity edged up in late November and December, although conditions remained mixed across sectors. Consumer spending rose modestly, driven by robust retail sales during the holiday shopping season. Contacts in the wholesale trade and professional and high-tech services sectors also reported modestly higher sales, while sales in the transportation sector decreased. Manufacturers continued to note slight declines in overall activity with ongoing weakness in durable goods factory activity. District real estate conditions held steady since the previous survey period, and contacts expected conditions to remain stable moving forward. District energy activity fell further, and contacts expected further declines in the months ahead. The agriculture sector remained weak despite rising commodity prices, and higher revenue from rising prices was not expected to significantly improve farm finances. District employment rose modestly since the previous survey period while employee hours held steady, and labor shortages were cited as the single biggest problem among a majority of respondents. Wages continued to expand at a modest pace, and contacts expected moderate growth in the months ahead. Services sector contacts continued to note higher input and selling prices since the previous survey period, while manufacturers and construction supply contacts noted slightly lower prices.\nEmployment and Wages\nDistrict employment rose modestly since the last survey period, while employee hours held steady. Contacts expected modest gains in employment and flat employee hours in the months ahead. Respondents in all reporting sectors noted job gains in late November and December, except for the transportation and manufacturing sectors. In addition, employment was above year-ago levels in all reporting sectors with the exception of the auto sales sector.\nA majority of survey contacts cited labor shortages as the single most important problem currently facing their business. Specifically, contacts noted shortages for hourly retail and food services positions, mechanics, truck drivers, skilled construction, software developers, pharmacists and nurse practitioners. Wages continued to rise modestly since the previous survey period, and moderate gains were expected in the months ahead.\nPrices\nInput and selling prices continued to rise modestly in late November and December in the services sector, while manufacturers and construction supply contacts noted slightly lower prices. Both input and selling prices were expected to increase in the months ahead for all services sectors, while manufacturers projected steady prices. Respondents in the retail trade sector reported modestly higher input prices and slightly lower selling prices, although both were above year-ago levels. Input and selling prices rose modestly in the restaurant sector, and both were strongly higher than a year ago. Transportation contacts noted slightly higher input and selling prices since the previous survey, but expected selling prices to decline in the months ahead. Prices in the construction supply sector decreased slightly, but remained above year-ago levels. Construction supply prices were projected to decrease modestly in the next few months. Manufacturers reported slightly lower prices of finished products and raw materials, but prices were expected to hold steady moving forward.\nConsumer Spending\nConsumer spending increased modestly in late November and December as gains in retail and auto sales offset spending declines in the restaurant and tourism sectors. Retail sales increased robustly during the holiday shopping season compared to both the previous survey period and year-ago levels. Contacts noted that lower-priced and promotionally priced items sold well, while higher-priced items sold poorly. Auto sales grew moderately this survey period, however sales were slightly below year-ago levels. A majority of auto respondents noted a decrease in net profit compared to the previous year, and contacts anticipated sales to decline slightly in the coming months. Restaurant and tourism sales dropped compared to the previous survey period, but remained above year-ago levels. Restaurant contacts anticipated strong sales growth in the coming months, while tourism contacts expected moderate gains in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity continued to fall slightly in late November and December primarily due to ongoing contractions in durable goods factory activity. However, manufacturers expected a slight increase in activity in the months ahead. Both durable and nondurable goods plants experienced decreases in production, but shipments and new orders were up slightly at nondurable goods plants compared to the previous survey period. Capital spending was slightly above year-ago levels, and contacts anticipated this rate of growth to continue in the months ahead.\nOutside of manufacturing, firms in the transportation sector experienced modestly lower sales, while sales increased modestly for both the wholesale trade and professional and high-tech services sectors. Sales for all three sectors remained above year-ago levels. Contacts in the transportation sector anticipated sales to edge down in the coming months, whereas sales were expected to continue to rise in the wholesale trade and professional and high-tech services sectors.\nReal Estate and Construction\nDistrict real estate activity remained at similar levels to the previous survey period, and contacts expected conditions to remain at current levels in the months ahead. Residential real estate sales continued to hold steady in late November and December compared to the previous survey period and to year-ago levels. Residential construction activity also remained flat as housing starts rose while construction supply sales and traffic of potential buyers fell. Contacts in the residential construction sector expected overall activity to decline in the months ahead. Commercial real estate activity edged up as sales, absorption, construction underway, and completions rose while vacancy rates held steady. Expectations for commercial real estate activity were for its current pace of growth to continue over the next few months.\nBanking\nOverall loan demand decreased slightly since the previous survey period, although the change in demand was mixed across categories. Bankers indicated a slight decline in commercial real estate and agricultural loans and reported a modest decrease in consumer and commercial and industrial loans. Demand for residential real estate loans increased slightly. Respondents indicated a slight improvement in loan quality compared to a year ago and expected a slight increase in loan quality over the next six months. Credit standards remained stable across all loan categories. Overall deposit levels increased modestly, but a number of respondents indicated demand for certificate of deposits remained low during the survey period.\nEnergy\nDistrict energy activity continued to decrease since the previous survey period, and expectations for future drilling and business activity remained downbeat. While the number of active gas rigs held steady across District states, the number of active oil rigs eased lower. Oil and gas production slowed slightly, but remained at high levels. Employment in the energy sector was below levels from a year ago, and most regional firms expected additional decreases. Low commodity prices were listed as the biggest factor driving business plans over the next six months. Credit conditions for District energy firms also remained more difficult than a year ago. Despite lower profit levels and less drilling and business activity, District firms expected revenues to pick up over the next six months.\nAgriculture\nThe Tenth District farm economy generally remained subdued despite a modest increase in agricultural commodity prices. The prices of most major crops increased moderately since the previous reporting period and crop production in the Tenth District was expected to be similar to a year ago, resulting in expectations of slightly higher revenues compared with the previous year. In the livestock sector, cattle prices also increased modestly in December and hog prices remained relatively stable, which could provide additional support. The slight increase in agricultural prices and revenues, however, was not expected to significantly improve the financial condition of producers in the District.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"January 15, 2020\nSummary of Economic Activity\nOverall, the Fifth District economy grew moderately in recent weeks. Manufacturing activity, however, softened slightly as firms continued to face headwinds from tariffs, other trade policies, and labor availability. Port activity varied by commodity, while trucking shipments rose modestly, compared to recent months, but remained below last year's level. Travel and tourism grew moderately, with particular strength in business travel. In addition, retailers reported moderate growth in sales as holiday shopping was even with or above the year-ago level. Home sales and mortgage lending remained fairly strong, as were commercial real estate leasing and construction. Business lending, according to bankers, was modest, as some firms were reluctant to invest due to uncertainty. Nonfinancial services firms gave mixed reports with some education and health services firms reporting growth while firms providing professional and business services reported softer demand. Farmers generally had good crop yields and solid demand in recent weeks, but faced tighter margins. The demand for labor remained strong across skill levels, and wage increases were moderate. Price growth picked up slightly for services, but remained muted, overall.\nEmployment and Wages\nThe demand for labor remained strong in recent weeks and businesses continued to report labor shortages across skill levels. The tight labor market led some firms to increase benefits and wages, ease background screening requirements, and invest in labor-saving technology. To retain workers, firms have increased wages, training, and talent development. Overall, wage increases were moderate with some larger raises cited for specific job categories, such as electricians and other skilled trades.\nPrices\nOn balance, price growth remained moderate since our previous Beige Book report. Manufacturers reported little change in annual growth of prices paid and prices received in recent weeks with both increasing at rates slightly below two percent, on average. Several manufacturers said that tariffs continued to impact the cost of raw materials. Meanwhile, services sector firms reported an uptick in price growth for prices paid and prices received, with both exceeding two percent but remaining within a moderate range.\nManufacturing\nFifth District manufacturing softened somewhat since our last report. On balance, contacts reported drops in both shipments and new orders. Many manufacturers cited uncertainty regarding trade policies as a major concern. Several increased prices of final goods but struggled with low profit margins due to tariffs on raw materials. Some manufacturers saw strong demand but had output constrained by labor shortages. However, a Virginia food manufacturer met demand by and investing in new equipment.\nPorts and Transportation\nImport and export volumes varied by commodity in recent weeks. For example, port contacts noted a decline in soybean exports to Asia, but expected shipments to rise after an announced trade deal with China. Exports of metals and hardware to Europe were weak, but pork exports were strong. Imports of furniture and other commodities were soft, but auto and apparel imports remained strong. Despite continued concerns about trade policy, port executives were optimistic and continued to invest in capital expansion projects.\nFifth District trucking rates continued to soften, and while shipments were lower than last year, they were slightly above the previous few months. Retail shipments were fairly strong for the holiday season. Some trucking companies picked up both business and labor from a major company closure as well as from continued closures of smaller companies. Low fuel prices helped margins amid softening rates, but one executive is struggling with increasing costs of liability insurance. Trucking firms expressed concerns about political uncertainty going into an election year, but continued to make long-term investments and were optimistic that business would remain solid.\nRetail, Travel, and Tourism\nOverall, Fifth District travel and tourism grew moderately since our last report. Business travel was particularly strong. Hotel rates and occupancy generally remained solid around most of the District amid high demand, even as more rooms opened. One exception was a hotel in Greenville, South Carolina, that attributed a drop in occupancy to increased supply of both hotels and short-term rental properties. Additionally, hotels in Charleston, West Virginia, reported low occupancy despite stronger tourism in the state as a whole.\nRetailers in the Fifth District reported moderate sales in recent weeks. Stores had solid customer traffic for the holidays, and many retailers reported that holiday sales were level with or up from last year. Auto dealers had increasing sales, amid high manufacturer incentives, and noted a shift towards smaller down payments and longer term financing. Some dealers said that rising costs were leading them to raise prices, and there were mild concerns about tariffs and online competition. However, other dealers have continued to invest and expand, as they expect to see strong growth in 2020.\nReal Estate and Construction\nHome sales in the Fifth District remained fairly strong in recent weeks, apart from a slight seasonal softening. Some real estate agents noted an increase in days on the market as home prices rose but said activity is strong overall. Inventory levels remained low, particularly in lower price ranges. Demand for construction of new homes was high, but construction was limited by availability of workers. Contacts expected buyer traffic and demand to increase in the coming months.\nCommercial real estate leasing remained strong since our last report. Brokers reported strong demand for industrial and retail space but slightly lower demand for office leasing. Occupancy of multifamily properties increased. Rental rates were generally described as steady to increasing slightly across property types. Office vacancy rates were stable, although some brokers expect them to increase in the coming months. Commercial real estate sales and sale prices showed modest growth, boosted by low interest rates, and construction remained strong across most types of properties, even though construction costs are high.\nBanking and Finance\nOverall, loan demand grew slightly in recent weeks. Bankers said that moderate growth in residential mortgages and commercial real estate loans was due, at least in part, to low rates. Although some bankers noted that the number of C&I loans in the pipeline rose modestly, a few respondents stated that firms seem to be holding back on capital spending. On balance, residential refinancing activity, home equity lines, and other consumer loans grew modestly. Applicant credit quality and loan delinquencies were reportedly unchanged, but bankers reported a slight decline in underwriting standards. Core deposits remained unchanged despite comments about increased competition from non-bank financial institutions.\nNonfinancial Services\nReports from nonfinancial services firms were mixed. Universities reported growth in healthcare, IT, and computer science programs. Also, a health service provider experienced growth and investment in ambulatory and urgent care facilities. A marketing firm, on the other hand, reported a slowdown that was partly due to the holidays and partly because potential clients were taking a long time to make decisions. In addition, a couple of firms in D.C. noted that political uncertainties, including a potential government shutdown, hampered demand for IT consulting and teleservices.\nNatural Resources\nRecent reports on the natural resources sector varied. Agriculture contacts were mostly positive because of good crop yields and solid demand; however, farmers faced tighter profit margins due to low selling prices and rising prices for labor, equipment, and land. Coal production reportedly picked up slightly, but several firms remain in bankruptcy proceedings. Finally, the oil and gas industry was negatively affected by low selling prices, excess supply, and stalled pipeline construction.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"January 15, 2020\nSummary of Economic Activity\nAggregate Third District business activity edged back to a slight pace of growth during the current Beige Book period. Manufacturing slowed to a slight pace of growth, and financial services slowed to a modest pace. On balance, nonfinancial services continued growing modestly, but the pace seemed to ebb a bit. Nonresidential construction declined slightly after holding steady in the prior period. In contrast, homebuilders and auto dealers experienced slight-to-modest growth after a prior period of slight decline and no growth, respectively. Commercial leasing activity held steady, and sales of existing homes continued to decline at a moderate pace. Labor markets remained excessively tight throughout the District, and wages continued growing moderately. While contacts describe increased wage pressure, they continued to report slight employment increases. Overall, price pressures remained modest. The firms' outlook for growth over the next six months remained positive, though cautious, and broadened further among nonmanufacturing firms.\nEmployment and Wages\nEmployment continued to grow slightly during the current Beige Book period. About two-thirds of the nonmanufacturing firms and four-fifths of the manufacturers reported no change in staff. While the share of manufacturers reporting a higher number of employees fell, the share among the much larger nonmanufacturing sector rose somewhat. Average work hours have continued to edge down since the prior period at manufacturing firms but rebounded at nonmanufacturing firms.\nThe firms continued to report tight labor market conditions. Lack of available labor has constrained production and expansion plans, according to various manufacturing and service-sector firms. Staffing firms reported continued demand for new job placements from clients but an insufficient supply of qualified labor to fill the orders. Turnover rates are rising, and nonstandard shifts are most difficult to fill. One staffing contact noted that some clients simply canceled orders from the fall that had gone unfilled. Another noted that a new hire took another job during the firm's onboarding orientation.\nOn balance, wage growth continued at a moderate pace, and many contacts noted a resumption of rising wage pressure. One staffing firm reported that its wage rates were up 4 to 5 percent year over year. Another staffing firm noted that $15 an hour was now the minimum required to attract workers for a manufacturing/warehousing job but that these workers were being drawn from other employers. On average, the share of nonmanufacturing contacts who reported increases in wage and benefit costs remained near 44 percent; just 3 percent reported decreases.\nPrices\nMost firms continued to report modest increases for both input prices and prices received for their own goods and services. However, the share of nonmanufacturers reporting higher prices paid rose significantly \u2013 well above its average. The share of firms reporting no change in prices rose to about three-fourths for manufacturers but fell to about half for nonmanufacturers.\nLooking ahead six months, the anticipation of higher prices has broadened among manufacturers. About half of the firms expected higher prices; almost none expected prices to fall. This was true for prices firms expected to pay as well as for prices firms expected to receive for their own goods.\nManufacturing\nOn balance, manufacturers reported slight growth in activity \u2013 easing from the modest pace reported during the prior period. The percentage of firms reporting increases in shipments and new orders slipped to one-third; the percentage reporting decreases also dipped for shipments but rose to one-fourth for new orders.\nComments remain mixed. Primary metals firms continued to note that some customers are beginning to source parts domestically again. However, downstream fabricators continued to note uncertainty, delayed or canceled expansions, and fewer orders from their customers. One contact did note that settling the new trade agreement with Canada and Mexico provided greater certainty and should increase some domestic production.\nManufacturers' expectations of activity over the next six months eased somewhat. Expectations of shipments and of new orders edged lower but remained above long-term nonrecession averages. Planned capital spending also fell, yet expectations of future employment increases rose.\nConsumer Spending\nContacts for malls and convenience stores continued to report modest growth in nonauto retail sales. Although the holiday sales season began late this year, mall store operators noted that activity appeared strong from Black Friday through mid-December across most retail segments. Mall shoppers seemed to focus on a single store's promotion, then make return trips for other stores' sales. Contacts also noted that shoppers are increasingly returning their online sales to local stores, which has boosted mall traffic. Convenience store contacts continued to report modest sales growth and no lull in the morning coffee runs of construction workers. Retailers expressed positive outlooks for 2020.\nMost auto dealers reported that sales were flat to up slightly, although the pace appeared to wane near year-end. Dealers noted that sales were stronger in more profitable segments, such as SUVs, than in sedans. The profitable used car market also remained strong. Early estimates of total 2019 sales growth were positive for most New Jersey and Pennsylvania dealers, and they expressed optimism for another good sales year in 2020.\nNonfinancial Services\nOn balance, activity at service-sector firms continued at a modest pace of growth. However, activity weakened a bit, as the percentage of firms reporting increases in new orders decreased significantly, while the share of firms reporting decreases in current revenues doubled. Proposed tariffs on European wine prompted an area merchant to stock up with over 35,000 cases to beat the February sanction and minimize price hikes. Over two-thirds of the firms \u2013 more than in the prior period \u2013 expect growth over the next six months.\nFinancial Services\nFinancial firms reported modest growth in overall loan volumes (excluding credit cards) on a year-over-year basis \u2013 a bit slower than in the prior period. Credit card lending also edged back to a modest pace.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly for home mortgages and commercial real estate, and modestly for other consumer loans (not elsewhere classified). Home equity lines and commercial and industrial loan volumes declined, while auto lending appeared flat.\nBanking contacts continued to express few concerns over credit quality; however, one contact noted that mortgage delinquencies had ticked up but were still at good levels. Of greater concern was an observation that as interest rates fell, many homeowners took additional cash with their refinanced mortgages \u2013 raising the question for banking contacts of whether the cash was for additional investment or was taken out of necessity to pay down other debt. Most banking contacts remained optimistic about continued growth through 2020.\nReal Estate and Construction\nHomebuilders reported a pickup to modest growth in contract signings, noting ongoing strength in 55+ communities and renewed interest in the luxury market. Apartment and condo construction has helped offset the difficulty of building affordable single-family units.\nExisting home sales continued to decline moderately on a year-over-year basis across most local markets, with exceptions of slight growth at the Jersey shore. Inventory constraints persisted. An area broker confirmed that potential listings of existing homes may be lost to investors converting houses to rentals and to developers razing houses, then rebuilding new units, to a greater degree than normal, especially in Philadelphia.\nOn balance, commercial real estate construction appeared to ease slightly, while leasing activity held steady \u2013 both at relatively high levels. Contacts reported continued strength in the industrial market, with ongoing demand for new construction; however, a few contacts noted that some warehouses are not being used to capacity. Most contacts remain optimistic about office space leasing and construction, but one noted that Philadelphia's construction activity has fallen slightly and may remain a bit below prior-year levels.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"January 15, 2020\nSummary of Economic Activity\nEconomic activity in the Seventh District increased modestly overall in late November and December, and contacts expected growth to continue at a similar pace over the next 12 months. Consumer spending increased modestly, while business spending and construction and real estate activity increased slightly. Manufacturing and employment were little changed. Wages and prices rose slightly and financial conditions improved modestly. The prospects of a trade deal with China boosted farmers' outlooks.\nEmployment and Wages\nEmployment was little changed over the reporting period, though contacts expected a modest rate of growth over the next 12 months. Current hiring remained focused on professional and technical, sales, and managerial workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. Manufacturers facing slow demand again reported cutting hours rather than laying off workers because they were worried the tight labor market would make it too difficult to hire when demand recovered. A staffing firm reported a moderate increase in billable hours. Wages increased slightly. Contacts were most likely to report increases for administrative, professional and technical, and managerial workers. Multiple contacts reported greater wage pressures for entry-level workers. Benefit costs increased modestly.\nPrices\nPrices increased slightly in late November and December, and contacts expected modest increases over the next 12 months. Retail prices increased slightly overall. One contact noted a small pickup in grocery price inflation. In addition, the contact reported that retailers were passing a greater share of freight- and tariff-related costs onto customers. Producer prices edged up, with contacts generally reporting small growth in input costs.\nConsumer Spending\nConsumer spending increased modestly over the reporting period. Nonauto retail sales were up modestly, with gains reported in the electronics, entertainment, furniture, and jewelry sectors. Overall, holiday sales met retailers' expectations. Contacts again reported strong growth in e-commerce and slow growth for brick and mortar general merchandise stores. New and used light vehicle sales increased moderately. Contacts continued to report shortages of GM replacement parts following the UAW strike.\nBusiness Spending\nBusiness spending increased slightly in late November and December. Retail inventories were generally comfortable, though GM dealers reported that restocking following the end of the UAW strike was proceeding slower than expected. Most manufacturers indicated that inventories were at comfortable levels and fewer contacts noted higher-than-desired levels. One heavy machinery dealer reported elevated inventory due to slower sales. Capital spending increased slightly and contacts expected a modest increase in spending over the next 12 months. Current outlays were primarily for IT equipment and intellectual property. Three-quarters of contacts reported that their newly purchased capital was intended to increase capacity. Demand for transportation services declined slightly. Energy usage edged down, largely due to lower demand from the industrial sector.\nConstruction and Real Estate\nOverall, construction and real estate activity increased slightly over the reporting period. Residential construction contacts reported a small increase in building. Residential real estate activity was unchanged, as growing demand for starter homes was offset by declining demand for high-end homes. Home prices and rents increased slightly. Nonresidential construction activity was little changed, and contacts again noted that rising costs were holding back growth. Commercial real estate activity increased slightly on top of a strong level. Contacts highlighted growth in the flex-office and industrial sectors but continued to report difficulties for big box and mall retailers. Rents ticked higher, vacancy rates inched lower, and the availability of sublease space increased marginally.\nManufacturing\nManufacturing production was flat in late November and December. Steel demand increased slightly, supported by increased demand from the auto sector following the end of the GM strike. Auto production was little changed overall, but continued at a solid level. GM suppliers reported that orders returned in line with expectations after the strike ended. Demand for heavy trucks decreased, and contacts expected continued declines over the next year. Heavy machinery manufacturers reported modest increases in sales. Demand for specialty metals was flat overall, with increased orders from the aerospace, defense, and energy sectors offset by decreased orders from the agriculture and heavy trucks sectors. Manufacturers of building materials reported little change in sales.\nBanking and Finance\nFinancial conditions improved modestly over the reporting period. Participants in the equity and bond markets reported moderately better conditions, citing lower interest rates, \"stabilization\" of the yield curve, and progress in trade talks between the US and China as positive developments. Business loan demand decreased slightly overall, with contacts reporting a slowdown in commercial real estate activity. Loan quality deteriorated slightly, but standards were little changed. Consumer loan demand increased modestly, led by continued growth in mortgage refinancing; loan quality and standards were little changed.\nAgriculture\nThe prospects of a trade deal with China created some optimism in the farm sector. One contact called the potential deal a \"key market driver.\" The final results for the 2019 harvest varied from average to well below normal across the District, yet they were better than had been expected in light of poor weather during both planting and harvesting. Corn and soybean prices moved higher, with both prices above year-ago levels. That said, lower-than-usual corn quality and higher-than-usual drying costs cut into crop farmers' profits. Overall, with extra government payments boosting farm income, the District's agricultural sector was in about the same financial shape as it was a year ago. Increases in milk and cattle prices provided a boost to dairy and livestock producers.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJanuary 15, 2020\nSummary of Economic Activity\nThe Second District economy grew at a modest pace in the latest reporting period. The labor market remained tight, though hiring activity was subdued and wages grew modestly. Businesses reported that both input prices and selling prices have continued to rise modestly. Manufacturing activity picked up slightly, while most service industries reported little change in business activity. Business contacts in most sectors were cautiously optimistic about the near-term outlook. Consumer spending was mixed, with retailers giving mixed reports on holiday-season sales, but auto dealers noting a fairly vibrant end to the year. Housing markets have been mixed but, on balance, steady, while the residential rental market has remained on a positive trend. Commercial real estate markets have weakened further. New commercial construction has remained sluggish, while multi-family residential construction has picked up. Finally, banks reported some pickup in loan demand and little change in delinquency rates, while financial sector contacts more generally reported weakening activity.\nEmployment and Wages\nThe labor market has remained tight across the District, while hiring has been restrained. Employment agencies have noted ongoing trouble finding workers in a wide variety of occupations, such as creative IT workers, financial controllers, project managers, paralegals, and delivery truck drivers.\nBusinesses in most sectors continued to report flat employment. Contacts in manufacturing, education & health, and leisure & hospitality reported modest net hiring; in contrast, contacts in the transportation and finance sectors noted some declines in staffing levels. Retailers noted that seasonal hiring was about the same as a year earlier, though some contacts said they had trouble finding enough seasonal help. Businesses in most sectors reported that wage growth has been modest and little changed, though contacts in finance reported flat wages overall.\nLooking ahead, businesses in manufacturing and most service sectors still planned on adding to staff; however, businesses in the finance and transportation sectors projected flat employment, and retailers reported plans to reduce staff, on net.\nPrices\nBusinesses in most sectors reported that both input costs and selling prices have continued to rise at a modest pace. However, contacts in education & health and wholesale & retail trade have noted fairly widespread escalation in the prices they pay. In terms of selling prices, the largest price hikes were reported by retailers, wholesalers, and transportation firms. Education & health providers also noted a leveling off in the prices they charge. Broadway theater ticket prices moved up during the busy holiday season and were up slightly from a year ago.\nLooking ahead, businesses in all sectors plan to raise their selling prices in 2020. The most widespread hikes were anticipated in transportation, retail trade, professional & business services, and real estate, while the least widespread were in finance, education & health, and leisure & hospitality.\nConsumer Spending\nRetailers reported mixed results for the holiday season, with overall sales mostly flat and on plan, while contacts were mildly pessimistic, on balance, about the outlook for 2020. A major retail chain reported that same-store sales were down slightly from last year but roughly on plan. Upstate New York retailers were somewhat more upbeat, noting fairly solid shopper traffic and satisfactory sales volume, amidst heavy discounting. A growing proportion of holiday shopping was done online, as in-store sales lagged. Most retailers indicated that inventories were in fairly good shape.\nSales of both new and used vehicles have strengthened further, helped by manufacturer incentives, heavy promotion, and solid credit conditions, according to dealers in upstate New York. Consumer confidence in the Middle Atlantic States (NY, NJ, PA) fell to a nearly two-year low in December, though it remained fairly elevated.\nManufacturing and Distribution\nManufacturers reported that business activity has picked up modestly. On the distribution side, reports were more mixed: wholesalers reported continuing moderate growth in activity, while transportation contacts noted a modest downturn in business.\nLooking ahead, manufacturers and wholesalers indicated that they project modest growth in the months ahead, on balance, whereas transportation businesses anticipate flat activity. Some contacts in these sectors have continued to express concern about tariffs and trade uncertainty, as well as minimum wage hikes.\nServices\nBusinesses in most service industries indicated that activity was essentially flat, on balance, since the last report. As in the prior report, one notable exception was the leisure & hospitality sector, where contacts continued to note moderate growth in activity. Broadway theaters reported a typical seasonal pickup in business in December, though both attendance and revenues were down modestly from comparable year-ago levels.\nLooking ahead to the first half of 2020, however, contacts in all the major service industries expressed optimism\u2014particularly in the information and professional & business service sectors.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, steady since the last report. Prices of New York City condos and co-ops continued to weaken and were down modestly from a year earlier. The steepest declines have continued to be at the high end of the market. The inventory of existing homes has risen further, reaching a fairly high level in Manhattan and moderate levels in Brooklyn and Queens. In contrast, housing markets in the suburban areas around New York have shown signs of strengthening, with sales activity holding up fairly well, prices rising moderately, and inventories generally stable. Similarly, the sales market in upstate New York has remained solid, with inventories steady at very low levels, prices running moderately ahead of a year earlier, and homes selling fairly quickly.\nThe residential rental market has remained on a positive trend. Rent growth has slowed in New York City's outer boroughs, as many newly developed properties have come on line. In Manhattan, rents have risen modestly, mainly at the high end. A local real estate expert attributed this to a shift from purchasing to renting, as well as a decline in investor interest. Rental vacancy rates remain quite low across New York City, though the shadow inventory is reported to be somewhat higher. Landlord concessions remain fairly sizable on new apartments.\nCommercial real estate markets across the District have continued to soften. Office availability rates have climbed modestly throughout New York State, while they have been steady in northern New Jersey. Office rents have remained essentially flat across the District. Industrial markets have been mixed: rents have continued to trend up, though at a decelerating pace, while availability rates have edged up. The market for retail space has continued to soften, with asking rents drifting down and vacancy rates rising to multi-year highs.\nNew multi-family construction starts have picked up across the District, while ongoing multi-family construction activity has remained brisk. New office and industrial construction has continued to weaken modestly.\nBanking and Finance\nFinancial sector contacts generally noted further weakening in activity and expressed ongoing concern about a deteriorating business climate. Small to medium-sized banks across the District reported increased demand for all categories of loans, except commercial and industrial. Refinancing activity was little changed. Banks reported narrowing spreads, unchanged credit standards, and stable delinquency rates across all major loan categories.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"January 15, 2020\nSummary of Economic Activity\nThe Fourth District economy continued to expand at a modest, relatively steady pace recently. The growth resulted from continuing strength in a few key sectors and waning drags from manufacturing and freight. As has been the case for several reporting periods, professional and business services firms provided a steady source of support for the broader economy. Construction and real estate activity remained strong, on balance, particularly on the nonresidential side. Meanwhile, consumer spending picked up as the holiday shopping season progressed. Bankers indicated that loan demand was stable on net. Although manufacturing activity did not expand during the reporting period, it did not contract either, as it had for much of 2019 as factories adjusted to weaker global economic growth and trade-related uncertainties. Turning to the outlook, firms remained optimistic about demand for their goods and services in coming months, albeit a little less optimistic than during the prior reporting period. Labor demand remained firm, while wages and selling prices increased at a modest pace.\nEmployment and Wages\nOn balance, aggregate employment increased slightly in recent weeks. Professional and business services firms continued to add workers because demand for their services increased from already robust levels. At the same time, construction and real estate firms suggested that labor demand remained solid at a time of year when firms are often experiencing a seasonal slowdown in construction and sales. Reports from manufacturers suggest that payrolls were relatively stable as demand for factory goods was flat. Retailers indicated that seasonal hiring was largely unchanged from a year earlier. Outside of a seasonal pickup in hiring for holiday fulfillment, transportation and freight contacts generally suggested that employment was flat to down in the sector. Some lenders reduced payrolls because overall loan demand was flat and they sought to increase efficiencies. Looking forward, firms were more bullish about their near-term hiring expectations than they were during the prior reporting period.\nWages increased at a modest pace, on net, similar to that of the prior reporting period. Firms across most industry segments reported that wages were increasing, particularly in geographies and occupations where competition for workers was significant. A few firms reported paying higher yearend bonuses, and one implemented a new profit-sharing plan to help retain workers.\nPrices\nOn average, selling prices in the District rose modestly in recent weeks. Output price increases were most often reported by contacts in the retail, professional and business services, and construction industries because of persistent strength in demand. By contrast, manufacturers indicated that output prices continued to move lower, although at a slower pace, while a downward trend in freight prices paused recently. Nonlabor input costs increased at a slightly faster pace in recent weeks. Retailers said that tariffs continued to put upward pressure on costs, as did increases in some commodity prices. Higher food prices were reported by a few restauranteurs. Freight contacts noted materially higher (nonhealthcare) insurance costs because insurance claims against trucking companies have increased dramatically while insurance capacity has dwindled. Manufacturers indicated that, on balance, materials costs have stabilized after trending lower in earlier months. Meanwhile, reports from professional and business services firms suggest that upward (nonlabor) cost pressures may have eased somewhat.\nConsumer Spending\nConsumer spending increased solidly; retailers reported significant sales gains that exceeded the typical holiday season pickup. One large department store contact said that Black Friday turnout lifted November sales to \"abnormally strong\" levels. Furthermore, auto retailers reported that new-vehicle sales were up 10 percent from a year earlier, boosted by manufacturers' incentives and strong performance of the stock market. Most retailers expected sales to slow back to normal levels heading into the first quarter of 2020. A hospitality contact indicated that investment in local construction projects had boosted demand for hotel rooms in his region.\nManufacturing\nThe overall level of manufacturing activity did not change meaningfully, but individual firms' reports varied considerably. Several contacts indicated that demand increased as the year drew to a close. Moreover, they seemed optimistic about the near-term outlook for demand and planned their capital expenditures accordingly. Meanwhile, others noted that ongoing trade-related uncertainty, weak industrial activity, and a typical seasonal slowdown constrained demand. These manufacturers indicated that their backlogs were soft, and they relayed reports that their customers did not expect that demand would soon return to levels seen in recent years. To cope with weaker demand, these manufacturers were watching spending carefully, resulting in less ambitious capital spending plans, reduced hours for workers, and less use of workers from temporary help agencies.\nReal Estate and Construction\nOverall construction and real estate activity edged up in recent weeks in spite of a typical seasonal slowdown in some segments. This seasonal slowdown was particularly notable on the residential side where both homebuilders and residential real estate contacts indicated that cold weather and the holidays combined to slow activity as 2019 drew to a close. However, one residential broker indicated that while sales activity slowed from two months earlier, it remained more robust than during the same period a year earlier.\nBy contrast, nonresidential builders and real estate firms indicated that demand remained very firm in spite of the expected seasonal slowdown. One contractor summarized the sentiment in the industry by stating that \"times are good and people are building.\" On the commercial real estate side, one contact indicated that growth in some of his economically vibrant markets was being augmented by emerging growth in one of his lagging metro markets. Another said that rising costs for new construction helped boost leasing activity because tenants sought lower-cost alternatives to new construction. On balance, nonresidential construction and real estate activity was expected to remain robust into 2020.\nFinancial Services\nReports from bankers were mixed but generally pointed to flat loan demand. Lower interest rates spurred an uptick in auto loan demand and home mortgage activity. However, that growth was offset by weaker demand for business loans. Bankers expected that the first quarter of 2020 would remain soft, citing the usual seasonal factors. Most bankers indicated that core deposits increased, but several noted that this was typical at the end of the calendar year.\nProfessional and Business Services\nActivity in the professional and business services sector held steady at robust levels since the previous report. Most industry contacts indicated there had been no recent changes in their activity levels, although a consulting firm in the online commerce industry reported a significant improvement in business conditions over the holiday period. A wealth advisor noted a slight increase in activity in recent months and identified his clients' confidence in the economic outlook for 2020 as the driving factor. Overall, the majority of contacts in professional and business services expected favorable conditions to persist into the first quarter of 2020.\nFreight\nReports from the transportation sector remained mixed but generally pointed to a slower contraction in freight volumes. Contacts commonly indicated that overall freight volumes remained lower in most industries and noted that the fall shipping season as a whole was softer than normal. Freight executives cited low commodity prices and tariffs on imported goods from China as factors contributing to the ongoing weakness. Several freight firms reported increases in their freight volumes since the previous report. However, these companies cited improved internal management and advertising as the drivers of the gains rather than a broader strengthening in demand. Expectations for future freight activity remained soft.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJanuary 15, 2020\nThis report was prepared at the Federal Reserve Bank of New York based on information collected on or before January 6, 2020. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nEconomic activity generally continued to expand modestly in the final six weeks of 2019. The Dallas and Richmond Districts noted above-average growth, while Philadelphia, St. Louis, and Kansas City reported sub-par growth. Consumer spending grew at a modest to moderate pace, with a number of Districts noting some pickup from the prior reporting period. On balance, holiday sales were said to be solid, with several Districts noting the growing importance of online shopping. Vehicle sales generally expanded moderately, though a handful of Districts reported flat sales. Tourism was mixed, with growth reported in the eastern seaboard Districts but activity little changed in the Midwest and West. Manufacturing activity was essentially flat in most Districts, as in the previous report. Business in nonfinancial services was mixed but, on balance, growing modestly. Transportation activity was also mixed across Districts, with a majority reporting flat to weaker activity. Banks mostly characterized loan volume as steady to expanding moderately. Home sales trends varied widely across Districts but were flat overall, while residential rental markets strengthened. Some Districts pointed to low inventories as restraining home sales. New residential construction expanded modestly. Commercial real estate activity varied substantially across Districts. Agricultural conditions were little changed, as was activity in the energy sector. In many Districts, tariffs and trade uncertainty continued to weigh on some businesses. Expectations for the near-term outlook remained modestly favorable across the nation.\nEmployment and Wages\nEmployment was steady to rising modestly in most Districts, while labor markets remained tight throughout the nation. Most Districts cited widespread labor shortages as a factor constraining job growth, and, in a few cases, business expansion. A few Districts noted brisk demand for professional, technical, and managerial workers. A number of Districts reported job cuts or reduced hiring among manufacturers, and there were scattered reports of job cuts in the transportation and energy sectors. Wage growth was characterized as modest or moderate in most Districts\u2014similar to the prior reporting period\u2014and there were scattered reports of wage increases from year-end hikes in minimum wages. A few Districts also noted the use of benefits, incentives, training programs, and automation to reduce vacancies.\nPrices\nPrices continued to rise at a modest pace during the reporting period, as did input costs. A number of Districts reported that retail selling prices rose at a slightly faster, but still subdued, pace. A few Districts indicated that some businesses were passing along tariff costs to consumers\u2014mostly in retail but also in construction. Some Districts noted that restaurants were being pressured by rising food prices. There were scattered reports of declining prices in some manufacturing industries, as well as in the energy sector. Those Districts reporting on price expectations indicated that prices were expected to continue to rise in the months ahead.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest to moderate pace in the closing weeks of 2019. Software and IT services firms cited relatively strong growth; manufacturers and retailers also reported revenue increases from a year earlier. Residential real estate markets saw continued inventory shortages. Labor market tightness persisted. Outlooks were positive.\nNew York\nThe regional economy expanded at a modest pace. The labor market remained tight, though hiring activity was subdued and wages grew modestly. Manufacturing activity picked up. Loan demand grew, though financial sector contacts more broadly reported weakening activity. Both input prices and selling prices continued to rise modestly.\nPhiladelphia\nOn balance, business activity slowed to a slight pace of growth during the current Beige Book period. Labor markets remained tight throughout the District\u2014slowing employment growth and raising wage pressure. Still, price increases remained modest. Most firms expressed cautious optimism.\nCleveland\nThe Fourth District economy continued to expand at a modest pace as a result of continuing strength in some key sectors and waning headwinds from manufacturing and freight. Retailers reported better-than-expected holiday sales amid tight labor markets, modest wage gains, and improved consumer confidence. Meanwhile, selling prices advanced at a steady, modest rate.\nRichmond\nOn balance, the Fifth District economy grew moderately. Retail, travel, and tourism picked up. Home sales and commercial real estate leasing and construction remained strong. However, manufacturing slowed slightly as tariff and other trade policy uncertainties continued. Labor markets were strong and wages rose moderately. Price growth remained moderate, overall.\nAtlanta\nEconomic conditions improved modestly. Labor market tightness continued, and wage pressures increased for some positions. Non-labor input costs rose, in line with expectations. Retail sales and tourism activity were strong. Residential real estate conditions improved, and commercial real estate activity remained positive. Manufacturing activity slowed during the reporting period.\nChicago\nEconomic activity increased modestly. Consumer spending increased modestly, while business spending and construction and real estate activity increased slightly. Manufacturing and employment were little changed. Wages and prices rose slightly and financial conditions improved modestly. The prospects of a trade deal with China boosted farmers' outlooks.\nSt. Louis\nReports from contacts indicate that economic conditions have slightly improved since our previous report. St. Louis region general retailers had mixed accounts of holiday sales. Area tourism and hospitality contacts generally cited that business activity met expectations over the holiday season.\nMinneapolis\nNinth District economic activity grew at a modest pace. Employment was mixed across states in the region. Consumer spending rose, with initial reports on holiday sales coming in positive. Manufacturing activity was flat overall, as slower recent activity contrasted with optimistic expectations for 2020. Commercial and residential construction grew modestly. Oil and gas drilling activity held steady.\nKansas City\nDistrict economic activity edged up in late November and December, driven by robust retail spending during the holiday season and stronger sales in the professional and high-tech services and wholesale trade sectors. In contrast, manufacturing activity and sales in the transportation sector continued to decline. Economic activity in the energy and agriculture sectors also remained weak.\nDallas\nEconomic activity expanded solidly, with growth increasing in most sectors. Home sales continued to rise while energy activity remained weak. Hiring continued at a steady pace. Selling prices were largely flat, even as input prices rose. Outlooks generally improved, with reduced trade uncertainty boosting optimism.\nSan Francisco\nEconomic activity in the Twelfth District expanded at a modest pace. The labor market remained tight, and wages increased further. Price inflation was up slightly. Sales of retail goods increased moderately, and consumer and business services activity was up modestly. Commerce in the manufacturing sector was stable, and activity in the agriculture sector was mixed. The residential real estate market expanded strongly, while commercial real estate activity softened a bit. Lending grew steadily.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"January 15, 2020\nSummary of Economic Activity\nThe Eleventh District economy expanded solidly over the reporting period, with growth increasing in most sectors. The energy sector remained weak, although drilling activity ticked up. Home sales continued to rise, even beating some expectations. The agriculture picture remained mixed. Employment growth was moderate, and upward wage pressures continued as labor availability remained a key concern. Selling prices were largely flat, while input prices continued to rise. Outlooks generally improved, with reduced trade uncertainty boosting optimism.\nEmployment and Wages\nEmployment expanded at a moderate pace overall, although layoffs continued in the oil and gas sector. Most energy contacts expect headcounts to fall further in 2020. Outside of the energy sector, hiring remained a key challenge for many companies, with some contacts expecting the lack of labor availability to continue to be a drag on business growth. Some contacts also mentioned that muted labor inflows from international and domestic sources were contributing to worker shortages.\nWages continued to increase. A survey of more than 300 Texas businesses showed that 2019 wage growth was 3.9 percent, on average, down from 4.5 percent in 2018 but about the same as in 2017. Expectations among surveyed firms were for 3.8 percent wage growth in 2020, on average.\nPrices\nInput prices continued to rise, except in the energy sector where they remained near a cyclical bottom. Some contacts noted that progress on trade agreements decreased uncertainty around future costs. Selling prices were largely flat, although a slight pickup was seen in the service sector, particularly among retailers. Most contacts expect increases in input costs to continue to outpace selling price increases in 2020.\nManufacturing\nModest expansion in the manufacturing sector resumed in December after stalling out in November. Most measures of manufacturing activity\u2014including new orders and capital expenditures\u2014ended the year on a slightly positive note. Food manufacturing was a particular bright spot, while energy-related manufacturing activity declined.\nRefinery utilization was steady, although refiners and chemical producers indicated that softening global demand, tariffs, and ongoing trade policy uncertainty were keeping downward pressure on margins. Chemical contacts noted that the phase-one trade agreement with China would remove tariffs from some forms of plastic but leave tariffs in place on many other products.\nNearly two-thirds of manufacturing contacts expect higher production this year versus 2019, and uncertainty regarding outlooks abated notably at yearend.\nRetail Sales\nRetail sales growth increased over the reporting period, led by auto dealers and nondurable goods wholesalers. Some contacts pointed to trade resolutions as a driver of increased retail activity. Retail outlooks improved notably. Half of retail contacts expect higher sales in 2020 versus 2019, and 35 percent expect sales to be about the same.\nNonfinancial Services\nSolid expansion was seen in nonfinancial services activity, a slight pickup from the prior reporting period. Growth was led by transportation services, with small parcel cargo volumes posting particular strength. Staffing services contacts indicated increased demand. Weaker activity centered on the softness in the oilfield.\nOutlooks continued to improve, although political uncertainty remained a concern. Several contacts noted that the passage of the USMCA should bolster growth by giving more certainty to the business environment. Overall, a majority of contacts expect stronger revenues this year.\nConstruction and Real Estate\nHome sales rose broadly, with demand exceeding expectations in some areas thanks to healthy job growth and low mortgage rates. Builders' margins mostly held steady, as builders were able to push through price increases to cover increases in construction costs. Development in previously less desirable locations has accelerated as builders focus on expanding offerings at more affordable price points. Outlooks were favorable, although a few contacts noted concern about the impact of the 2020 elections on home buying activity.\nApartment demand remained healthy, with occupancy flat to up year over year and rent growth holding above long-term averages across most major Texas metros. Activity in the office market was mixed in Houston, while San Antonio and Dallas-Fort Worth saw steady demand. Industrial demand generally remained strong, particularly in DFW. New development of retail space remained modest and was driven by grocery-anchored shopping centers. Investor interest remained high for commercial properties in Texas' major markets.\nFinancial Services\nGrowth in loan demand increased over the reporting period. Loan volume growth was broad based across all lending categories, with real estate lending (both commercial and residential) continuing to lead growth. Bankers reported that loan pricing continued to decline, and the vast majority noted no change in credit standards and terms. Business activity improved since the last reporting period, and expectations for activity six months from now have improved slightly.\nEnergy\nDrilling activity in the Eleventh District ticked up slightly over the reporting period, after several months of declines. Contacts indicated that the rig count was likely near a soft bottom, although further declines are possible. The industry remained distressed as access to capital was limited, especially for small firms. Bankruptcies were likely to rise, according to contacts. However, U.S. crude oil production is still projected to grow in 2020.\nAgriculture\nMore than half of Texas remained abnormally dry or in drought, although drought severity eased somewhat over the reporting period. Agricultural producers expressed concern over dry conditions damping crop production next year. This is especially pertinent given relatively low crop prices, as above-average production is needed in order for farmers to achieve profitability. Cotton exports were quite strong, and lower U.S. and world supplies boosted price outlooks. The signing of the USMCA alleviated some uncertainty among agricultural producers, and progress on U.S. and China trade disputes added optimism.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"January 15, 2020\nSummary of Economic Activity\nEconomic activity continued to expand in the First District at the close of 2019. Retailers and manufacturers cited modest to moderate revenue increases from a year earlier, while results for software and information technology services firms were stronger. Respondents in these three sectors also reported continued tight labor markets, but none mentioned increasing wages (other than scheduled minimum wage rises in some states). Price increases continued to be modest according to contacts. Inventory shortages persisted in New England residential real estate markets, and median sales prices for single-family homes and condos rose across the region in November. Greater Boston's commercial real estate market continued to be robust, while commercial activity in the Providence area was moderate. Business outlooks ranged from very positive to cautiously optimistic, mostly reflecting expectations that recent trends will continue into 2020.\nEmployment and Wages\nContacts in all sectors reported that labor markets remained tight in many areas. Retailers noted that minimum wage increases in effect January 1 in some states further raise labor costs. While two contacts in the software and IT services industry noted that acquisitions made in the past year led to increased headcounts, only one mentioned that this could lead to future restructuring. Most of the software and IT services hiring is for replacement only; while many contacts cited tight labor markets as hurdles for filling vacancies, one noted that there appeared to be no shortage of entry-level labor. One manufacturer, a biotech firm, reported significant hiring plans; they plan to roll out a new drug and need additional staff. Other manufacturing contacts continued to report difficulties hiring new workers.\nPrices\nBusiness contacts reported that prices had risen modestly or not at all. Retailers indicated that their price increases were very minimal in recent months. For most software and IT services firms, pricing was unchanged over the past year, but two contacts reported price increases of 3 percent to 5 percent year-over-year on contract renewals for their larger enterprise customers. Manufacturers cited muted pricing pressure. A fish producer said that tariffs had stabilized but the resulting costs were difficult to pass on to supermarkets.\nRetail and Tourism\nRetailers consulted for this round reported that year-over-year comparable-store sales results ranged from flat to up a few percentage points. Black Friday and Cyber Monday results were very strong, while Green Monday (December 9) was a bit softer, in what was a very short holiday sales season. Contacts expressed some concern that higher costs, whether related to labor markets or tariffs, in combination with a very competitive retail environment, will put a damper on revenue growth. However, capital spending plans for 2020 are on pace with or exceeding investment expenditures in 2019. An auto industry contact reported that November vehicle sales were 2 percent higher than a year earlier, continuing at a fairly slow but steady pace.\nTravel industry contacts reported that in November, occupancy rates were down very slightly compared to 2018; for 2019 as a whole, occupancy rates were also expected to post a slight decrease. However, lodging revenues were up year-over-year. In one tourist market, this reflected an increase in the average nightly room rate. In the Boston area hotel market through November, room rates were virtually unchanged from 2018 but new hotel rooms increased the supply, with more new hotels planned. The travel industry expects 2020 to be a good year; large conventions booked in Boston will help, as will the greater number of H2B visas issued to fill staffing requirements.\nManufacturing and Related Services\nReports from manufacturing contacts were generally positive. The number of responding firms was small in this round. All four contacts reported higher sales versus the year-earlier period and two said sales growth exceeded their expectations. A packaging manufacturer attributed the strong growth to retail sales and a defense contractor said that orders were high. A frozen fish producer said strong revenue growth largely resulted from a change in the mix of sales to higher priced goods.\nThree contacts reported lower capital investment but in two of those cases the reduction was expected after unusually high investment in recent years.\nAll manufacturing respondents had a positive outlook. Only one, the packaging firm, said it had revised its outlook up in recent months, citing a soft period last year that appears to have ended.\nSoftware and Information Technology Services\nThe New England software and IT services industry ended 2019 on a strong note according to contacts. Across the board, demand growth was positive, both year-over-year and quarter-over-quarter, with most contacts seeing year-over-year demand growth in the double digits. Cloud and subscription-based offerings continued to perform well, but growth was attributed to an overall strong industry rather than specific product lines. Overall, contacts were mostly optimistic. While political and macroeconomic uncertainty remained a factor, many respondents were confident about their ability to execute their business plans in the coming quarters and expected that the strong demand seen at the end of 2019 would carry through to 2020.\nCommercial Real Estate\nCommercial real estate activity in the First District has continued to strengthen despite some variation across areas. The leasing market in Boston was robust in the last quarter of 2019. Most contacts reported that they experienced higher activity than at the end of 2018. Activity levels picked up from November to December, and rents continued to rise. Vacancies were low and construction was robust. Life sciences were strong contributors to growth in 2019. The investment sales market in Boston was strong and liquid. Contacts said the commercial real estate market in Boston was a yield generator and the outlook was very positive.\nIn the Providence area, by contrast, the leasing market was moderate. Existing construction projects continued as scheduled, but few new projects have been undertaken. Rents rose in both the office and industrial leasing markets. The investment sales market was also moderate, and capitalization rates remained stable. The outlook for Providence was cautious; one contact mentioned that uncertainties associated with the 2020 election may cause businesses to be more reserved in making long-term decisions.\nResidential Real Estate\nMost residential real estate markets in the First District experienced declines in closed sales in November. For single-family homes, closed sales decreased in Rhode Island, Massachusetts, Boston, and Maine while increasing slightly in New Hampshire. Median sales prices increased moderately in all areas. For condominiums, closed sales were down in all areas except Maine. Condo prices dropped in New Hampshire while increasing or staying flat elsewhere in the region. Based on combined statistics for single-family homes and condominiums, Vermont experienced a moderate decrease in closed sales and an increase in prices.\nInventory shortages prevailed. In particular, Rhode Island, Massachusetts, New Hampshire, and Maine experienced double-digit drops in inventory for both single-family homes and condos. According to the Massachusetts respondent, many potential sellers are concerned about having nothing to buy after a sale because inventories are so low. Contacts expressed cautious optimism for the coming months.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"January 15, 2020\nSummary of Economic Activity\nThe Ninth District economy grew at a modest pace since the last report. Employment was mixed across the region, while wage pressures were moderate overall and price pressures remained modest. The District economy saw growth in consumer spending, commercial construction and real estate, residential construction, and energy. Manufacturing and energy activity was flat. Residential real estate fell slightly, while agricultural conditions remained weak.\nEmployment and Wages\nEmployment was mixed since the last report. Minnesota and Wisconsin both saw seasonally adjusted employment fall in November, while other District states saw slight-to-moderate gains. Job postings rose by double digits in the Dakotas, but were lower in Minnesota and Michigan's Upper Peninsula. Unemployment insurance initial claims were higher overall during the most recent six-week period (through mid-December) compared with the same period a year earlier, with claims increasing notably in Minnesota and Wisconsin, but falling in the Dakotas. A poll of Minnesota staffing firms by the Minneapolis Fed found that recent job orders and hours booked were modestly higher; unfilled job orders were also higher due to tight labor supply. Staffing contacts in eastern North Dakota and Michigan's U.P. also said job orders were higher. A Montana staffing contact said job orders were lower, but the company has also been more selective. \"We are no longer writing job orders we know we can't fill.\" A survey of employer hiring sentiment found more optimism across the District for the first quarter of 2020 compared with the same survey a year ago. However, two other regional hiring indexes that include Minnesota and the Dakotas had softer outlooks, including one that suggested contraction in manufacturing employment. A poll by the Minneapolis Fed of greater Minnesota firms found generally soft hiring activity, particularly compared with a similar poll in mid-2019.\nWage pressures were moderate overall, with considerable variation. Fewer than half of staffing firms polled by the Minneapolis Fed said wages grew by more than 3 percent over the past 12 months, though more than 60 percent said they expected wage increases above 3 percent over the coming year. Close to 70 percent of firms in the aforementioned greater Minnesota poll said wages grew by less than 3 percent over the past year, with future wage expectations only slightly higher. However, a contact in Michigan's U.P. said housekeeping positions have recently seen wage increases of 10 percent or more, while a call center and manufacturer there increased wages by more than 5 percent. A construction contact said workers were getting recruited regularly, and a 3 percent raise \"isn't good enough\" to retain good employees. In contrast, a manufacturer of hardwood products with plants in Wisconsin that has been \"significantly affected\" by tariffs cut wages by 10 percent.\nPrices\nPrice pressures remained modest since the previous report. Respondents to a recent survey of Minnesota economic development officials reported that retail prices among their business contacts were mostly little changed over the past year; however, the outlook for the coming year was for prices to increase slightly faster than normal. Retail fuel prices as of early January were slightly lower in most areas of the District relative to the previous reporting period. Prices received by farmers in November increased from a year earlier for corn, soybeans, dry beans, milk, hogs, eggs, and turkeys, while cattle prices were unchanged and prices for wheat, hay, and chickens decreased.\nConsumer Spending\nConsumer spending increased moderately since the last report. Most reports on holiday shopping and other spending were positive. Sources in major markets in Montana and the Dakotas reported good foot traffic in stores. One source noted that a shorter holiday shopping season this year provided steadier business overall. But firms in greater Minnesota reported flat holiday sales. Gross sales in South Dakota saw a healthy bump in November compared with a year earlier, and the state's gambling handle also increased by almost 4 percent. Sales tax collections in Minnesota grew by more than 3 percent in November, but gross sales in Wisconsin saw a 4 percent decline. Poor snow conditions across much of Montana meant slower activity early in the ski season. Nevertheless, the broader winter skiing economy was reportedly \"booming\" in Montana, with resorts making significant capital investments in new lifts, accommodations, and other amenities. However, Snow conditions in northern Minnesota and Wisconsin were reportedly good in December, with \"quite a few snowmobilers out on the trails\" in some locations. Hotel occupancy rates and revenue per room in Minnesota rose slightly in November.\nConstruction and Real Estate\nCommercial construction grew modestly since the last report. Construction spending saw a notable uptick in November compared with a year earlier, according to an industry database, with increases seen in every District state except Wisconsin. A second industry database showed that the number of new and active projects over the most recent six-week period (through mid-December) were notably higher than during the same period a year ago. Commercial permitting in the District's larger markets in November saw a modest increase overall compared with a year earlier, with Rapid City and Sioux Falls, S.D., continuing to see strong activity overall. Individual contacts have generally reported strong backlogs. A Minnesota contact said commercial construction was \"bouncing along the top,\" and while there was some expectation of a possible decrease in 2020, \"the market is still operating at high levels.\" Residential construction grew modestly overall. The value of November residential permits was widely higher, with the notable exception of Minneapolis-St. Paul, which broke a string of months with robust single- and multifamily permitting.\nCommercial real estate was modestly higher. Vacancy rates in most subsectors in Minneapolis-St. Paul remained stable. Despite persistent new construction of multifamily units, continued low vacancy rates have led to rising rents\u2014roughly 5 percent in the past 12 months, according to one source. Residential real estate fell slightly overall, with mixed sales activity across the District in November compared with a year earlier. Northern and western counties of Wisconsin located in the District saw higher sales, and Great Falls, Mont., saw particularly robust activity. However, sales in Minnesota were largely flat, while small declines were seen in Bozeman and Missoula, Mont., and Sioux Falls, S.D. Fargo and Grand Forks, N.D., experienced larger declines.\nManufacturing\nDistrict manufacturing activity was flat on balance from the last report. Preliminary results from a survey of Ninth District manufacturers indicated that firms generally reported a slight decrease in orders, production, and investment over the past year. However, expectations for the coming year were generally positive. An index of manufacturing conditions indicated increased activity in December compared with a month earlier in South Dakota, while activity was nearly flat in Minnesota and decreased in North Dakota. In contrast, a Montana staffing contact reported that manufacturers were increasing their hiring late in the year. Producers of construction inputs also reported solid recent sales.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak. Industry contacts reported that trade conflicts combined with poor weather put continued pressure on farm households, with federal aid payments and insurance the only source of relief for many producers. One contact called 2019 \"the mother of all disasters.\" In contrast, a dairy industry source reported that the sector has begun to rebound, and producers were becoming more bullish; Montana wheat producers also had a strong year. District oil and gas exploration activity was steady since the previous report. The number of active drilling rigs as of early January fell slightly from a month earlier, but the most recent figures (as of October) indicated that oil production hit a new record.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nNovember 27, 2019\nSummary of Economic Activity\nTenth District economic activity held steady in October and early November, although conditions were mixed across sectors. Consumer spending edged down since the previous survey period as higher retail sales were offset by lower sales in the auto, restaurant, and tourism sectors. Manufacturers noted weaker activity, led by continued declines in durable goods production, but manufacturers expected activity to stabilize in the months ahead. Contacts in the transportation sector noted slightly lower sales, while sales in the wholesale trade and professional and high-tech services sectors rose. District real estate conditions rose slightly, although residential construction contacts expected lower activity moving into the winter months. Energy activity continued to fall in the District, and the outlook for drilling and business activity softened. The agriculture sector remained weak, and credit conditions worsened as farm income and loan repayment rates fell. District employment and employee hours held steady since the previous survey period, but a majority of contacts reported ongoing shortages of qualified labor. Wages continued to expand at a modest pace, and contacts expected moderate growth in the months ahead. Services sector contacts noted higher input and selling prices since the previous survey period, while manufacturers noted slightly lower prices for finished products and raw materials.\nEmployment and Wages\nDistrict employment and employee hours held steady since the last survey period, and both remained above year-ago levels. Job gains in the professional and technical services, real estate, health services and wholesale trade sectors were offset by losses in the manufacturing, auto sales, transportation, and tourism and hotel sectors. Employment in all industries, with the exception of the auto sales sector, was at or above levels from the same period a year ago, and contacts expected employment to rise in the next few months.\nA majority of contacts continued to report labor shortages across all skill levels, and a lack of qualified applicants was cited as the number one reason for not filling open positions over the last three months. Specifically, respondents noted shortages for truck drivers, hourly retail and food-services positions, auto-technicians, IT personnel, nurses, engineers and skilled construction trades. Wages continued to grow modestly since the previous survey period, and strong gains were expected in the months ahead.\nPrices\nInput and selling prices rose modestly in October and early November in the services sector, while manufacturers noted slightly lower prices. Both input and selling prices were expected to increase moving forward for all reporting sectors. Contacts in the retail trade sector noted moderate input price gains and modestly higher selling prices. Input and selling prices in the restaurant sector rose modestly, and were strongly above year-ago levels. The transportation sector saw modest gains in both input and selling prices. Construction supply respondents noted steady selling prices since the previous survey period, although selling prices were below year-ago levels. Manufacturers noted slightly lower prices for finished products and raw materials. Construction supply and manufacturing respondents expected small price increases moving forward.\nConsumer Spending\nConsumer spending edged down in October and early November relative to the previous survey period, however contacts expected sales to expand during the upcoming holiday season. Retail sales grew modestly compared to the previous survey period, and remained above year-ago levels. After steady increases through the late summer months, auto sales fell modestly compared to both the previous survey period and year-ago levels. Contacts noted that SUVs and trucks sold well, while sedans sold poorly. Both auto and retail trade contacts were optimistic about future sales and expected increases in the coming months. Restaurant sales fell slightly compared to the previous survey, but were sharply higher than a year ago. Tourism activity was weaker than the last survey, but slightly above levels from a year ago. Above average snowfall in the mountain areas has led to increased optimism about winter tourism activity this season.\nManufacturing and Other Business Activity\nManufacturing activity fell slightly in October and early November due to persistent declines in durable goods factory activity, however manufacturers expected activity to slightly increase in the months ahead. Factory production, order backlogs, and new orders each declined com-pared to the previous survey period, and contacts expected production, shipments, and the volume of new orders to increase in the months ahead. Capital spending was modestly above year-ago levels, and contacts anticipated slight growth in spending in the months ahead.\nOutside of manufacturing, firms in the transportation sector experienced slightly lower sales, while sales increased strongly in the wholesale trade sector and modestly in the professional and high-tech services sector. All three sectors expected sales to increase in the months ahead. Transportation sector contacts anticipated slight decreases in capital spending in the coming months, while wholesale trade and professional and high-tech services contacts expected spending to increase.\nReal Estate and Construction\nDistrict real estate activity rose slightly since the last survey period and was above year-ago levels. Residential real estate sales held steady in October and early November, although sales were higher than a year ago. Residential construction activity rose modestly over the previous survey period as starts, traffic of potential buyers, and construction supply sales rose. However, expectations were for a decrease in residential construction activity moving into the winter months. Commercial real estate activity inched up as sales, absorption, and completions rose while vacancy rates fell and construction underway held steady. Overall activity in the commercial real estate sector was projected to grow slightly.\nBanking\nOverall loan demand rose slightly during the survey period, although demand across categories was mixed. Bankers noted higher demand for commercial real estate and consumer installment loans, but experienced flat demand for residential real estate loans, and lower demand for commercial and industrial and agricultural loans. Bankers continued to see modest improvement in loan quality compared to levels at the same time last year and expected loan quality to hold steady during the next six months. Credit standards held steady across all major loan categories. Deposits edged up, although several bankers noted poor demand for certificates of deposits during the survey period.\nEnergy\nDistrict energy activity decreased since the previous survey period, and expectations for future drilling and business activity eased. The number of active rigs continued to decline across most states but was primarily driven by a decrease in Oklahoma. Oil and gas production eased slightly, but still remained at generally high levels. As a result, production levels continued to support strong mid-stream and transportation activity. Revenues and profit levels of regional firms fell compared to a year ago and earlier this year, in part due to lower commodity prices. District employment levels and capital expenditures in the industry also eased.\nAgriculture\nThe Tenth District farm economy remained weak, and agricultural credit conditions deteriorated slightly. In the most recent survey period, regional contacts reported that farm income and loan repayment rates continued to decline at a modest pace. Demand for farm loans remained strong, but the pace of growth slowed from previous survey periods. Despite some support from government payments connected to ongoing trade disputes, most bankers pointed to an ongoing environment of low agricultural commodity prices and elevated costs as the primary factors contributing to further weakness. As profit opportunities remained limited, producer working capital deteriorated slightly, and a modest number of borrowers were expected to sell assets before the end of the year to improve liquidity.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nNovember 27, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of October through mid-November. The labor market remained tight, employment growth picked up moderately, and wages rose modestly. Reports on price inflation were mixed. Sales of retail goods increased somewhat, and activity in consumer and business services was solid. The pace of commerce in the manufacturing sector was little changed, and activity in the agriculture sector was mixed. Residential and commercial real estate markets expanded moderately. Lending grew further.\nEmployment and Wages\nThe labor market remained tight, and employment growth picked up moderately. Businesses in sectors including health care, finance, and manufacturing noted solid hiring activity, while others reported that shortages of qualified labor prevented them from filling vacancies. In the Mountain West, a producer of building products hired tradespeople in response to improved construction activity, and a contact in Boise reported that a major e-commerce business was opening a distribution center in the area, resulting in anticipatory hiring. In the Pacific Northwest, a health-care provider expanded its workforce in response to higher demand. Worker turnover also spurred hiring activity, as in the case of a credit union in Northern California. A community banking contact in Oregon saw previously robust demand for workers moderate slightly.\nWages rose modestly across sectors as companies tried to attract qualified workers in highly competitive labor markets. Wages picked up further for skilled finance and technology workers, according to community banks, credit unions, and financial technology companies across the District. A provider of business security services in Seattle observed that labor costs have risen to the highest level in company history. A few businesses in higher cost urban areas noted efforts to relocate jobs to lower cost areas of the District in order to contain labor compensation. Several reports mentioned that forthcoming increases in the minimum wage taking effect in the new year would result in higher wages for most hourly workers as employers adjust pay scales upwards.\nPrices\nReports on prices were mixed, but suggested that inflation was up slightly on balance. A handful of businesses, such as a quick service restaurant chain and a professional security provider, reported that selling prices were higher due to a pickup in wage costs that could not be sustainably absorbed by profit margins. Health-care service providers noted that inflation ticked up for many products and treatments due to solid patient traffic. Some producers of building materials and wood products increased selling prices in response to improved construction activity, while others lowered prices somewhat in response to weak export demand. Contacts in metals manufacturing and public utilities reported stable prices on inputs such as copper and natural gas. In Southern California, subdued demand for hotel lodging resulted in a slowdown in room rate inflation and, for some hotels, modest declines in prices.\nRetail Trade and Services\nSales of retail goods increased somewhat. Most reports indicated that consumer demand was steady, with spending supported by increasing incomes borne of tight labor markets. Sales at specialized outlets, such as home improvement stores and pet supply stores, rose noticeably. Retailers were generally optimistic about holiday sales, given solid consumer spending over the past year and other factors like continued service improvements at e-commerce outlets. A few businesses expected to rely more on discount pricing schemes than in previous holiday seasons due to brisk competition. Some businesses that depend primarily on brick-and-mortar sales were concerned about inclement weather constraining foot traffic; one contact noted that, with Thanksgiving falling later than usual, the shorter holiday shopping season could damp sales.\nActivity in the consumer and business services sectors was solid. Across the District, demand for health services was strong and in some cases led service providers to open new locations. In the entertainment sector, the robust growth of streaming services has resulted in a boom in television and movie production that could lead to expansion in locales in the District outside of Southern California. Sales at quick service restaurants grew steadily, though one contact in Southern California noted a few restaurants closed in response to labor and operating costs that exceeded sales revenue. In California, the tourism sector saw mixed activity, with sales at leisure cruise companies rising somewhat and occupancy rates at hotels around San Diego falling modestly.\nManufacturing\nActivity in the manufacturing sector was little changed. A metals manufacturer in the Pacific Northwest reported that demand was steady, though order backlogs for most producers were no longer growing. Domestic wood product manufacturers saw the pace of sales pick up modestly thanks to the stabilizing housing market, which followed the broad decline in mortgage rates. In general, these manufacturers also noted stiff competition with producers from countries that have not been targeted with tariffs. However, one contact noted that production constraints at sawmills in Canada have benefited domestic producers by reducing Canadian supply to the United States.\nAgriculture and Resource-Related Industries\nReports on activity in the agricultural sector were mixed. In the Central Valley of California, one contact noted solid yields and sales for crops like tomatoes, beans, and grapes, while another observed disappointing nut yields and continued weak export demand. Profitability for growers improved slightly, however, as they adjusted their supply levels in response to the new environment of subdued demand from abroad. Activity in the livestock sector was also mixed, with demand for beef and dairy cattle ticking down and demand for swine picking up somewhat. A lumber producer from the Pacific Northwest reported that production has been steady, but exports continue to decline due to trade tensions and slowing foreign economies. For some wheat growers in Eastern Washington, recent inclement weather prevented them from planting, while tensions with trading partners have resulted in an oversupply in domestic markets and tighter profit margins.\nReal Estate and Construction\nResidential real estate activity expanded moderately on balance. Several reports noted that permitting picked up, along with sales, due in part to lower interest rates spurring construction and demand. Labor shortages and higher materials costs still limited construction starts somewhat, but a few respondents indicated that materials were now more readily available and wait times for contractors had shortened modestly. Prices grew a bit, with historically elevated selling prices and rents leading buyers in some urban areas to relocate. Robust demand continued to outpace supply and push up prices in the Mountain West, especially in metro areas like Boise. In Seattle and Los Angeles, contacts noted a mixed picture of the residential market, with some indicating that time-on-market for houses increased amid flagging demand and others observing robust construction activity and sales.\nActivity in commercial real estate markets also expanded moderately. Demand for industrial spaces like factories and distribution centers was brisk in Southern California. Commercial construction activity was stable to up slightly in Oregon. In Seattle, major developers have initiated new commercial projects to meet the demand of businesses that have expanded employment and operations. In the Los Angeles area, rents have risen to such high levels in response to past robust demand for office space that leasing activity has cooled slightly. A contact in the Central Valley of California observed a modest decline in commercial permitting.\nFinancial Institutions\nLending activity grew solidly, with most reports noting a further pickup in loan demand and a few noting no change over the reporting period. In general, lower interest rates drove more lending activity, but also resulted in narrower interest margins for many banks. A financial technology company that lends primarily to small businesses reported steady activity. Credit quality was strong across most of the District, though a few banks reported tighter underwriting standards for new loans in the face of uncertainty about future economic conditions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"November 27, 2019\nSummary of Economic Activity\nOverall economic activity in the Fourth District increased modestly, an improvement after a couple periods of little growth. Professional and business services contacts continued to see strong and increasing activity. Manufacturers reported slight demand growth for the first time in several months, noting that while their international sales remained weak, domestic demand was stronger than they had predicted. Homebuilders indicated that low mortgage rates and rising wages boosted demand for new homes. Auto sales were bolstered by higher incentives, while reports from nonauto retailers were mixed. Bankers noted growing loan demand for homes and autos. Nonresidential contractors reported that demand ticked up. By contrast, the freight sector saw further weakening. Contacts in many sectors were optimistic about near-term growth prospects. Employment rose slightly on balance, largely on the strength of professional and business services hiring, while overall wage growth was modest. Output price inflation was modest on balance.\nEmployment and Wages\nAggregate employment increased slightly over the period. Professional and business services firms continued to staff up to meet demand growth, accounting for most of the net employment gains. Construction contractors indicated that typical winter layoffs had been delayed this year. Nonseasonal retail staffing levels were stable. Most bankers held employment levels steady, but one large bank implemented layoffs, saying interest rate reductions had put pressure on margins. Most manufacturers had stable staffing, but a couple steel manufacturers cut temporary workers and reduced hours for permanent employees. Long-haul trucking and rail companies reduced staffing levels because of softening demand.\nWages rose modestly overall. Manufacturers increased wages and offered retention bonuses to compete for talent. Retailers across subsectors raised pay rates, citing tighter labor markets. While professional and business services firms reported only slight wage pressure, other white-collar industries, including banking and real estate, saw stronger wage pressure. One community banker said he needed to raise wages 10 percent to attract qualified talent. Construction pay was mostly unchanged. Freight firms reported little pressure to raise wages.\nPrices\nSelling prices in the District rose modestly on balance. Much of the price inflation came from services firms; nonsteel manufacturers' prices were stable, and retail inflation was mixed. Some professional and business services firms negotiated modest price increases. A staffing contact remarked, \"we have good pricing power due to [strong] demand with inadequate supply.\" Commercial real estate companies increased rates in response to rising labor costs. Local delivery and rail freight companies raised rates, while long-haul trucking rates were flat to down. Manufacturers' selling prices were stable, except in the case of steel producers, whose prices fell with the market. Though tariffs pushed up costs for some manufacturers, manufacturers' materials costs decreased on balance, especially for steel. On the consumer side, a clothing retailer reduced the use of price discounting to offset higher costs resulting from tariffs. By contrast, a food retailer said that while tariffs had increased costs, the company \"cannot raise prices on a whim\" because of fierce competition. Homebuilders reported rising costs; some increased prices to offset these costs, while others took hits to their margins to maintain market share.\nConsumer Spending\nRetailers reported slightly higher sales compared to those of the previous report. Light-vehicle sales were solid and increasing. One dealer noted that new-vehicle sales in October were bolstered by a 7 percent increase in manufacturer incentives relative to last year's. Contacts in hospitality and retail apparel reported mixed activity throughout the Fourth District. While overall sales were up only slightly this period, retailers were optimistic about sales in the coming months, looking forward to a boost from the holiday shopping season.\nManufacturing\nManufacturers reported a slight increase in activity, although overall conditions remained relatively soft. Domestic demand held up better than manufacturers had anticipated. However, several contacts said international weakness still weighed on demand, especially softness in western and central Europe and the ongoing negative impacts from trade tensions with China. One steel producer noted that declines in steel prices pushed up demand as customers negotiated contracts for 2020 in an effort to lock in low prices, while another said that a falling price environment encouraged customers to hold lower inventory and buy on an as-needed basis. Aside from the usual holiday slowdown, manufacturers were relatively optimistic that conditions would continue to improve in the coming months, and several noted that they were working on plans for increased capital investment for 2020.\nReal Estate and Construction\nConstruction contacts reported strengthening demand, while real estate firms indicated that demand was flat. Nonresidential contractors noted slight demand growth over the period because they acquired new projects from a wide range of industry segments. Nonresidential contractors were upbeat about the near future as well, believing there will be plenty of projects to bid on in 2020. However, commercial real estate contacts reported flat demand. A couple commercial real estate contacts said softening global markets and trade tensions weighed on demand.\nOn the residential side, homebuilders indicated that demand increased modestly, citing low mortgage rates and wage growth as contributing factors. One homebuilder also suggested that stronger demand for resale homes allowed potential buyers to trade up to new homes more easily. However, residential real estate agents characterized sales of existing homes as unchanged. Homebuilders expected continued demand growth, apart from the expected winter slowdown, while realtors expected home demand to remain unchanged.\nFinancial Services\nOn balance, demand for credit increased slightly. A large minority of bankers reported that demand for credit had increased, while the rest suggested that it was steady. In particular, contacts indicated that lower interest rates drove increases in home lending\u2014particularly for mortgage refinancing\u2014and vehicle loans. However, one contact indicated that demand from small businesses and large commercial clients weakened. Although bankers indicated that falling interest rates may erode core deposits going forward, deposit balances have remained relatively stable to date.\nProfessional and Business Services\nActivity in the professional and business services sector has strengthened further since the previous report. Contacts from a variety of subsectors continued to report strong demand for business services and suggested that their clients were investing in growth through activities such as marketing and mergers and acquisitions. One business development contact reported a considerable increase in activity in recent weeks because of a number of businesses that are opening new locations in the area. Overall, the majority of contacts in professional and business services expect favorable conditions to continue into the near future.\nFreight\nFreight sector conditions have weakened further since the last report. The majority of contacts reported no change or lower demand for freight services, although one freight firm reported that September and October were its strongest months since January. Ongoing weakness in the manufacturing sector was a major factor contributing to recent softening; one contact noted demand weakness because manufacturing output from Mexico had fallen significantly. Another contact remarked that economic uncertainty caused businesses to hold off on investment purchases, resulting in lower shipping volumes. Finally, contacts pointed to excess capacity in trucking as exacerbating weaknesses. Overall, freight contacts have downgraded their near-term outlook since the previous report, from solid to mixed.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"November 27, 2019\nSummary of Economic Activity\nThe Fifth District economy grew moderately since our previous Beige Book. A majority of manufacturers reported growth in shipments and new orders, although tariffs and trade uncertainty were concerns for many producers. Overall, import volumes continued to exceed export volumes; however, growth in exports outpaced growth in imports in recent weeks. Meanwhile, trucking companies reported a decline in rates as demand softened to a moderate rate. Some retailers reported strong sales, although some high end retailers lost sales to customers who sought less expensive alternatives. Travel and tourism strengthened across most of the Fifth District. Home sales and mortgage lending picked up in recent weeks, according to real estate agents and lenders. On the commercial side, real estate leasing, sales, and construction grew at a modest to moderate pace with the exception of retail leasing, which slowed in several markets. Nonfinancial services firms reported mild growth, overall, and expected slow growth to continue heading into 2020. Executives noted a slowdown in the oil and gas industry. Farmers have been hesitant to invest in land or equipment. Labor demand strengthened while wage increases were moderate, overall. Price growth also remained moderate in recent weeks.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks. Employment agencies reported a seasonal pick-up in new job openings and an increase in direct hire recruitment services, rather than temporary, for larger clients. Employers continued to report difficulties finding qualified workers. A few firms sought to fill job openings with in-house training programs, apprenticeship programs, or partnerships with educational institutions. Wages increased moderately, overall. Meanwhile, staffing agencies reported increased wage pressures for jobs in the lower pay scales.\nPrices\nPrice growth remained moderate since our previous report. According to manufacturing and service sector firms, growth of prices paid continued to exceed growth in prices received. Rising labor costs, including wages and employer-paid health insurance, were noted as contributors to the increase in prices paid. Meanwhile, raw materials prices were reportedly up for some construction materials and tariffed goods while price declines were cited for freight transportation, energy, food commodities, chemicals, and steel.\nManufacturing\nManufacturing in the Fifth District grew moderately since our last report. Contacts reported increases in shipments and new orders, overall, as strong demand supported continued growth for many manufacturers. However, tariffs and trade continued to be concerns since tariffs led to higher costs of raw materials and lower profit margins. Trade-related uncertainty remained significant. Lower profitability caused some companies to decrease production levels and staff headcounts. Meanwhile, some manufacturers struggled on the demand side, such as a Virginia yarn manufacturer, who reported that economic uncertainty is hurting demand by leading some customers to reduce inventory levels.\nPorts and Transportation\nPorts in the Fifth District saw modest growth, overall. Import volumes continued to exceed export volumes, but several contacts noted that export volumes were growing faster than import volumes. On the export side, growth was particularly strong in chemicals, plastics, and meat. However, some ports saw softness in autos, on both the import and export side. Firms continued to express concerns about trade with China but were able to divert some trade through other East Asian countries. Meanwhile, an airport executive saw a drop in cargo to and from Europe and looked to expand business in other parts of the world.\nFifth District trucking companies reported moderate demand in recent weeks. Executives saw steady business with established customers but softening rates, lower revenues, and less demand than a year ago. Some small trucking companies that had opened to meet high demand in recent years went out of business, easing pressures on driver availability and wages. Executives differed in their views about the future. For example, a North Carolina trucking firm planned to expand its fleet of tractors and drivers in 2020, but another company stopped filling open positions because of low revenues and high costs.\nRetail, Travel, and Tourism\nTravel and tourism in the Fifth District were generally strong in recent weeks. Hotels and resorts had higher occupancy and moderate rate increases. Restaurants around the Fifth District also had steady demand, although some had to cut services or hours because of difficulty finding employees. In Charleston, South Carolina, tourism recovered well after Hurricane Dorian, but attractions in the District of Columbia noted some softness. Contacts noted that low gas prices gave people incentive to travel but expressed concerns that ongoing delays in operationalizing new aircraft could hamper growth.\nFifth District retailers experienced varied conditions since our last report. Some reported strong sales, and one even planned to expand by opening new stores. However, hardware stores saw softening demand, as did high-end clothing stores, who attributed weakness to customers looking for cheaper alternatives. Several retailers reported that tariffs were raising costs and hurting profit margins. In Virginia, a home goods store discontinued several items, particularly small electronic devices, as a result of tariff-related cost increases.\nReal Estate and Construction\nHome sales increased moderately in recent weeks. Real estate agents indicated that inventories of single-family homes were little changed as new listings continued to sell quickly and buyer traffic was steady at open houses and showings. Meanwhile, new home sales and construction were steady, although construction of lower priced homes remained limited. Overall, agents reported modest growth in home prices.\nCommercial real estate leasing rose moderately in recent weeks. Brokers continued to reported strong demand for industrial space and office leasing increased modestly in some markets. Retail leasing, however, slowed across markets and vacancy rates increased slightly. Meanwhile, rental rates were reportedly stable to increasing modestly. Commercial sales and construction increased modestly in some regions. Multifamily leasing remained healthy in most markets, while multifamily construction remained steady.\nBanking and Finance\nOn the whole, loan demand picked up modestly since our previous report. Residential mortgage demand was generally described as stable to increasing modestly. Some banks noted that low interest rates helped to increase loan demand, but net interest margins were compressed. Bankers also noted an increase in mortgage refinancing. Commercial real estate loan demand and business lending strengthened modestly while automotive lending was flat, on balance. Deposits grew moderately since our last report. Bankers continued to report vigorous competition for loans and deposits. Measures of credit quality remained stable at high levels throughout the Fifth District.\nNonfinancial Services\nOn balance, nonfinancial services firms reported slight growth in demand in recent weeks. Hospitals and health care providers continued to experience solid growth. A records management firm, on the other hand, saw softer federal government spending in recent weeks. Advertising and marketing firms were generally positive, although one marketing executive believed that the outlook in his industry had shifted from optimistic to cautiously optimistic or \"a little nervous\". Several firms indicated that challenges finding qualified workers and general economic uncertainty were constraining growth and leading to expectations for slower growth heading into 2020.\nNatural Resources\nComments on the natural resources sector were somewhat pessimistic. One contact noted a slowdown in oil and gas drilling and was concerned about bankruptcies in the coal industry. Meanwhile, farmers were reportedly hesitant to invest in land or equipment because of unstable commodity prices, limited labor availability, tariffs, and their income being tied to government subsidies such as disaster and trade relief funds.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"November 27, 2019\nSummary of Economic Activity\nModerate expansion continued in the Eleventh District economy. Growth held fairly steady in services and retail but decelerated slightly in manufacturing. Home sales remained on the rise while energy activity continued to decline. The agriculture picture was mixed, with continued drought conditions but rising prices and decent production prospects. Employment growth was solid and upward wage pressures continued. Selling prices were largely flat, as firms' ability to pass through increased costs remained limited. Outlooks generally improved, except in energy and financial services. Uncertainty generally remained elevated, driven by trade tensions, the political climate, and weaker global growth.\nEmployment and Wages\nEmployment continued to expand at a solid pace. Hiring accelerated slightly in the service sector and remained above average in manufacturing. Headcounts continued to fall in the oil and gas sector. Labor shortages remained pervasive, with multiple contacts specifically mentioning the drag this was having on business growth. Staffing services contacts reported a very tight labor market with most companies struggling to find qualified workers across skill levels.\nWages continued to increase, with pressures picking up slightly over the reporting period.\nPrices\nInput prices continued to rise at a moderate pace, except in the energy sector where they remained flat at low levels. Some contacts, particularly manufacturers and retailers, pointed to tariffs as a primary driver of increased costs. Selling prices were largely flat, although airline contacts noted a slight increase in ticket prices over the past six weeks. Some contacts said they are unable to sufficiently raise prices to cover their increasing costs.\nManufacturing\nExpansion in the manufacturing sector slowed to a more modest pace, and demand weakened slightly. Several contacts noted that slowing demand was due to energy sector weakness and a general pullback among customers due to heightened uncertainty. Production declines were noted in machinery and fabricated metals manufacturing\u2014two segments with ties to the energy sector. Meanwhile, output of nondurable goods picked up pace over the reporting period. Refiners and chemical producers said softening global demand, tariffs, and ongoing trade policy uncertainty were squeezing margins.\nOutlooks among manufacturers remained positive, and expectations for manufacturing activity six months ahead increased across a variety of measures. Trade tensions remained a concern, however, and some contacts noted that uncertainty was making planning difficult.\nRetail Sales\nRetail sales continued to grow at a moderate pace over the reporting period, although some weakness was seen in autos and among wholesalers. Retailers experiencing a pickup in sales pointed to lower interest rates, favorable weather, and increased internet sales as factors boosting growth. One retailer noted that sales at stores near the Mexican border continued to be challenging compared with previous years. Overall retail outlooks improved notably, although some contacts cited trade issues as a headwind, including instability in some countries where they do business.\nNonfinancial Services\nNonfinancial services activity continued to expand moderately over the reporting period, even picking up pace slightly. Growth in professional and technical services continued to lead the expansion, joined in the latest period by healthcare services. Weakness was seen in administrative and support services. Staffing services contacts reported mostly softer demand, though still at relatively high levels. Staffing contacts noted strength in healthcare and banking but weakness in energy. Activity in the transportation and warehousing sector remained mixed, with strong airline passenger demand and rising sea cargo volumes but some weakness in rail cargo.\nService-sector outlooks improved over the past six weeks, although uncertainty remained elevated. Global economic uncertainty and trade tensions continued to be the predominant factors hampering future planning. Domestic political uncertainty moving into the 2020 elections also came up as an area of concern for several contacts.\nConstruction and Real Estate\nHome sales continued to rise, although a few contacts noted slight seasonal weakness. Sales were up year over year partly due to lower mortgage rates, and most builders were meeting or exceeding expectations. Builders have managed to sell off inventory, bringing the supply of finished vacant homes down to normal levels. Some builders were able to pass through select price increases, improving their margins, and outlooks were mostly optimistic. Recent tornadoes in Dallas-Fort Worth damaged homes, which spurred demand for rentals.\nApartment demand generally remained healthy, with occupancy tightest in Austin. Rents rose slightly. Investor appetite was solid, and apartment construction continued to be elevated. Leasing of office and industrial space remained active.\nFinancial Services\nGrowth in loan demand continued at a moderate pace over the reporting period, bolstered primarily by commercial and residential real estate loans. Commercial and industrial loan volumes held steady while consumer loan volumes again contracted slightly. Credit standards continued to tighten across the board. While business activity picked up since the last reporting period, the outlook for activity six months from now deteriorated slightly. Bankers cited concerns regarding the uncertain business climate and lower interest rates hampering pricing flexibility.\nEnergy\nDrilling activity in the Eleventh District continued to erode, with firms cutting spending and orders for new equipment. Well completion activity has proved more resilient, particularly in the Permian Basin, slipping only slightly from recent highs. The oilfield services market remained depressed, with little optimism about better margins next year.\nFirms were more pessimistic in their outlooks through the end of 2020 than during the prior reporting period due to a weaker economic outlook and tightening credit conditions. Contacts noted that some firms were pivoting to international markets for growth opportunities and where there is hope for higher margins.\nAgriculture\nMuch of Texas remained abnormally dry or in drought. Even still, crop conditions were mostly fair to good, and were more favorable than this time last year. Texas crop production estimates for 2019 exceed 2018 for several crops, including corn, sorghum and cotton. Crop and livestock prices generally trended higher over the reporting period. Milk prices also rose, nearing a profitable level for dairies after a couple of difficult years, according to contacts. Contacts noted continued concern among agricultural producers over trade issues with China but noted there was increased optimism regarding trade talks and the possibility of some tariffs being removed.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nNovember 27, 2019\nSummary of Economic Activity\nThere has been little or no growth in the Second District economy in the latest reporting period. The labor market remained tight, with slowing hiring activity and wage growth. Input prices decelerated, while selling prices continued to rise at a modest pace. Manufacturing activity was essentially flat, while business in the transportation and distribution sectors grew modestly. However, most service industries reported some softening in business conditions. Business contacts remained fairly restrained in their optimism about the near-term outlook. Consumer spending was mixed, with strength in auto sales but ongoing weakness in traditional retail. Tourism has remained robust. Housing markets have been softer, on balance, though the residential rental market has held up fairly well. Commercial real estate markets have weakened, and new commercial construction has slowed. Finally, finance sector contacts generally reported softening conditions, though banks reported increased demand for mortgage loans.\nEmployment and Wages\nThe labor market has remained tight across the District, but hiring has slowed. Business contacts have continued to report trouble finding workers to fill a wide range of jobs such as software developers and engineers, accountants, retail clerks, mechanical engineers, machinists and welders. Two major employment agencies noted that almost all job candidates are already working, and that many are reluctant to switch jobs, particularly at this time in the year.\nBusinesses overall continued to report little change in staffing levels, as job creation slowed. Contacts in manufacturing, education & health, and leisure & hospitality reported modest net hiring; however, finance, real estate, and wholesale trade firms indicated modest declines in employment, on balance. Looking ahead to the next six months, businesses in manufacturing and most service sectors still planned on adding to staff; however, businesses in the information, finance, and transportation sectors projected modest declines in employment. Businesses overall reported that wage growth has moderated slightly in the latest reporting period, though contacts in leisure & hospitality and education & health reported more widespread increases.\nPrices\nBusinesses in most sectors reported that input costs decelerated, while selling prices continued to rise at a modest pace. However, contacts in wholesale and retail trade have continued to note more widespread escalation in the prices they pay. Contacts in the leisure & hospitality sector, however, have continued to report steady to declining prices. Prices for Broadway theater tickets, for example, have edged down and are slightly lower than a year ago. Looking ahead, there was not much of a change in businesses' inclination to raise prices in the months ahead.\nConsumer Spending\nRetailers report that sales have been steady to softer since the last report and were lukewarm in their expectations for the near-term outlook. A number of retail contacts expressed concern about the general business climate, and a sizable number have scaled back capital spending plans. Upstate New York retailers noted some pickup in shopper traffic and sales activity, reflecting heavier and earlier sales promotion, but note that the pace of growth remains modest. Most stores indicated that inventories were in good shape heading into the holiday season.\nSales of both new and used vehicles have remained solid in recent weeks, running above year-earlier levels, according to dealers in upstate New York. Dealers indicated that manufacturer incentives and year-end changeovers have boosted sales. Consumer credit conditions have remained in good shape.\nManufacturing and Distribution\nManufacturers reported that business activity has remained flat. On the distribution side, wholesalers noted a significant rebound in activity, while transportation contacts said that activity grew modestly.\nLooking ahead, manufacturers, wholesalers, and transportation firms indicated that they anticipate modest growth in the months ahead, on balance. Contacts in all these sectors have expressed ongoing concern about tariffs, trade tensions, and related uncertainty, as well as the rising minimum wage in New York.\nServices\nBusinesses across almost all service industries reported some weakening in activity, on balance, since the last report. A notable exception has been in the leisure & hospitality sector, where contacts noted moderate growth in activity. Broadway theaters reported that attendance was fairly sturdy in October but dropped off a bit in the first half of November, as both attendance and revenues slipped below comparable year-ago levels.\nOther service industries generally reported softening activity\u2014particularly in the information and finance sectors. Professional & business and education & health service firms reported some modest weakening in conditions. Service firms, even those in leisure & hospitality, have grown somewhat less optimistic about the near-term outlook.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, weaker in the latest reporting period. Prices of New York City condos and co-ops have continued to trend lower and are now running moderately below comparable 2018 levels, with steeper declines at the high end of the market and in Manhattan. A local real estate expert noted a precipitous drop in the share of cash purchases at the higher end of the market, which is seen as a signal that investors have largely left the market. The inventory of existing homes has continued to climb to a fairly high level in Manhattan but less so in the outer boroughs. Housing markets in the suburban areas around New York have been more stable, with prices still rising moderately in most areas and inventories generally stable. Similarly, in upstate New York, the sales market has remained strong, with inventories steady at very low levels, prices still rising, and bidding wars still fairly commonplace in the more sought-after areas.\nThe residential rental market has strengthened further. While Manhattan rents have leveled off, rents across much of the city and metro area have continued to rise at a moderate pace\u2014and at a somewhat faster pace at the high end of the market, reflecting a shift in demand away from owning. Rental vacancy rates have edged up but remain quite low across New York City.\nCommercial real estate markets across the District have generally weakened in the latest reporting period. Office rents have been mostly flat, while availability rates have climbed modestly in most areas, with leasing activity steady to slower. Industrial markets have been mixed: rents have continued to trend up, though the pace has slowed, and availability rates have been flat to up slightly. The market for retail space has weakened further, even as the holiday shopping season draws near, with rents flat and vacancy rates at multi-year highs.\nNew multi-family construction starts have held steady across the District, while the volume of ongoing multi-family construction has remained fairly brisk. New office and industrial construction has continued to weaken modestly.\nBanking and Finance\nFinancial sector contacts generally reported softer business conditions and expressed concern about a deteriorating business climate. Bankers reported higher demand for residential and commercial mortgages, but unchanged demand for consumer and C&I loans. Credit standards were said to be unchanged across all major categories. Loan spreads narrowed on all categories. Contacts also reported further decreases in average deposit rates. Finally, bankers reported stable delinquency rates across all loan categories.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"November 27, 2019\nSummary of Economic Activity\nAggregate Third District business activity continued at a modest pace of growth during the current Beige Book period. Growth rates slowed from the prior period to a modest pace in manufacturing and nonauto retail sales, and to a slight pace for tourism. Financial services continued to grow at a moderate pace; nonfinancial services grew at a modest pace. Construction activity for residential and nonresidential buildings continued to hold steady, as did commercial leasing activity. Sales of new autos and of existing homes continued to decline \u2013 at a slight and a moderate pace, respectively. Labor markets tightened further throughout the District. Wages continued growing moderately, but employment growth appeared to slow to a slight pace. Overall, price pressures remained modest. The firms' outlook for growth over the next six months remained positive, with about half of all firms anticipating increases in general activity. Most contacts expected current business conditions to continue through 2020 but remained cautious in their planning.\nEmployment and Wages\nEmployment grew slightly during the current Beige Book period \u2013 a slower pace than in the prior period. About two-thirds of the firms reported no change in staff. While the share of manufacturers reporting a higher number of employees rose, the share among the much larger nonmanufacturing sectors fell. Average work hours continued to edge down since the prior period.\nThe firms continued to report very tight labor market conditions. Staffing firm contacts all noted challenges to hiring, as the labor shortages continued to constrain placements. One staffing contact also reported that order activity was down; another noted that orders had been delayed, after which clients were trying to catch up with production \u2013 necessitating added incentives to attract workers for overtime. Another staffing firm noted pressure from a client seeking contact concessions in order to absorb some of the cost of tariffs on the firm's products.\nWage growth continued at a moderate pace. While the overall pressure appears to have eased slightly, contacts noted specific pressures at lower wage rates. One staffing firm reported more difficulty recruiting for firms that only offered minimum wage, and another indicated that a different staffing firm was deploying yard signs to recruit for jobs paying $16 an hour. The share of nonmanufacturing contacts who reported increases in wage and benefit costs ticked up to 44 percent; just 2 percent reported decreases.\nPrices\nOn balance, the firms continued to report modest increases for both input prices and prices received for their own goods and services. The share of firms reporting increases in prices fell for both manufacturing and nonmanufacturing firms; generally, the share reporting decreases in prices rose. About two-thirds of the firms reported no change in prices over the period.\nLooking ahead six months, the anticipation of higher prices was less widespread among manufacturers than last period. The percentage of manufacturing firms that expect higher prices fell, while the percentage expecting lower prices rose. This was true for prices firms expected to pay as well as for prices firms expected to receive for their own goods.\nManufacturing\nOn balance, manufacturers reported modest growth in activity \u2013 somewhat slower than the moderate pace reported during the prior period. Nearly twice as many firms reported increases in shipments and new orders than reported decreases; however, the percentage reporting increases rose to about one-fifth of all firms that reported.\nThe growth was broadly shared, as the makers of lumber products, paper products, chemicals, primary metal products, fabricated metal products, and industrial machinery all tended to note gains in new orders and shipments.\nComments were mixed. A couple of primary metals firms reported positive trends, but the firms from several other sectors noted weakening orders, competitive business lost as a consequence of tariffs, and production constraints for lack of labor.\nManufacturers' expectations of activity over the next six months were mostly unchanged. Expectations of shipments and of new orders edged higher, remaining above long-term nonrecession averages. Expectations of future employment fell, while planned capital spending rose.\nConsumer Spending\nContacts for malls and convenience stores reported modest growth in nonauto retail sales \u2013 a return from the somewhat faster pace during the prior period. Mall store operators reported solid year-over-year sales growth. Convenience store contacts suspected a little economic softness underlying a slight tick down in their positive rate of sales growth, although weather may have also been a factor.\nAuto sales continued to edge lower but remained near high levels. Pennsylvania dealers noted positive year-over-year sales in October, while New Jersey dealers reported slight growth in October following a weak September. Year-over-year sales growth through October year to date remained positive in both states, holding steady in Pennsylvania but flattening out slightly in New Jersey.\nTourism activity appeared to grow at a slight pace \u2013 a bit slower than in the prior period. A tourism analyst noted that demand for hotels in downtown Philadelphia remained positive but slowed on a year-over-year basis, similar to national trends. Atlantic City casino revenues slowed from the prior period and were down slightly, on balance.\nNonfinancial Services\nOn balance, activity at service-sector firms continued at a modest pace of growth. The percentage of firms reporting increases in new orders nearly doubled, and the share of firms reporting increases in current revenues edged higher. Over 55 percent of the firms \u2013 more than in the prior period \u2013 expect growth over the next six months.\nFinancial Services\nFinancial firms continued to report moderate growth in overall loan volumes (excluding credit cards) on a year-over-year basis, although the rate seemed to edge slightly slower. Credit card lending held steady at a moderate pace.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow moderately for home mortgages, modestly for automobile loans, and slightly for other consumer loans (not elsewhere classified). Commercial real estate and commercial and industrial loan volumes declined slightly, while home equity lines decreased moderately.\nBanking contacts continued to report no significant problems with loan delinquencies. Contacts also noted ongoing uncertainty that is slowing business decision-making and constraining the willingness to invest. However, most banking contacts remain cautiously optimistic about continued growth through 2020.\nReal Estate and Construction\nHomebuilders reported little change in contract signings in the current period, on balance. One South Jersey builder reported two strong months of sales in the active adult market, noting positive feelings about the coming year but a plan to be conservative.\nExisting home sales continued to decline moderately on a year-over-year basis across most local markets, with exceptions of moderate growth in the Jersey Shore and Harrisburg areas. A large Philadelphia-area broker indicated continued inventory constraints heading into a seasonal lull for home sales.\nOn balance, commercial real estate construction and leasing activity seemed to hold steady at relatively high levels. Contacts reported continued strength in the industrial market, with ongoing demand for new construction. Most contacts also noted a positive quarter for office space leasing, which may spur demand for new construction in the future. Management firms continued to note positive net absorption, falling vacancy rates, and rising rents in many office and industrial segments.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"November 27, 2019\nSummary of Economic Activity\nThe Ninth District economy grew at a modest pace since the last report. Employment grew slightly, while wage pressures were moderate overall and price pressures remained modest. The District economy saw growth in consumer spending, commercial and residential construction and real estate, and energy. However, manufacturing declined slightly, while agricultural conditions remained weak.\nEmployment and Wages\nEmployment was slightly higher since the last report. In several ad hoc polls, conducted in three states among a mix of business types, a majority of respondents said they were hiring in some capacity. A broader poll of contacts across the District found somewhat softer (but still positive) sentiment about recent and future employment levels at their firms. An October survey of manufacturers in Minnesota and the Dakotas found that hiring sentiment had improved from contractionary levels a month earlier. A second survey among bankers and other rural businesses in these same states found that new-hiring sentiment was quite positive. Job postings this fall were modestly higher in the Dakotas and Michigan's Upper Peninsula, while Minnesota's were lower. A major layoff at a manufacturer in central Minnesota, involving more than 800, was seen by some local employers as a contribution to the local labor pool. However, contacts widely noted difficulty filling open positions, including in manufacturing, which has been experiencing some overall softness. Many staffing contacts reported lower job orders from clients, particularly in manufacturing, with some seeing declines of 20 percent, year over year. Initial unemployment insurance claims over the most recent six-week period (through the end of October) were about 3 percent higher than a year earlier, with increases seen in Montana, North Dakota, and Wisconsin, while Minnesota saw a slight decline.\nWage pressures were moderate overall. Staffing contacts suggested varying degrees of wage pressure. Among a group of six staffing offices (all with the same franchise, located mostly in Minnesota), average wages rose less than 2 percent at three locations over the previous 12 months, but more than 5 percent at two locations, and almost 10 percent at the remaining office. In the span of one week in October, a staffing contact in western Wisconsin said four manufacturing clients increased wages by $1 to $3 an hour. A Minneapolis Fed survey of Districtwide businesses found that 62 percent of employers raised wages by 3 percent or more compared with a year earlier. However, among a small sample of large Minnesota firms, most reported increasing wages by less than 3 percent over the past 12 months. As has been the pattern for some time, however, contacts continued to believe that future wage increases will be slightly to modestly softer than previous wage gains.\nPrices\nPrice pressures remained modest since the previous report. A majority of respondents to a survey of large District firms reported recent increases in nonlabor input costs of less than 2 percent, with a similar outlook for the coming 12 months. Retail fuel prices as of mid-November were slightly lower in most areas of the District relative to the previous reporting period. Home heating costs were expected to rise more in District states than nationwide this winter, largely due to differences in regional increases in the prices of natural gas. Prices received by farmers in September increased from a year earlier for corn, potatoes, milk, hogs, and turkeys, while prices for wheat, soybeans, hay, cattle, eggs, and chickens decreased.\nConsumer Spending\nConsumer spending increased moderately since the last report. Gross retail sales in South Dakota jumped more than 6 percent in September compared with a year earlier. The state also saw 11 percent growth in gaming receipts. But gross sales in Wisconsin were down 1 percent over the same period, following fairly strong summer sales. Sales tax receipts in Minnesota and North Dakota have also trended higher than forecasts. A vehicle dealership with multiple sales outlets in the western portion of the District saw vehicle sales fall modestly in September compared with a year earlier, but rebounded with an 8 percent increase in October. Airport traffic in September and October was strong across many of the District's regional airports. In Minnesota, hotel occupancy and revenue per available room improved modestly in September (year over year). Lodging and accommodations taxes in Montana were also slightly higher in the third quarter compared with 2018. However, several bankers noted that consumer loan demand was mixed. Monthly visitors to several major national parks in the District also saw double-digit declines in September (year over year). Restaurants and other businesses catering to consumers reported having to shorten hours of operation due to lack of staffing.\nConstruction and Real Estate\nCommercial construction rose moderately since the last report. A construction database showed that new and active projects across the District over the most recent six-week period (ending in early November) were modestly higher than the same period a year earlier. Most contacts in engineering, architecture, and construction reported solid backlogs and were optimistic heading into a traditionally slower period. Commercial permitting this fall was broadly higher across most of the District's larger cities, and was particularly strong in Sioux Falls, S.D.; one notable exception was the city of Minneapolis, where permitting slowed in October. A contact in Michigan's Upper Peninsula said the region was seeing normal seasonal slowdown, and there were fewer projects to bid on for work next year. Residential construction was moderately higher; single-family construction was higher in many locations, but flat in a few places; multifamily construction was mostly lower. However, both single- and multifamily construction were strongly higher in Minneapolis-St. Paul in September and October.\nCommercial real estate improved modestly since the last report. In Minneapolis-St. Paul, office vacancy rates were down slightly compared with this summer. Industrial space in the region continued to expand, but strong leasing activity kept vacancy rates low. Retail vacancy rates have remained among the lowest in the country, thanks to strong leasing and lower levels of new construction. Rental rates, however, have been flat or falling. Office vacancies have trended lower this year in Sioux Falls, and industrial vacancies were stable; however, retail vacancies there were still elevated. Multifamily vacancy rates remained low across most of the District, according to sources. Residential real estate was modestly higher across the District. Closed home sales in September and October in Minnesota were about 2 percent higher over the same period a year earlier. Higher sales over this period were also seen in western Wisconsin, Grand Forks and Fargo, N.D., and Bozeman and Missoula, Mont. However, slower sales were seen in northern Wisconsin and Sioux Falls.\nManufacturing\nDistrict manufacturing activity declined modestly from the last report. Contacts continued to point to decreases in orders, production, and capital spending. A heavy equipment producer noted a slowdown in sales that they initially blamed on heavy rainfall this year, but said this \"masks a much deeper contraction in capital equipment spending.\" Custom manufacturers reported a decrease in order backlogs. In contrast, an index of manufacturing conditions indicated increased activity in October compared with a month earlier in Minnesota and South Dakota and flat activity in North Dakota.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions declined from an already weak position. Roughly three in five lenders responding to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions reported that farm incomes decreased in the third quarter relative to a year earlier, with a similar proportion reporting decreased capital spending. Persistent heavy rains have delayed harvests and damaged crop quality in substantial portions of the District. District oil and gas exploration activity was steady since the previous report. The number of active drilling rigs as of early November fell slightly from a month earlier, but the most recent figures (as of August) indicated that oil production hit a new record.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nNovember 27, 2019\nThis report was prepared at the Federal Reserve Bank of Dallas based on information collected on or before November 18, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nEconomic activity expanded modestly from October through mid-November, similar to the pace of growth seen over the prior reporting period. Most Districts reported stable to moderately growing consumer spending, and increases in auto sales and tourism were seen across several Districts. In manufacturing, more Districts reported an expansion in the current period than the previous one, though the majority continued to experience no growth. The picture for nonfinancial services remained quite positive, with most Districts reporting modest to moderate growth. Transportation activity was rather mixed across Districts. Reports from the banking sector indicated continued but slightly slower growth in loan volumes. Home sales were mostly flat to up, and residential construction experienced more widespread growth compared to the prior report. Construction and leasing activity of nonresidential real estate continued to increase at a modest pace. Agricultural conditions were little changed overall, remaining strained by weather and low crop prices. Activity in the energy sector deteriorated modestly among reporting Districts. Outlooks generally remained positive, with some contacts expecting the current pace of growth to continue into next year.\nEmployment and Wages\nEmployment continued to rise slightly overall, even as labor markets remained tight across the U.S. Several Districts noted relatively strong job gains in professional and technical services as well as healthcare. Reports were mixed for employment in manufacturing, with some Districts noting rising headcounts while others noted stable employment levels and one District reported layoffs. There were scattered reports of labor reductions in retail and wholesale trade. The vast majority of Districts continued to note difficulty hiring driven by a lack of qualified applicants as the labor market remained very tight. The shortage of workers spanned most industries and skill levels, and some contacts noted that their inability to fill vacancies was constraining business growth. Moderate wage growth continued across most Districts. Wage pressures intensified for low-skill positions.\nPrices\nPrices rose at a modest pace during the reporting period. Reports regarding input costs and selling prices in the manufacturing sector were mixed, with some Districts noting deceleration in prices, while others cited increased cost pressures and a few indicated little to no change. Retailers mentioned higher costs, which contacts in some Districts attributed to tariffs. Firms' ability to raise prices to cover higher costs remained limited, though a few Districts noted that companies affected by the tariffs were more inclined to pass on cost increases. Service sector prices in reporting Districts were mostly flat to up. Energy and steel prices were flat to down, while reports on construction materials and agricultural commodity prices were mixed. Overall, firms generally expected higher prices going forward.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest to moderate pace as businesses and consumers headed into the fourth quarter. Prices were largely stable and hiring steady. Outlooks were mostly positive\u2014an improvement since the last round.\nNew York\nThere was little or no growth in the regional economy. Employment was little changed, as job creation slowed, partly reflecting a shortage of available workers, while wage growth moderated. Input price decelerated, while selling prices continued to rise modestly. Service sector activity weakened, and real estate markets softened somewhat.\nPhiladelphia\nOn balance, business activity continued at a modest pace of growth during the current Beige Book period. Labor markets tightened further throughout the District, accompanied by slowing employment growth and continued moderate wage growth. Price increases remained modest. Most firms expressed cautious optimism but continued uncertainty.\nCleveland\nFourth District economic activity increased modestly. Strength in professional and business services drove growth. Manufacturing improved slightly. Home and auto demand was up, though nondurable consumption was mixed. Employment grew slightly, driven by hiring in professional and business services. Wages rose modestly overall. Selling prices increased modestly on balance.\nRichmond\nThe Fifth District economy grew moderately. Manufacturers saw a pick-up in shipments and new orders but continued to face constraints from tariffs and trade uncertainties. Tourism remained strong while reports on retail sales were mixed. Financial and nonfinancial services experienced positive but mild growth. Labor demand strengthened while wage and price growth remained moderate, overall.\nAtlanta\nEconomic conditions improved modestly. Tightness in the labor market persisted, and low-skill wage pressures increased. Nonlabor input costs rose. Retail sales and tourism activity were stable. Residential real estate activity improved, and commercial real estate activity was positive. Manufacturing activity accelerated further during the reporting period.\nChicago\nEconomic activity increased slightly. Employment, consumer spending, and manufacturing all increased slightly. Construction and real estate activity was little changed, while business spending decreased slightly. Wages and prices rose slightly and financial conditions improved modestly. More poor weather added to crop farmers' difficulties.\nSt. Louis\nEconomic conditions have been mixed but relatively unchanged since our previous report. Contacts continued to note a heightened sense of economic uncertainty. Labor market conditions remained tight, and many firms reported raising wages and salaries to attract new workers. The outlook among firms surveyed in mid-November was slightly pessimistic for the second consecutive quarter.\nMinneapolis\nNinth District activity grew at a modest pace. Employment grew slightly. Labor demand remained healthy, but some softness was evident, and labor supply remained tight nonetheless. Consumer spending rose, with increases seen in airport traffic and vehicle sales. Manufacturing contracted, with reports of shrinking backlogs. Construction and real estate markets reported healthy activity. Oil drilling decreased slightly.\nKansas City\nDistrict economic activity was flat in October and early November. Consumer spending edged down as sales in the retail sector rose but fell in the auto, restaurant and tourism sectors. The professional and high-tech services and wholesale trade sectors reported rising sales, while transportation contacts noted a decline. Overall conditions in the energy, agricultural and manufacturing sectors remained weak.\nDallas\nEconomic activity continued to expand moderately. Growth remained solid in services and retail, and down-shifted slightly in manufacturing. Home sales remained on the rise while energy activity continued to decline. Selling prices were largely flat, as firms' ability to pass through cost increases remained limited. Hiring continued at a steady pace. Outlooks were generally improved, though uncertainty remained elevated.\nSan Francisco\nEconomic activity in the Twelfth District expanded at a modest pace. The labor market remained tight, and wage growth was modest. Reports on price inflation were mixed. Sales of retail goods increased somewhat, and consumer and business services activity was solid. The pace of commerce in the manufacturing sector was little changed, and activity in the agriculture sector was mixed. Activity in residential and commercial real estate markets expanded moderately, and lending grew further.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nNovember 27, 2019\nSummary of Economic Activity\nEconomic conditions have been mixed but generally unchanged since our previous report. Contacts across multiple industries continued to note a heightened sense of economic uncertainty. There was a slight uptick in employment. Wage increases were widespread and higher than in previous years for the vast majority of firms. Contacts continued to report only a slight uptick in prices charged to consumers despite moderate increases to nonlabor input costs. Reports from manufacturing firms were mixed. Agriculture conditions remained strained by low crop prices and generally poor production and yields. Across all industries, the outlook among surveyed contacts remained slightly pessimistic; on net, 12 percent of respondents expect conditions during 2020 to be worse or somewhat worse than in 2019.\nEmployment and Wages\nEmployment has increased slightly since the previous reporting period. On net, 11 percent of survey respondents reported that employment was higher than a year ago, and 41 percent, on net, expect to hire additional workers over the next 12 months. Labor market tightness persisted across the District; on net, 34 percent of contacts reported difficulty finding qualified workers. Firms continued to deal with worker scarcity by raising benefits, lowering hiring standards, investing in technology, and/or retraining existing employees. Employment conditions in manufacturing remained more subdued. Fifty-seven percent of manufacturing contacts reported a desire to hire more workers, but other survey-based results showed slight employment declines in the sector.\nThe tight labor market has continued to put upward pressure on wages, which have increased moderately since the previous report. On net, 38 percent of survey respondents indicated that wages were higher than a year ago. Seventy-four percent of those seeking to hire new workers reported raising wages for some or most job categories, and 63 percent of all contacts reported raising wages for existing employees by more than they have in the past few years.\nPrices\nPrices have increased slightly since the previous report. On net, just 6 percent of business contacts reported that prices charged to consumers increased in the current quarter relative to the same time last year. This is the fifth consecutive survey in which the share reporting higher selling prices has declined. Despite the reported softness in prices charged to consumers, firms' input costs continued to increase at a moderate rate. On net, 32 percent of business contacts reported higher nonlabor costs, the same share as in the previous quarter. Business contacts in retail and manufacturing reported facing increased price pressures due to tariffs.\nConsumer Spending\nReports from general retailers, auto dealers, and hoteliers indicate that consumer activity has been mixed since the previous report. October real sales tax collections increased in Arkansas and Kentucky but were flat in Missouri relative to a year ago. September real sales tax collections increased in West Tennessee relative to a year ago. General retailers reported that sales have been about the same or slightly lower than this time last year, and their outlook on future economic conditions has turned pessimistic. Most surveyed auto dealers reported that sales have been about the same as this time last year but have fallen short of expectations, citing rising prices as deterrents to consumer confidence. Multiple dealers continued to note seeing an increased preference for used and low-end vehicles. Hospitality contacts in the St. Louis region shared mixed accounts of recent tourism activity relative to a year ago but remained optimistic about the coming months.\nManufacturing\nManufacturing activity has been mixed since our previous report. For the second consecutive quarter, a majority of survey respondents reported declines in production, new orders, and capacity utilization relative to one year ago. Makers of vehicle parts noted that a slowdown in the automotive industry has negatively impacted sales. However, survey-based indexes indicate that manufacturing activity overall expanded slightly in Arkansas and Missouri from September to October, with new orders and production increasing moderately in both states. Contacts were slightly optimistic about the future; on net, most survey respondents expect manufacturing conditions to improve slightly in the first quarter of 2020.\nNonfinancial Services\nActivity in the services sector has improved modestly since the previous report. On net, around 40 percent of survey respondents reported higher sales compared with the same time last year, and 45 percent expect this growth to continue into the first quarter of 2020. However, nearly a third of contacts noted that sales halfway through the fourth quarter have fallen short of expectations, which some credited to increased economic uncertainty. Transportation activity has been mixed since the previous report. Trucking contacts reported that lackluster demand for freight transportation has put downward pressure on prices. Barge traffic in Little Rock exceeded expectations in the first half of the fourth quarter.\nReal Estate and Construction\nResidential real estate activity has been mixed since the previous report. Seasonally adjusted home sales increased slightly from August to September in Little Rock, Louisville, and Memphis but decreased slightly in St. Louis. On net, 10 percent of survey respondents reported a decrease in demand for single-family homes relative to a year ago, and some contacts noted that fourth-quarter sales have fallen short of expectations. Inventory levels remained depressed.\nResidential construction activity increased slightly. There was a slight uptick in September permit activity across District MSAs relative to the previous month. On net, 10 percent of survey respondents reported higher construction activity compared with the same time last year, and 20 percent expect continued growth in the next quarter. Builders in the St. Louis area expect an uptick in activity in the near future due to lower mortgage rates and a reduction in home inventory.\nCommercial real estate activity has increased slightly since the previous report. Survey respondents reported a slight increase in demand for office space relative to one year ago, a slight decrease in demand for retail space, and no change in demand for industrial space. Contacts, on net, also noted slightly higher demand for multifamily properties.\nCommercial construction activity was mixed. Survey respondents reported higher demand for office and industrial property construction. However, there were some reports of firms putting future projects on hold because of economic uncertainty.\nBanking and Finance\nBanking conditions in the District have experienced little change since the previous report. Demand for mortgages and auto loans decreased slightly relative to one year ago, and demand for commercial and industry loans fell modestly. However, there was a sharp increase in credit card borrowing relative to the same time last year. Bankers expect a slight increase in total loan demand in the first quarter of 2020. Credit standards tightened overall compared with year-ago levels. Delinquencies were flat on a year-over-year basis but are expected to increase moderately in the first quarter of 2020.\nAgriculture and Natural Resources\nDistrict agriculture conditions have remained unchanged from the previous reporting period and well below those from a year ago. Corn and soybean yield forecasts increased from October, while cotton yield forecasts have declined modestly. All three crops and rice are projected to have lower yields than last year. Production forecasts for corn, cotton, and soybeans have increased slightly since the previous report. Production levels for corn, rice, and soybeans are expected to be significantly lower than in 2018, while that for cotton is expected to increase modestly. District contacts continued to express concerns over depressed agriculture commodity prices.\nNatural resource extraction conditions declined modestly from September to October, with seasonally adjusted production declining by nearly 4 percent. October production decreased 8 percent from a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"November 27, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly overall in October and early November, and contacts expected growth to continue at a similar pace over the next 12 months. Employment, consumer spending, and manufacturing all increased slightly. Construction and real estate activity was little changed, while business spending decreased slightly. Wages and prices rose slightly and financial conditions improved modestly. More poor weather added to crop farmers' difficulties.\nEmployment and Wages\nEmployment increased slightly over the reporting period, though contacts expected a somewhat faster rate of growth over the next 12 months. Hiring continued to be focused on professional and technical, sales, and production workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. Multiple contacts reported bringing back retired workers as a way to fill openings. Manufacturers facing slow demand again reported cutting hours rather than laying off workers because they were worried the tight labor market would make it too difficult to hire when demand recovered. A staffing firm reported a slight decrease in billable hours due to lower demand from manufacturers. Wages increased slightly overall; contacts were most likely to report increases for managerial, professional and technical, and administrative workers. Benefits costs increased slightly as well.\nPrices\nPrices moved up slightly in October and early November, though contacts expected prices to rise at a somewhat faster pace over the next 12 months. Retail prices increased modestly. One contact said that food, home goods, and apparel retailers were struggling to pass on higher costs; in contrast, another contact noted that retailers continued to raise prices to reflect higher potential and realized tariffs. Producer prices were flat, with contacts reporting little change in input costs.\nConsumer Spending\nConsumer spending increased slightly on balance over the reporting period. Nonauto retail sales decreased slightly, as declines in apparel, appliances, and furniture outweighed gains in the grocery, home improvement, hospitality, and lawn and garden sectors. Contacts noted that brick and mortar department stores continued to struggle as e-commerce spending grows. Contacts remained optimistic that holiday spending would be higher than last year. Light vehicle sales increased moderately over the reporting period. The UAW-GM strike had a limited effect on GM vehicle sales on net, with a decline in sales in October offset by a pickup in November. However, dealers reported a noticeable shortage in GM parts, particularly those needed by collision repair shops. Used light vehicle sales also moved up moderately.\nBusiness Spending\nBusiness spending decreased slightly in October and early November. Retail inventories were a little high overall. One contact indicated that retailers were building stocks as a hedge against potential tariff increases. Inventories of GM vehicles were lower than normal due to the UAW strike, but contacts expected them to return to normal by the end of the year. Most manufacturers reported comfortable inventory levels. Capital spending declined some, though contacts expected a modest increase in spending over the next 12 months. Outlays were primarily for IT equipment and intellectual property. A majority of contacts reported that their newly purchased capital had increased capacity. Demand for transportation services declined modestly, most noticeably for long distance trucking. Commercial and industrial energy usage declined modestly due to lower demand from the industrial sector. Contacts attributed at least part of the decline to the GM strike.\nConstruction and Real Estate\nConstruction and real estate activity was little changed over the reporting period. Residential construction increased slightly. There were reports that slower growth in demand had led some single-family homebuilders to slow the pace of new development projects. One contact noted an increase in remodeling demand. Home sales declined slightly overall, with larger decreases for homes at higher price points. Overall, home prices were unchanged, while rents increased. Nonresidential construction activity decreased marginally. Commercial real estate activity was little changed at a strong level. Contacts noted that demand for industrial space, particularly for warehousing and logistics, continued to be solid, and activity in the hospitality sector was also strong. Contacts reported that demand for commercial real estate as an investment vehicle was robust because of relatively high capitalization rates in the District compared to other regions. Vacancy rates edged lower and the availability of sublease space increased slightly. Rents were unchanged.\nManufacturing\nManufacturing production increased slightly overall in October and early November in spite of the strike at GM. Steel demand increased slightly, with one contact reporting strong demand from energy transmission firms but slightly weaker demand from the auto sector. Heavy machinery demand increased slightly, spurred by growth in the construction and mining industries. Auto production declined due to the GM strike, but contacts reported that overall auto industry demand was flat and at a solid level. Contacts supplying GM reported lower shipments due to the strike and expected the recovery in activity to take until the end of the year. Specialty metals manufacturers reported little change in order books, with flat activity across most major sectors. Contacts reported increased shipments of heavy trucks, but a decline in new orders. Manufacturers of building materials reported a slight increase in sales.\nBanking and Finance\nFinancial conditions improved modestly on balance over the reporting period. Business loan demand increased slightly, with reports of strength in the commercial construction sector, but weakness in the agricultural sector. Loan quality edged down and standards were little changed. Consumer loan volumes increased modestly as lower rates continued to spur mortgage refinancing. Quality and standards were little changed.\nAgriculture\nEarly frost and snow further delayed this year's harvest and diminished yields. Overall, contacts expected the District's corn and soybean harvests would be much smaller than a year ago. In addition, contacts expressed concern about crop quality, especially with short propane supplies in some places, which limited the amount of crop drying farmers could do. Corn and soybean prices were down from the previous reporting period, but up from a year earlier. Nevertheless, lower expected yields meant crop revenues would be down from a year ago. Milk, egg, hog, and cattle prices moved up during the reporting period. Contacts noted that demand for pork from China had grown despite U.S. tariffs because African swine fever had decimated China's hog herd. More generally, contacts reported a pickup in overall agricultural exports, with some noting that news on trade negotiations sounded promising for future exports. Farm incomes generally are expected to be down from last year, although government payments from the Market Facilitation Program will provide some support.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"November 27, 2019\nSummary of Economic Activity\nSixth District business contacts indicated that economic activity expanded modestly since the previous report, and the outlook among contacts remained positive. Tightness in the labor market continued to constrain growth in many sectors. Contacts noted that wage pressures continued to increase for lower-skilled positions. Firms continued to report rising nonlabor costs, and businesses affected by tariffs indicated they were likely to pass along cost increases to customers. Retail sales levels and automobile sales remained steady from October through mid-November. Tourism activity improved since the last report. Residential real estate markets showed signs of improvement, and commercial real estate activity was steady. Manufacturing activity accelerated, and new orders and production levels rose over the reporting period. District bankers noted that financial conditions remained healthy, though the pace of loan growth slowed slightly.\nEmployment and Wages\nFirms continued to report that staffing levels were in line with projections of flat to slightly higher growth in payrolls compared with the prior year. As reported last period, exceptions were in retail, trade, and logistics, where labor force reductions were noted. Contacts in various geographies and industry segments continued to cite labor market tightness as constraining growth. Consequently, firms continued to pursue automation of certain operational processes. Attracting and retaining talent remained another labor market challenge, as employers continued to explore innovative recruiting and retention tactics.\nAnnual wage increases, on average, remained in the 3-4 percent range; however, contacts reported that wage pressures continued to build for lower-skill positions.\nPrices\nOverall, reports from firms continued to indicate increasing nonlabor costs, albeit at a pace in line with expectations. While some businesses noted pricing power, there were accounts of some firms considering alternatives to raising prices in order to maintain margins and offset increases. However, firms most affected by tariffs indicated they were more likely to pass along cost increases to customers. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.7 percent in October. Survey respondents indicated they expect unit costs to rise 1.8 percent over the next twelve months.\nConsumer Spending and Tourism\nRetailers noted that consumer spending remained strong and retail sales levels were steady since the last report. Contacts anticipate a healthy holiday season with online sales growth expected to again outpace brick and mortar sales. Automotive sales were unchanged from the previous report.\nTourism and hospitality contacts indicated a higher level of uncertainty from a year ago; however, overall business sentiment remains positive for the balance of the year and into 2020. Overall, tourism activity for the District remained healthy since the last report. Monthly Mississippi casino gross revenues were up for the first nine months of the year compared with the same time frame in 2018.\nConstruction and Real Estate\nThis year's gradual decline in mortgage rates helped boost demand for housing throughout the District. Home sales showed signs of improvement and home prices appreciated. Supply remained a challenge, however, as for-sale inventory levels in many markets has not kept up with demand. Declining supply of developed lots for new construction and relatively higher construction costs remained an impediment to improving housing starts. Although lower mortgage rates made housing more affordable, rising home prices and limited supply continued to be a challenge for home buyers looking to purchase in many markets throughout the District.\nCommercial real estate (CRE) leasing and sales activity generally remained positive and steady across most District markets and property sectors during the reporting period. Overall, most CRE sectors experienced positive dynamics as rents continued to grow and vacancy trends remained stable or declined at a modest pace. Industry contacts reported continued strength in the multifamily, industrial, hospitality and office sectors. The pace of CRE project construction activity remained healthy. Contacts reported that capital was readily available for most CRE projects via banks and non-bank entities and that lending competition appeared to be accelerating.\nManufacturing\nManufacturers indicated that overall business activity accelerated slightly since the last report. New orders and production levels rose, while finished inventories remained relatively flat. Purchasing managers reported that wait times for supply deliveries were slightly longer. Optimism for future production among manufacturing contacts decreased, with only one-fifth of contacts expecting higher levels of production over the next six months, compared to one-third in the last reporting period. Contacts continued to mention trade policy as a potential downside risk to their outlook.\nTransportation\nDistrict transportation firms cited varying levels of activity over the reporting period. Freight forwarders saw strong growth in package volume and revenue. Port contacts reported increased freight activity, and some noted record year-over-year increases in container volumes. However, some slowing in breakbulk cargos, such as imported steel, plywood, and non-ferrous metals, primarily due to tariffs, was noted. Inland barge companies reported an increase in demand from year-earlier levels. Railroads saw significant declines in shipments of food products (excluding grain), primary metal products, iron and steel scrap, and coal, which were partially offset by increases in coke and metallic ores; intermodal shipments continued to decline by near double digits. The majority of contacts expect activity over the next year to be flat to slightly up.\nBanking and Finance\nConditions at financial institutions cooled slightly but remained healthy. Bankers indicated that loan growth continued, though at a slower pace, particularly for consumer loans and commercial real estate. While there was a slight increase in nonperforming assets, values were still near historic lows. Slower loan growth and increased payoffs added to margin pressures for financial institutions.\nEnergy\nChemical and petrochemical manufacturers described a slight softening in production related to slowing global economic conditions. However, capital investment and hiring is expected to pick up in the near term as facility expansion plans move forward. While demand for pipeline infrastructure persisted, some energy contacts mentioned that new pipeline construction was fraught with challenges and cost overruns. Utilities contacts reported slowing momentum among certain industrial and commercial segments, although their Southeast outlook was positive and capital investment budgets expanded year-over-year. Renewables sales and production activity remained strong as adoption, especially wind and solar, accelerated.\nAgriculture\nAgricultural conditions remained mixed. Reports indicated parts of the District, particularly in Georgia but also in large parts of Alabama, the Florida panhandle, and Tennessee, experienced drought-conditions ranging from abnormally dry to extreme drought. The November forecast for Florida's orange and grapefruit crops was unchanged from last month but ahead of last year's production. On a year-over-year basis, prices paid to farmers in September were up for corn but down for cotton, rice, soybeans, beef, broilers, and eggs. However, on a month-over-month basis, prices increased for cotton, rice, and soybeans but declined for corn, beef, broilers and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"November 27, 2019\nSummary of Economic Activity\nBusiness contacts in the First District cited mostly positive results when contacted in November. Both retailers and manufacturers reported modest to moderate increases in revenues compared with a year earlier, as did staffing firms. Reports from commercial real estate contacts were similar to the last round, with the greatest strength in the Boston market, while activity in Hartford was steady at a low level. Residential real estate sales and prices were up in most areas. Labor markets remained tight and staffing firms noted some substantial pay increases. Most responding firms cited a positive outlook, with some noting a recent upgrade in their expectations.\nEmployment and Wages\nLabor markets remained tight in the First District even as business contacts cited modest expansion of headcounts in aggregate. Retail contacts reported having no problems hiring staff or having difficulty hiring only for selected positions. By contrast, several manufacturers noted that hiring was difficult and that labor costs had risen. At the same time, manufacturers reported no major positive revisions to hiring plans. Staffing respondents saw strong demand for labor and continued to experience tight labor supplies, particularly of highly-skilled workers. Most staffing contacts were able to increase bill rates and pay rates concurrently, ranging from 4 percent to 20 percent; one held both rates unchanged from the last quarter.\nPrices\nBusiness contacts had little to say about prices. Retailers mentioned no pressures and most manufacturing contacts reported no unusual pricing patterns. One exception was a dairy-products firm which reported raising their selling prices by 5 percent to recoup part of a 9 percent increase in input costs.\nConsumer Spending\nRetailers consulted for this round reported posting year-over-year comparable-store sales gains in the mid-single digits. Total revenue increases including expansion activity were in the high single digits or low double digits year-over-year. Sales expectations were optimistic for the holiday season and beyond. While the underlying trend in terms of economic fundamentals was reportedly strong, some contacts expressed concern about the impact of tariffs. One retailer reported that the intermediary firm that pays their import duties on some European luxury goods recently announced that the rates it charges will be going up significantly. Two other firms have reported tariff impacts on sales, either in terms of pricing or in terms of supply chain disruptions slowing their product supply.\nPassenger traffic to Logan International was up 2.3 percent for domestic travel and up 11.1 percent for international arrivals year-to-date through September compared with a year earlier. Airlines have continued to add flights. The 2019 cruise ship season has ended with homeport passenger counts up 15 percent and port-of-call passenger counts up 33 percent compared to the 2018 season. Business and leisure travel were expected to remain robust into 2020.\nManufacturing and Related Services\nReports from eight manufacturing contacts were more positive in this round than in the recent past. In some cases, contacts reported their first year-on-year sales growth since 2018. However, part of the improvement reflects a weak comparison period a year earlier: The first half of 2018 was strong, partly because of tax cuts, but tariffs and general trade uncertainty contributed to weakness in the second half of 2018. A notable area of strength was semiconductors, which had been going through a down cycle that industry participants said was only partly attributable to global economic patterns; semiconductor industry cycles are often out-of-sync with the rest of the economy.\nTwo contacts reported positive revisions to their capital expenditure plans. One is a manufacturer of veterinary supplies which said, among other things, that swine flu had led Chinese producers to increase production of chickens, requiring purchase of new veterinary technologies.\nManufacturing respondents were positive about the near-term future and half said they had made upward revisions to their forecasts recently. Reasons varied. For a furniture maker, it was mostly a single large order from a new type of customer. For other firms, it was the trough in the semiconductor cycle.\nStaffing\nMost New England staffing firms reported positive revenue growth in the third quarter of 2019, citing high single-digit year-over-year increases. Some expect healthy growth in the last quarter of 2019 as well. Job candidates often do not possess the skillsets and experience desired by employers, so staffing firms have augmented their training efforts. They have also increased their presence on online job boards and other advertising channels. A few respondents have expanded by hiring more recruiters and building specialized teams for retained search services or permanent placements. All staffing contacts expressed optimism for additional gains in 2020.\nCommercial Real Estate\nCommercial real estate activity in the First District continued to strengthen into November. Office leasing demand in Boston has been robust even as leasing activity has slowed because of extremely low vacancy rates. Construction activity was robust. The investment sales market has also been strong; according to one contact, total transaction volume increased by 18 percent from Q3 2018 to Q3 2019. The outlook for Boston was cautiously positive: All contacts reported that there were no signs of a growth slow-down and the commercial real estate market was well-balanced. However, one contact mentioned that they did not expect much price appreciation and had lowered their income expectations for the next five years.\nThe Providence area saw moderate commercial market activity. Office rents were flat, while one-off transactions (not robust activity) lifted rents in the industrial market. Demand remained moderate in the investment sales market. One contact expressed concern about growing political uncertainty.\nIn the greater Hartford area, commercial leasing activity levels have not changed since the last cycle. Absorption in the industrial market was low, and absorption in the office market was negative for 2019 to date. Retail stores continued to close. In the investment sales market, prices were steady and the number of bidders in the market has fallen slightly. Commercial real estate respondents said business sentiment was neutral in Connecticut.\nResidential Real Estate\nResidential real estate markets in the First District saw improvements in September. (Most areas reported year-over-year changes from September 2018 to September 2019; New Hampshire reported October statistics and Vermont reported August data. Connecticut statistics were unavailable.) For single family homes, closed sales and median sales prices were up in five reporting areas. Inventory generally decreased. For condominiums, sales rose moderately in all reporting areas except Rhode Island. Median sales prices dropped slightly in Boston, but increased or stayed flat in all other areas. Condo inventory improved in Boston and Maine but decreased in Rhode Island, Massachusetts, and New Hampshire. Vermont experienced a slowdown in closed sales and an increase in prices in August (data for Vermont combine single family homes and condos).\nContacts expected market activity to slow seasonally during the remainder of the year. The Maine and Massachusetts respondents both noted that the market for homes priced below $250,000 is very tight. Contacts expressed positive outlooks for the coming months, citing favorable mortgage rates as the main reason.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nOctober 16, 2019\nSummary of Economic Activity\nReports from contacts suggest economic conditions have improved slightly since our previous report. Contacts from multiple industries noted a heightened sense of economic uncertainty. Labor market conditions remained tight, although there were indications of declines in manufacturing employment. Contacts noted a strengthening of price pressures, but remained mixed as to their ability to pass higher costs on to their customers. Consumer spending activity increased slightly. Outstanding loan volumes at District banks continued to expand, but growth slowed compared with three months ago. Row crop conditions remained poor; production levels are expected to be well below those of last year.\nEmployment and Wages\nEmployment conditions have been mixed since the previous report. The number of posted job vacancies for nonfinancial services occupations increased from July to August. Contacts continued to report labor market tightness and difficulty hiring and retaining qualified employees; one St. Louis area hospitality firm reported that some candidates were not even showing up for scheduled interviews. Several firms reported taking additional steps to compete for workers, such as increasing benefits, relaxing hiring standards, and increasing outreach. Other firms described creative attempts to adapt their business practices to a worker shortage, such as retraining existing employees to work other positions. Conversely, survey-based measures of employment showed declines in some sectors, particularly manufacturing. An Arkansas grocer reported that the state's increase in the minimum wage has forced them to rethink the number of employees they can deploy per store.\nWages have grown moderately since the previous report, in part due to continued upward pressure from the tight labor market. Wage growth at smaller firms has been more modest. Several local contacts at such companies reported struggling to match wage increases offered by larger firms.\nPrices\nPrice pressures have increased modestly since the previous report. Business contacts largely noted positive growth in nonlabor input costs. Construction contacts, in particular, reported moderate growth, with some of these price increases attributed to new tariffs. This trend comes despite recent declines in steel prices, which have fallen 8 percent since the previous report and 33 percent from one year ago. The ability of firms to pass higher input costs on to consumers was mixed. Contacts generally reported increasing prices charged to consumers, but some cited difficulties doing so due to price competition from online competitors and inflexible pricing agreements with large buyers.\nConsumer Spending\nReports from general retailers, auto dealers, and hospitality contacts indicate that consumer spending activity has increased slightly since our previous report. August real sales tax collections increased in Missouri, Arkansas, Tennessee, and Kentucky relative to a year ago. Consumer sentiment in West Tennessee has increased since June, but future expectations about the economy six months from now have declined. Auto dealers in Arkansas reported stronger sales in the past few months compared with earlier in the year, especially for used vehicles. Hospitality contacts in the St. Louis region remained optimistic about tourism growth in the coming months despite some uncertainty and downside risk.\nManufacturing\nOverall manufacturing activity has declined slightly since our previous report. Survey-based indexes suggested that manufacturing activity decreased slightly in both Arkansas and Missouri from August to September. Production levels were down slightly in Missouri but relatively unchanged in Arkansas. New orders fell in both states. Several companies announced new capital expenditures and hiring plans, but others announced operation reductions or facility closures.\nNonfinancial Services\nActivity in the transportation sector has improved modestly since the previous report. Barge activity along the Arkansas and Mississippi rivers continued to recover from the slowdowns caused by months of high water conditions earlier in the year. Passenger traffic at District airports remained above year-ago levels while cargo traffic declined slightly. Contacts in Arkansas reported that commercial trucks and rail cars are in good supply. Logistics firms announced plans to expand operations and increase their workforce within the District.\nReal Estate and Construction\nResidential sales activity has been unchanged since the previous report. Seasonally adjusted home sales increased slightly in Little Rock but were unchanged in Louisville, Memphis, and St. Louis. Inventory levels in the District continued to be depressed.\nResidential construction activity increased slightly. There was a slight uptick in August permit activity across District MSAs relative to the previous month. Contacts from Louisville and Little Rock reported that landlords have become less inclined to renovate older buildings because of rising labor and material costs.\nCommercial construction activity was mixed. The number of commercial construction projects fell slightly from July to August across most of the states in the District. Multiple contacts reported increased uncertainty surrounding projects due to the ongoing trade dispute with China. A contact from Little Rock reported that rising costs have limited speculative construction. However, there were multiple reports of healthy demand for commercial construction and infrastructure development in the District, and local contacts continued to note labor shortages.\nBanking and Finance\nBanking conditions in the District have improved modestly since the previous report. Outstanding loan volumes at District banks grew by 3 percent in the third quarter relative to year-ago levels, which was a slight decrease from the second quarter of 2019. This slowdown continued the nearly steady downward trend in loan growth since the end of 2016. District growth remained slower than the national rate for the fourth consecutive quarter. Commercial and industrial lending maintained a positive growth rate, growing by 2 percent year over year, although growth has slowed significantly in this category over the past two quarters. Commercial real estate lending grew at the same rate as the prior quarter. However, residential real estate lending contracted slightly.\nAgriculture and Natural Resources\nDistrict agriculture conditions have declined modestly compared with the previous report. Production and yield forecasts fell for corn and soybeans from August to September but improved for cotton. Expected rice production also declined over the same period, but expected yields ticked up. Relative to 2018, corn, rice, and soybean production levels are projected to decrease sharply, largely due to the unusually wet weather and flooding during the planting season. However, cotton production levels are expected to improve compared with last year. The outlook among contacts remained relatively pessimistic due to depressed commodity prices and trade uncertainty. Farmers in southern Indiana also expressed concern over the recent lack of rain.\nNatural resource extraction conditions have declined slightly from July to August, with seasonally adjusted coal production decreasing about 1 percent. August coal production was nearly 2 percent higher than a year ago.\nFor more information about District economic conditions, visit: https://research.stlouisfed.org/regecon/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"October 16, 2019\nSummary of Economic Activity\nReports from Sixth District business contacts indicated that economic activity expanded modestly from mid-August through September, and most contacts expect a similar pace to continue for the remainder of the year. The labor market remained tight, and a growing number of contacts shared reports of wage pressures increasing among lower-skilled positions. Some firms noted rising nonlabor costs and several contacts impacted by tariffs reported the ability to pass along price increases. Retail sales levels remained unchanged since the previous report and automobile dealers noted sales were up for trucks and SUVs. Tourism activity was reported as mixed heading into the fall season. Residential real estate market activity improved since the previous report, and commercial real estate activity was stable. Manufacturing activity improved with purchasing managers noting increased new orders and production since the previous report. Bankers indicated that activity was steady, on balance.\nEmployment and Wages\nMost firms reported that staffing levels were in line with expectations for flat to slightly higher growth in payrolls compared with the prior year. Exceptions emerged in industry sectors directly related to export logistics and freight, where some labor force reductions were noted. Overall, however, business contacts continued to observe tightening in several labor market segments, sharing that many positions remained unfilled for long periods of time, encouraging some employers to lower hiring standards. Labor availability challenges were broadly viewed as firms' biggest constraint to growth. As a result, firms continued to explore recruiting and retention options.\nAnnual wage increases, on average, remained in the 3-4 percent range; however, wage growth continued to accelerate for lower-skill positions. Across industry sectors, there was growing dialog about increasing minimum hourly wages to $15 per hour.\nPrices\nSome firms reported rising nonlabor input costs, particularly for products impacted by tariffs. Overall pricing power remained limited and some businesses were considering alternative approaches to maintaining margins. However, several contacts impacted by tariffs were more successful in passing along increases. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in September. Survey respondents indicated they expect unit costs to rise 2.0 percent over the next twelve months.\nConsumer Spending and Tourism\nDistrict retail sales levels were unchanged since the previous report. Retailers remained concerned that heightened uncertainty among consumers due to the geo-political environment would negatively impact consumer confidence and spending behavior during the upcoming holiday season. Light trucks and SUV units drove the month-over-month increase in new vehicles sales in August while sales of used vehicles also rose.\nDistrict tourism activity remained mixed, and uncertainty remained elevated since the last report. On balance, the start of the fall season was softer than expected with a year-over-year decline in hotel occupancy and average daily rates in Louisiana and Florida. Strong leisure travel and business conference bookings were reported in Alabama and Georgia.\nConstruction and Real Estate\nLow mortgage rates improved housing affordability and led to increased demand for housing throughout the District. Overall, home sales increased on a month-over-month and a year-over-year basis. Demand remained strongest in the more affordable price segments, where inventory remained limited. Declining inventory levels led to strong upward pressure on home prices. New home sales improved as builders sought to ramp up construction levels while offering incentives and discounts to increase sales traffic.\nOverall, the pace of activity in the commercial sector remained steady during the reporting period. Most sectors experienced positive dynamics as vacancies continued to trend downward. Despite growing construction costs, contacts reported healthy construction activity. A robust amount of concentrated new multifamily construction continued to dominate specific metro submarkets leading to increased concerns of possible oversupply. Industry participants noted continuing strength in the industrial sector. Contacts reported capital was readily available, and that greater amounts of financing along with loosening underwriting standards were creating strong tailwinds and risks for some projects.\nManufacturing\nDistrict manufacturing contacts reported a moderate rebound in overall business activity since the last reporting period. New orders and production levels increased notably and purchasing managers indicated that supply delivery times were slightly longer. Finished inventory levels were reported to have increased somewhat, while optimism for future production was unchanged, with close to one-third of contacts expecting higher levels of production over the next six months.\nTransportation\nOn balance, transportation activity was little changed since the previous report. Total rail traffic fell, and intermodal volumes declined substantially. Trucking companies saw decreased shipments compared with year-earlier levels. Air cargo contacts reported weakness in international freight volumes. Port contacts continued to report record levels of growth in container traffic.\nBanking and Finance\nConditions at financial institutions were steady. Margins at banks were stable as higher loan yields offset increased funding costs. Total loan growth was positive but slowing, especially for smaller community banks. Asset quality remained strong with fewer loans transitioning from 30-89 days delinquent to 90 days or more.\nEnergy\nEnergy manufacturing continued to expand across the District in order to meet growing domestic and global demand for chemicals, natural gas, and refined products. Business contacts reported continued investment in pipeline infrastructure, as demand for transportation outlets for products to be processed remained elevated. Investment persisted in utilities, where growth in refining and chemical processing segments has necessitated additional power plants and transmission lines. Utilities contacts described growing investment in natural gas pipeline infrastructure. Renewables activity was steady from the prior reporting period, as solar energy facility installations continued across Florida.\nAgriculture\nAgricultural conditions remained mixed. Reports indicated much of the District was drought-free, although parts of Alabama, Georgia, the Florida panhandle, and Tennessee continued to experience abnormally dry to moderate drought conditions. The USDA designated several counties within the District as natural disaster areas due to damages and losses attributed to several inclement weather events this year. Cotton, corn, and peanut production forecasts were ahead of last year's production while rice and soybean production forecasts were below. On a year-over-year basis, prices paid to farmers in July were up for corn and beef but down for cotton, rice, soybeans, broilers, and eggs. However, on a month-over-month basis, prices increased for corn, cotton, rice, and soybeans but declined for beef, broilers and eggs.\nFor more information about District economic conditions visit: www.frbatlanta.org/economy-matters/regional-economics\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nOctober 16, 2019\nSummary of Economic Activity\nGrowth in the Second District economy was subdued in the latest reporting period. The labor market remained very tight, as employment levels were flat, and wage growth picked up slightly. Input price pressures have remained moderate, while selling prices have risen modestly. Manufacturing activity was up marginally, and transportation business rebounded, while business was reported to be weaker in most service industries. Business contacts generally expressed considerably less optimism about the near-term outlook. Consumer spending was mixed, with strength in auto sales but weakness in other areas. Tourism has remained fairly robust. Housing markets have been softer, on balance, though the residential rental market has continued to firm. Commercial real estate markets have been steady to softer, and new commercial construction has tapered off somewhat. Finally, banks reported a pickup in loan demand from the household sector, though the financial sector overall showed further signs of weakening.\nEmployment and Wages\nThe labor market has remained stable and very tight across the District, but hiring has been subdued. Business contacts have continued to report trouble finding workers to fill a wide range of jobs such as construction contractors, truck drivers, auto mechanics, IT professionals, accountants, retail clerks, and nursing home attendants. A major New York City employment agency noted that almost all job candidates are merely jumping from other jobs. However, an upstate contact maintains that there has been a decrease in job-hopping.\nBusinesses overall continued to report little change in staffing levels. Contacts in real estate, education & health, and leisure & hospitality reported continued modest net hiring, while those in manufacturing, wholesale trade, transportation, and information reported modest declines in employment, on balance. Looking ahead to the next six months, businesses in manufacturing and most service sectors still plan on adding to staff; however, wholesale trade and information businesses anticipate modest declines in employment.\nWhile businesses generally report that wage growth has remained moderate, there has been more widespread escalation in some lower-wage industries such as retail trade and leisure & hospitality. A large New York City employment agency notes that finance-sector firms are largely holding the line on salary increases, and there is a wide gap between salary offers and job-seekers' demands.\nPrices\nBusinesses in most sectors indicated continued moderate increases in input costs and modest growth in selling prices. However, retailers have been reporting increasingly widespread hikes in the prices they pay, and, to a somewhat lesser extent, in the prices they charge. One contact at a major chain noted that tariffs were raising costs, particularly on home goods, but that consumers were resistant to price increases on such merchandise. Contacts in the leisure & hospitality sector, however, have held prices steady and, in some cases, lowered prices. For example, rates on New York City hotel rooms and Broadway theater tickets have receded.\nLooking ahead, contacts in retail, wholesale, transportation, and manufacturing expressed a greater inclination to raise prices than others. Manufacturers and wholesalers anticipated the most widespread hikes in prices paid.\nConsumer Spending\nRetail sales have softened in recent weeks and were mostly little changed from a year earlier. A major retail chain noted that sales were down and somewhat below plan in September, partly reflecting weak demand for home goods. On a more positive note, some upstate New York retailers reported continued modest growth in both sales activity and shopper traffic. In general, inventories were said to be near desired levels, helped by increased discounting over the summer.\nSales of both new and used vehicles have remained solid in recent weeks, according to dealers in upstate New York. Inventories of new vehicles remained somewhat above desired levels, but there is some concern about maintaining ample inventories (especially of parts) if the GM strike drags out. Dealers indicated that service departments have remained busy and characterized consumer credit conditions as being in good shape.\nManufacturing and Distribution\nManufacturers reported steady to slightly rising business activity. On the distribution side, transportation contacts indicated a modest pickup in activity, while wholesalers noted a significant drop-off in business.\nLooking ahead, manufacturers and wholesalers have grown less optimistic about the near-term outlook, while transportation firms have become somewhat more optimistic. Contacts in all these sectors have expressed ongoing concern about tariffs and trade tensions and the related uncertainty going forward.\nServices\nBusinesses across almost all service industries reported some weakening in activity, on balance, since the last report. However, contacts in leisure & hospitality noted a leveling off in activity, following a substantial pickup in the last report. Broadway theaters reported that attendance and revenues picked up noticeably in the second half of September, following a sluggish spell in August and early September. Hotel occupancy remained solid across most of the District.\nOther service industries reported softening activity\u2014particularly those engaged in information services. Finance and real estate firms reported notable weakening, while professional & business and education & health service firms reported flat to modestly declining activity. Service firms, in general, have grown somewhat less optimistic about the near-term outlook.\nReal Estate and Construction\nHousing markets across the District have been mixed but, on balance, softer since the last report. The home sales market has weakened, especially in New York City, whereas rental markets have continued to strengthen moderately.\nPrices of New York City condos and co-ops, which had been fairly steady through mid-year, slipped noticeably in the third quarter\u2014most sharply in Manhattan. A local real estate expert noted that, while the city's \"mansion tax\" (effective July 1) has curtailed high end sales, the price declines have occurred across the spectrum. Moreover, the inventory of resale inventories has risen noticeably. In contrast, home prices in the suburbs north of New York City have continued to rise slightly, while sales volume and inventory levels have been steady.\nThe rental market has continued to trend stronger. Residential rents have continued to rise at a 3-5 percent pace, and the high end of the market has out-performed in recent months. Rental vacancy rates have declined further in New York City, and landlord concessions have continued to recede, though they remain fairly prevalent.\nCommercial real estate markets across the District have generally been steady to slightly softer. Office rents have been mostly flat, while availability rates have been mixed but up slightly, on balance, while leasing activity has slowed. Industrial markets have shown some signs of softening: rents have continued to rise but at a slower pace, while availability rates have begun to trend up. The market for retail space has remained soft.\nNew multi-family construction starts have weakened noticeably across the New York City area, though there has been a modest pickup in upstate New York. Ongoing multi-family construction has remained fairly brisk. New office and industrial construction has weakened slightly across the District.\nBanking and Finance\nSmall to medium sized banks in the District reported a rise in demand for consumer loans and residential mortgages but steady demand for commercial mortgages and C&I loans. Bankers reported higher refinancing activity. Banks reported unchanged credit standards and narrowing spreads across all loan categories. Contacts also reported widespread decreases in the average deposit rate. Finally, banks reported lower delinquency rates for consumer loans, but stable delinquencies across other categories.\nFor more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"October 16, 2019\nSummary of Economic Activity\nThe Ninth District economy grew at a slight pace since the last report. Employment was flat, while wage pressures were moderate overall and price pressures remained modest. The District economy saw growth in tourism, services, commercial construction and real estate, and energy. Consumer spending and residential construction and real estate were mixed. Manufacturing decreased slightly, while agricultural conditions remained weak.\nEmployment and Wages\nEmployment was flat since the last report. August employment rose over the previous month in three District states, but fell in two others. Hiring demand remained healthy, but there were some signs of softness. Separate polls of human resources contacts in Minnesota and Montana showed that the large majority of firms were hiring, and virtually none were cutting staff. Construction firms in Minnesota reported strong demand for skilled trades workers, but lower demand for other staffing needs. Staffing contacts in Minnesota saw slight growth in job orders overall in the third quarter compared with last year, but several reported significant decreases. Expectations for the fourth quarter were mostly flat, with many expecting an increase in unfilled job orders due to very tight labor conditions. A strong majority of respondents to a survey of Ninth District firms indicated that they planned to leave employment unchanged or increase it slightly over the coming three months. August job postings were lower in Minnesota, Montana, and North Dakota; flat in Michigan's Upper Peninsula; and up slightly in South Dakota. Hiring sentiment in two regional indexes fell notably for respondents in Minnesota and the Dakotas; one index fell into contraction for all three states. Initial unemployment claims rose slightly overall among District states over the most recent six-week period (ending mid-September) compared with a year earlier, with Wisconsin and the Dakotas seeing the largest increases.\nWage pressures were moderate overall. A solid majority of human resources poll respondents in Minnesota and Montana said that wages rose by 3 percent or less over the past 12 months, and wage expectations for the coming 12 months were softer. Wage growth was stronger among construction and staffing contacts in Minnesota, but each group also expected wage pressure to lessen somewhat in the coming year. A staffing contact in Montana said wages for entry-level positions continued to rise, and those who raised wages last year to stay competitive were re-evaluating additional increases. A North Dakota staffing contact noted that while wages were rising overall, some clients were intentionally not raising wages for unskilled labor because it \"does not make much difference\" in the workers they attract or retain, \"unless they raise pay scales significantly.\"\nPrices\nSince the previous report, price pressures remained modest. Most respondents to a survey of firms across the Ninth District indicated only flat or slight increases in input costs over the previous quarter, with a similarly subdued outlook for the final three months of the year. However, firms continued to note faster growth in health insurance premiums. Retail fuel prices in District states as of early October were roughly unchanged relative to the previous reporting period. Prices received by farmers in August increased from a year earlier for corn, potatoes, hogs, cattle, milk, and turkeys, while prices for wheat, soybeans, hay, eggs, and chickens decreased.\nConsumer Spending\nConsumer spending was mixed since the last report. South Dakota gross sales in August grew by 5 percent compared with a year ago, and the state's gaming handle was almost 4 percent higher. Conversely, gross sales in Wisconsin were flat, and North Dakota sales tax collections were 5 percent lower than a year earlier. Assisted by good weather, the Minnesota State Fair in late August and early September saw record attendance. A vehicle dealership with multiple outlets in the western Dakotas and Montana saw new-vehicle sales grow by 4 percent in August, while used cars fell by 4 percent. Another dealership with outlets across the eastern portion of the District saw strong sales over the summer, including August and September, with sales slightly stronger in used versus new vehicles. According to industry sources, marine and recreational vehicle sales in District states have been lower this summer compared with last year, but powersport sales have been on par.\nTourism saw growth overall in the most recent period. In northern Wisconsin, tourism businesses reported strong activity at the end of the summer, with lodging facilities seeing solid bookings through mid-September. A large campground in the region reported modestly more summer bookings and higher average customer spending. Hotel occupancy rates in Minnesota were slightly higher in August compared with a year earlier, and revenue per room was 3 percent higher. Total passengers at District airports increased compared with a year earlier: August passengers through Minneapolis-St. Paul were up 3 percent, and seven other regional airports saw increases ranging from 4 percent to 20 percent. However, among nine major national parks in District states, only two registered an increase in August visitors compared with a year earlier.\nServices\nActivity in the professional services sector increased moderately. Several engineering firms reported large backlogs of work. Regional hospital systems and clinics continued to plan large capital expenditures for expansions over the medium term. In contrast, contacts in the trucking and rail transportation sector reported a slowdown in freight volumes.\nConstruction and Real Estate\nCommercial construction rose moderately since the last report. A construction database showed that August construction starts in the District were higher than a year earlier. A second industry database showed that new and active projects in the District over the most recent six-week period (ending September 27) were roughly on par with the same period a year earlier. A number of subcontractors in Minnesota reported large backlogs. Industry contacts in Montana also reported healthy activity. Residential permitting for single-family units in August was flat or lower across the large majority of metros in the District compared with a year earlier. While single-family construction lagged, however, some regions continued to see strong multifamily permitting, including Minneapolis-St. Paul.\nCommercial real estate grew modestly since the last report. Despite steady delivery of new units, multifamily housing vacancy rates in Minneapolis-St. Paul remained among the lowest in the country for major metropolitan regions, leading to rent increases. Industrial space in the region continued to see low vacancy rates and healthy expansion. New retail construction in Minneapolis-St. Paul has declined, although grocery has continued its expansion in the region, and vacancy rates remained fairly stable. Residential real estate was mixed. Closed home sales in August fell compared with a year earlier across Minnesota, as well as in Missoula, Mont., Sioux Falls, S.D., Grand Forks, N.D., and northern Wisconsin. However, closed sales rose in Bozeman and Helena, Mont., Fargo, N.D., and western Wisconsin.\nManufacturing\nDistrict manufacturing activity decreased slightly relative to the previous report. An index of manufacturing conditions indicated decreased activity in September compared with a month earlier in Minnesota and South Dakota and flat activity in North Dakota. Multiple contacts in custom manufacturing and metal fabrication reported a slowdown in new orders, and several said they expect a slower fourth quarter. In contrast, producers of heavy equipment and building materials noted increased demand from the construction sector.\nAgriculture, Energy, and Natural Resources\nDistrict agricultural conditions remained weak. Heavy rains that hampered crop planting this season have persisted into the fall and may complicate harvests in some areas, according to sources. Recent forecasts indicated that corn and soybean production in District states may decrease 10 percent and 20 percent, respectively, in 2019 compared with last year. District oil and gas exploration activity increased moderately relative to the previous report. The number of active drilling rigs rose as of September from a month earlier, but industry contacts reported that demand for workers and materials was little changed. District iron ore mines continued to operate at near capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nOctober 16, 2019\nSummary of Economic Activity\nEconomic activity in the Tenth District rose slightly in late August and September, with gains in consumer spending, professional and high-tech services, transportation and wholesale trade driving overall growth. Consumer spending rose modestly, led by solid retail and auto sales. Manufacturing activity edged down, driven by continued declines in durable goods plants, but was expected to expand slightly in the coming months. District real estate activity increased, but contacts expected conditions to soften this fall. Energy activity declined in the District as the number of active rigs fell and oil and gas production levels also eased. The agriculture sector remained weak, while crop and cattle prices remained relatively stable. Bankers reported modestly higher loan demand and an improvement in loan quality. Employment levels rose in most services sectors, but contacts in the energy and manufacturing sectors noted a decline. District manufacturing and services firms expected employment to increase by 3 percent on average in 2020. Wages grew modestly, and the pace of gains was anticipated to accelerate in the months ahead. District input and selling prices also rose modestly since the previous survey period.\nEmployment and Wages\nDistrict employment rose since the last survey as a majority of services sector contacts noted increasing employment levels, while contacts in the manufacturing and energy sectors reported a slight decline. Employment levels were above year-ago levels in both the services and manufacturing sectors, but slightly below in the energy sector. Expectations for employment growth were positive across most sectors, and survey respondents in the manufacturing and services sectors expected employment in their firms to rise by 3 percent on average in 2020.\nA majority of contacts continued to report labor shortages across all skill levels. Specifically, contacts noted shortages for truck drivers, hourly retail and food-services positions, auto-technicians, pilots, IT personnel, nurses, and skilled construction workers. Wages were modestly higher than the previous survey period, and wage gains were expected to accelerate at a faster pace moving forward.\nPrices\nDistrict selling and input prices increased modestly in late August and September and were moderately above year-ago levels. Contacts expected additional gains in the coming months. Retail input and selling prices were strongly above levels from both the previous survey period and the same period one year-ago, and expectations were for similar increases moving forward. In contrast, restaurants reported steady input and selling prices compared to the previous survey period, although both were moderately above year-ago levels. Respondents in the manufacturing and transportation sectors reported modestly higher input and selling prices compared to a year ago and anticipated similar gains in the months ahead. Selling prices in the construction supply sector rose modestly since the previous survey but remained modestly lower than year-ago levels.\nConsumer Spending\nConsumer spending climbed modestly compared to the previous survey period, and contacts anticipated additional sales growth heading into the winter months. Retail sales rose modestly since the previous survey period, and expectations were for sales to rise in the next few months but at a slower pace. Lower-priced items continued to sell well, while sales of higher-priced items lagged. Auto sales expanded robustly compared to the previous survey period and year-ago levels, and contacts anticipated modest increases in the coming months. Unlike retail and auto contacts, restaurant contacts reported a strong decline in sales in late August and September. However, restaurant sales remained slightly above year-ago levels and were expected to hold steady in the months ahead. Tourism sales were flat compared to the previous survey period, and contacts anticipated a modest decline in the coming months.\nManufacturing and Other Business Activity\nManufacturing activity edged lower compared to the previous survey and year-ago levels, driven by continued declines at durable goods plants. Manufacturers expected activity to expand slightly in the months ahead. New orders and the backlog of orders declined, while factory production and shipments increased slightly. Factory production, shipments, and volume of new orders were expected to increase moving forward. Capital spending remained modestly above year-ago levels, but contacts anticipated much slower growth in the months ahead. One contact attributed delayed capital spending to high tariffs that could not be passed along to customers.\nOutside of manufacturing, firms in the transportation sector experienced moderately higher sales, while sales increased strongly in both the wholesale trade sector and professional and high-tech services sector. Expectations for all three sectors were for strong growth moving forward.\nReal Estate and Construction\nDistrict real estate activity increased since the last survey, but residential construction activity declined and contacts expected a slower pace of overall real estate activity moving forward. Contacts in the residential real estate sector reported modestly higher home sales and inventories since the previous survey, and inventories were projected to hold steady in the months ahead. Residential real estate respondents continued to note that sales of low- and medium-priced homes outpaced sales of higher-priced homes. Residential construction activity fell modestly in late August and September and was projected to decline further this fall. Commercial real estate activity rose slightly as sales increased, construction underway was flat, and vacancy rates fell. Commercial real estate contacts projected activity to continue to expand but at a slightly slower pace in the next few months.\nBanking\nBankers reported a modest increase in overall loan demand across several categories. Respondents indicated a modest increase in demand for residential real estate loans. Demand for agricultural and consumer installment loans increased slightly from previous levels, while the demand for commercial real estate and commercial and industrial loans declined slightly. Bankers indicated modest improvement in loan quality compared to a year ago, but expected a slight decrease in loan quality over the next six months. Credit standards remained largely unchanged in all major loan categories, and deposit levels were stable.\nEnergy\nDistrict energy activity decreased since the previous survey period, and expectations for future drilling and business activity also declined. The number of active rigs continued to fall across most District states in both the oil and gas sectors. Oil and gas production levels also eased in the third quarter, and District energy firms reported drilling and business activity levels were below those from this time last year. Firms reported that total revenues, profits, employment levels, and access to credit also declined. Sixty percent of regional energy contacts indicated that current low prices for oil and natural gas were the main constraint limiting near-term growth in activity among areas where their firms were active. Additionally, a majority of District energy contacts expressed negative impacts from trade tensions and tariffs over the past year, and most firms anticipated negative business effects from trade policy to continue in 2020.\nAgriculture\nAgricultural economic conditions in the Tenth District generally remained weak. Major row crop and cattle prices were generally stable following sharp declines in the prior period. U.S. corn and soybean production was expected to decline slightly in 2019, but not enough to materially reduce large outstanding supplies. In contrast to other areas of the U.S., a slight increase in corn production was expected throughout the region and could contribute to a slight improvement in revenues. Conversely, soybean production was expected to be moderately lower, and prices continued to be damped by on-going trade disputes. In the livestock sector, recently disrupted beef production channels continued to put downward pressure on cattle prices, but stronger pork exports drove a moderate increase in hog prices. In addition, the distribution of 2019 USDA trade relief payments could provide additional short-term support to farm cash flows.\nFor more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"October 16, 2019\nSummary of Economic Activity\nAggregate Third District business activity continued at a modest pace of growth during the current Beige Book period. Nonauto retail sales accelerated to a moderate pace of growth, and manufacturing continued to grow moderately. Nonmanufacturing and tourism continued at a modest pace of growth. Construction activity for residential and nonresidential buildings appeared to hold steady this period, as did commercial leasing activity; these three sectors had declined in the prior period. Sales of new autos and of existing homes continued to decline \u2013 at a slight and a moderate pace, respectively. Labor markets tightened further throughout the District, and wages continued to grow moderately. Overall, price pressures remained modest. The firms' outlook for growth over the next six months remained positive but softened, with less than half of all firms anticipating increases in general activity. Contacts frequently noted ongoing caution in the business plans of their clients and themselves, but most expected current business conditions to continue.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. About two-thirds of nonmanufacturing firms reported increases in staff \u2013 a bit higher than in the prior period \u2013 while the share of manufacturers reporting increases held steady at about one-fourth. Average work hours have edged down since the prior period.\nTight labor market conditions continued to be cited as a factor in slow hiring by nearly all firms. Staffing firm contacts described \"acute pressure\" in recent months, which has resulted in still fewer job applicants, more difficulty signing prospective job candidates and retaining current employees, and ongoing wage pressures.\nWage growth continued at a moderate pace, with contacts reporting wage increases ranging from above 3 percent to 6 percent on a year-over-year basis. Reports were further mixed, with some contacts noting that wage growth had steadied and others noting an acceleration. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged down further to 40 percent; only 4 percent reported decreases.\nPrices\nThe firms reported overall modest increases for both input prices and prices received for their own goods and services. The share of nonmanufacturing firms reporting increases in prices edged lower, while the share of manufacturing firms reporting increases rose. Roughly one-half to two-thirds of the firms reported no change in prices over the period. Most banking contacts continued to note no signs of inflation.\nLooking ahead six months, the anticipation of higher prices broadened further among manufacturers. The percentage of manufacturing firms that expect to pay higher prices for inputs rose to above 50 percent, and the share expecting to receive higher prices for their own goods increased to almost 45 percent.\nManufacturing\nOn balance, manufacturers continued to report moderate growth in activity. Although nearly half of all the firms reported no change in shipments and in new orders, the percentage of firms noting increases significantly outstripped those noting decreases for each metric.\nThe makers of lumber products, paper products, chemicals, fabricated metal products, and industrial machinery tended to note gains in new orders and shipments. Electronics producers reported little change, and the makers of primary metal products reported mixed results. Overall, these trends are not substantially different compared with the same period one year ago.\nComments have been mixed. Several firms noted slowing activity, heightened uncertainty, and ongoing concerns over tariffs; a primary metals producer noted that \"customers were hesitant.\" However, others noted product segments with strong demand and mixed effects from tariffs.\nManufacturers' expectations of activity over the next six months were mostly unchanged. Expectations of shipments and of new orders edged lower but remained above long-term nonrecession averages. Expectations of future employment and planned capital spending also remained above average but rose a bit.\nConsumer Spending\nContacts for malls and convenience stores reported moderate growth in nonauto retail sales \u2013 a somewhat faster pace than during the prior period. Mall store operators noted \"solid traffic\" and moderate year-over-year growth during the back-to-school season. Convenience store contacts continued to report strong sales \u2013 boosted by job stability among consumers and great weather.\nAuto sales edged lower but remained near high levels \u2013 sustained by fleet sales, even as consumer demand continued to decline, according to contacts. Pennsylvania dealers noted that year-over-year sales had started to slow, while New Jersey dealers reported lower August and September combined sales. However, year-over-year sales growth through September year to date remained positive in both states.\nTourism activity continued to grow at a modest pace. A Delaware shore contact reported strong visitor traffic, aided by excellent weather, and noted record levels of spending at local shops and restaurants, even as three new restaurants opened. Atlantic City casino revenues continued growing modestly.\nNonfinancial Services\nOn balance, activity at service-sector firms continued at a modest pace of growth. The percentage of firms reporting increases in current revenues and in new orders remained positive but edged lower. One large firm noted continued improvement in the already low delinquent accounts receivables of its consumer base. This improvement was observed throughout the Third District and the country. Nearly one-half of the firms \u2013 slightly less than in the prior period \u2013 expect growth over the next six months.\nFinancial Services\nFinancial firms reported continued moderate growth in overall loan volumes (excluding credit cards) on a year-over-year basis, although the rate seemed to strengthen somewhat. Meanwhile, credit card lending also continued at a moderate pace but appeared to edge slower.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly in home mortgages, commercial real estate loans, and other consumer loans (not elsewhere classified). Home equity lines and auto lending grew moderately, while commercial and industrial loans grew modestly.\nMost banking contacts described incremental growth of the overall economy, constrained by a tight labor market and low housing inventories, with little shift in low delinquency rates. Banking contacts noted ongoing uncertainty and more widespread talk of a (mild) recession risk in 2020. However, most indicated that they and their clients felt that the U.S. economy was fundamentally sound and that they were planning (cautiously) for ongoing growth next year.\nReal Estate and Construction\nHomebuilders reported no change in contract signings in the current period, on balance, although reports ranged somewhat from \"continued strength\" to \"slightly off\" from the prior period. To varying degrees, builders are shifting their product offerings to capture lower price points; however, production costs remain a challenge.\nExisting home sales continued to decline moderately on a year-over-year basis across most local markets, as exceedingly low inventories continued to constrain sales. A large Philadelphia-area broker noted that the trend continued through September and is not expected to shift much in 2020.\nOn balance, commercial real estate construction and leasing activity seemed to hold steady at relatively high levels. Most contacts were bullish about current activity and noted that while the project pipeline has thinned, groundbreakings, project planning, and new inquiries remained relatively steady. One design firm noted it is struggling to keep pace with demand. Management firms noted positive net absorption, falling vacancy rates, and rising rents in many office and industrial segments.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"October 16, 2019\nSummary of Economic Activity\nModerate expansion continued in the Eleventh District economy. Growth continued in manufacturing and nonfinancial services and resumed in retail after flat sales in the previous period. Home sales increased and loan demand accelerated. Energy activity declined and agricultural conditions deteriorated due to hot and dry weather. Employment growth was solid while wage pressures continued. Selling prices were largely flat, as firms' ability to pass through cost increases remained limited. Outlooks improved in manufacturing and nonfinancial services, were unchanged in retail and financial services, and softened in energy. Uncertainty generally remained elevated, driven by trade tensions, the political climate, recession concerns, and weaker global growth.\nEmployment and Wages\nEmployment continued to expand at a solid pace. Hiring picked up in manufacturing, while headcounts fell in the oil and gas sector. A staffing services firm noted that direct hires have been increasing while demand for contract workers has abated. A majority of firms trying to hire reported they were having difficulty finding qualified workers. Labor shortages continued to span most industries, skill levels, and regions. Contacts in retail, leisure and hospitality, and professional and business services cited difficultly hiring and retaining workers as a leading issue. A manufacturing contact expressed plans to invest more in capital equipment to reduce their dependence on labor in expanding their business.\nWage pressures continued but retreated slightly to more average levels.\nPrices\nInput prices continued to rise at a moderate pace, with an uptick seen in prices paid for raw materials among manufacturers. Several contacts pointed to tariffs and trade policy as a driver of higher costs. Firms' ability to pass higher costs on to customers was somewhat mixed, but reports of difficulty were more common than reports of ease. Selling prices were largely flat in the manufacturing and services sectors while prices received for oil and gas support services declined. Several contacts reported squeezed profit margins.\nManufacturing\nExpansion in the manufacturing sector continued at a moderate pace. Growth in September was slightly slower than what was seen in August, but still stronger than the first half of the year. The modest deceleration in September output growth was fairly broad based, led by machinery and fabricated metals manufacturing. Refiners and chemical producers indicated softening global demand growth was putting downward pressure on production this year. Some recent strength was seen in transportation equipment manufacturing.\nOutlooks among manufacturers remained positive, although several contacts pointed to increased uncertainty stemming from tariffs and trade tensions, the political climate, and the global economy.\nRetail Sales\nRetail sales strengthened slightly over the reporting period, although some weakness was seen in autos and in sales at stores located near the Mexico border. Contacts in Austin noted very healthy retail activity, with national chains and local retailers eager to expand in the region but rather limited by lack of available retail space. One contact noted a negative impact from Tropical Storm Imelda. Outlooks were largely unchanged, an improvement from the deterioration noted so far this year.\nNonfinancial Services\nNonfinancial services activity expanded moderately over the reporting period. Growth in professional and technical services continued to lead the expansion, while administrative and support services also picked up pace. Staffing services contacts reported high demand in all markets, with particular strength in IT, accounting, banking, and healthcare. Activity in the transportation and warehousing sector remained mixed, with strong airline passenger demand and rising sea cargo volumes but some weakness in air and rail cargo volumes. Both rail and sea cargo contacts reported declines in trade with China, in some cases offset by stronger trade with Southeast Asia.\nService-sector outlooks were slightly positive. Contacts cited uncertainty as a serious issue hampering future demand and business expansion plans. Tariffs, the presidential election, and national or global recession fears were among the drivers of increased uncertainty.\nConstruction and Real Estate\nHome sales continued to trend upward. The increase was broad based, with some contacts noting that sales were better than expected. New-home sales appeared to be the strongest in Austin. Recent flooding in the eastern parts of Houston may impact housing starts in coming weeks. Margins improved slightly, and outlooks were cautiously optimistic, with some builders concerned about an impending U.S. recession.\nApartment demand was strong in Dallas-Fort Worth (DFW) and Houston in the third quarter. Rent growth firmed up close to its long-term average rate in DFW while rent increases in Houston remained sluggish. Apartment leasing stayed solid in Austin, with rent growth in the metro well above the U.S. average. Healthy demand along with a slowing pace of deliveries boosted rents in San Antonio. Apartment construction remained elevated, particularly in DFW.\nReports on the office market indicated leasing continued to be active for new Class A space. Industrial demand and construction remained solid, although there was some concern about the high levels of construction in Houston.\nFinancial Services\nGrowth in loan demand and volumes picked up pace over the reporting period, led by particular strength in real estate lending. Volumes for commercial and industrial loans edged up, while consumer loan volumes declined modestly. Credit standards tightened in all loan categories. Nearly half of contacts noted declining margins. Bankers reported that business activity improved further over the past six weeks, and outlooks were unchanged. Bankers cite concerns regarding lower interest rates, the uncertain business climate, and political and trade tensions.\nEnergy\nDrilling activity in the Eleventh District continued to erode, contributing to notable weakness in oilfield services. However, oil and gas production continued to rise and well completion continued to increase in the Permian Basin.\nAccording to contacts, the attacks on Saudi Arabian oil facilities did not change capital spending expectations in the oil and gas sector\u2014it would take a lasting increase in the price of oil to influence those plans. Firms were slightly more pessimistic in their outlooks for the remainder of the year than they were during the previous reporting period thanks to spending cuts and a weaker economic outlook.\nAgriculture\nHot and dry weather continued across most of the District, with some parts of Texas entering severe to extreme drought. As a result, crop and pasture conditions deteriorated over the reporting period, though harvest was already well underway for row crops. Yields were favorable for much of the 2019 corn and sorghum crop, which at current crop prices has allowed many producers to cover their costs. Wheat and cotton yields were good but prices were below break-even levels. Contacts report a bearish outlook for cotton prices as export and domestic demand estimates are being cut due to slower economic growth, and supply estimates are not being cut as much as anticipated. Trade issues were still very prominent on the minds of agricultural producers, however some contacts reported more optimism regarding a resolution.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"October 16, 2019\nSummary of Economic Activity\nOn balance, the Fifth District economy grew modestly in recent weeks. Manufacturers saw a modest decline in shipments and new orders, overall, as trade policies continued to reduce sales and raise raw materials costs. Port activity grew robustly in recent weeks, particularly import volumes. Trucking companies reported a modest increase in demand and a rail company saw continued strength in auto and construction-related shipments. Travel and tourism picked up modestly despite some disruptions from hurricane evacuations in North and South Carolina. Retail sales rose moderately, overall, but some retailers expressed concerns that economic uncertainty could hamper fourth quarter sales. Home sales, although hampered by low inventories, rose modestly. Meanwhile, shortages of labor and buildable lots restrained new home construction. Commercial real estate leasing, sales, and construction picked up, although some softness was reported in retail and office construction. Loan demand picked up for real estate purchases and refinancing, but was flat for business and auto lending. Nonfinancial services firms saw a slight increase in demand in recent weeks and remained cautiously optimistic about future growth. Labor markets remained tight and wages increased at a moderate rate. Overall, price growth remained moderate.\nEmployment and Wages\nThe demand for labor strengthened moderately in recent weeks. Employment agencies reported a seasonal pick-up in new job openings. Also, employers continued to report very tight labor markets and difficulties finding qualified workers. In particular, firms reported shortages of construction workers, engineers, IT professionals, accounting and finance professionals, manufacturing plant workers, mechanics, and truckers. Wages increased moderately, overall, with some larger increases reported for jobs in high demand. Some employers said they were using non-wage compensation, such as sign-on and stay-on bonuses, to attract and retain workers.\nPrices\nPrice growth remained moderate overall since our previous report. Manufacturers indicated that growth in prices paid was little changed in recent weeks and remained slightly above growth in selling prices. Raw materials prices rose for steel plates, scrap metal, and electricity and remained elevated for some tariffed goods, while other materials prices were generally flat to down slightly. Service sector firms also reported moderate growth in prices paid that outpaced growth in selling prices.\nManufacturing\nFifth District manufacturers reported a modest decline in shipment and new orders. Several firms indicated that trade policy was reducing their foreign sales and raising raw materials costs. An electrical equipment manufacturer reported raising prices to cover tariff-related cost increases, while another firm looked to cut costs in other areas of the supply chain. A Virginia furniture manufacturer said that trade issues could lead to jobs losses if not resolved. Meanwhile, a food manufacturer cited the rapidly rising price of chicken as a concern, and a Virginia manufacturer reported looking for new suppliers over concerns about the possible effects of Brexit.\nPorts and Transportation\nPorts in the Fifth District saw robust growth since our last report. Import volumes continued to exceed export volumes, but both showed healthy growth. Multiple ports saw record volumes in recent weeks. One executive reported an increase in vehicles going to Thailand and Russia for assembly to avoid Chinese tariffs. A Fifth District airport reported that cargo volumes continued to increase, although at a somewhat slower rate. Ports continued to hire and make new investments for expansion.\nFifth District trucking demand increased modestly, after softening in the previous months. One executive reported turning away some business but not as much as a year ago, while another reported having some excess capacity. Both were fairly content with the current level of demand. Another contact reported a slight disruption from Hurricane Dorian but business remained solid, overall. Meanwhile, a rail company saw some shipments move back to trucks but noted that auto and construction-related shipments remained strong. Some transportation contacts delayed investments over concerns about economic uncertainty.\nRetail, Travel, and Tourism\nTravel and tourism in the Fifth District were modest since our last report. On the outer banks of North Carolina, hotels and restaurants saw strong business and increased receipts despite a temporary disruption from Hurricane Dorian evacuations. However, some restaurants had to close an extra day a week because of labor shortages when students went back to school. Charleston, South Carolina, also saw fairly solid tourism despite a hurricane evacuation. Meanwhile, hotels in the District of Columbia reported a decline in rates and occupancy in recent weeks.\nOn balance, retail sales rose moderately in recent weeks. A Virginia auto dealer reported strong sales of trucks and SUVs. However, a few firms reported declines. A North Carolina home furnishing store reported a drop in sales instead of the normal seasonal uptick. Meanwhile, a hardware store said that lumber mills recently reduced production, which affected availability and prices. Several retailers said that they planned to reduce inventories and scale back capital spending over concerns that economic uncertainty could limit consumer spending in the fourth quarter.\nReal Estate and Construction\nHome sales rose modestly in recent weeks and buyer traffic was steady, although inventories remained low. Most agents continued to see multiple offers in specific areas, especially for homes selling in the $250,000 to $400,000 price range. District home prices increased slightly, while average days on the market remained low. New home construction remained limited and was constrained by labor shortages and lot availability.\nCommercial real estate leasing rose moderately in recent weeks. District brokers continued to report strong demand for industrial space and office leasing was described as healthy in most locations. Reports on retail leasing were mixed, as demand for smaller inline spaces remained steady, but demand for larger spaces declined. Multifamily leasing remained healthy. Overall, industrial construction remained strong, while retail and office construction slowed. Vacancy rates remained low across most sub-markets, although some slight increases in retail were reported. Contacts reported that rental rates were flat to increasing slightly. On the commercial sales side, brokers reported modest increases in prices and sales.\nBanking and Finance\nLoan demand rose moderately in recent weeks. Residential mortgage demand was generally described as stable to increasing modestly. On the commercial side, real estate loan demand strengthened modestly. Business and automotive lending were flat, on balance. Bankers noted an uptick in residential and commercial refinancing due to lower interest rates. Deposits grew moderately since our last report and bankers continued to report heightened rate competition. Measures of credit quality remained stable at high levels.\nNonfinancial Services\nOn balance, demand for nonfinancial services picked up slightly in recent weeks. Many service providers continued to report difficulties finding workers and rising labor costs, particularly for health insurance. In some cases, those firms faced profit margin compression since they were not able to pass along cost increases to customers. Overall, businesses remained cautiously optimistic about growth prospects over the next several months. There were several remarks about investing in software and technology. A few firms, on the other hand, were holding back on capital spending due to uncertainties around labor constraints and trade.\nFor more information about District economic conditions visit: www.richmondfed.org/research/regional_economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"October 16, 2019\nSummary of Economic Activity\nOverall economic activity in the District was stable on balance, though reports varied by sector. A still favorable economic environment continued to boost demand for professional and business services generally, but some firms indicated that heightened uncertainty also contributed to the increase as customers sought more consulting services. Home sales and auto sales rose over the period, while consumer spending on nondurable goods was flat. Slowing global growth and trade tensions continued to weigh on manufacturing, but output stabilized as some customers rebuilt inventories after allowing them to run too low. Lenders suggested that overall loan demand was unchanged, even as lower interest rates boosted lending for homes and autos. Nonresidential construction remained strong, while residential construction softened modestly. Freight activity continued to fall. Employment was stable on balance, though reports by sector were mixed. Still, wages rose modestly because of persistently tight labor markets. Selling prices increased modestly on balance as firms sought to compensate for higher labor costs as well as increased pressure from rising nonlabor costs.\nEmployment and Wages\nEmployment was generally stable in the Fourth District, although there were scattered reports of softer demand for labor. Firms in the professional and business services sector continued to add staff in response to robust demand. Most apparel and general merchandise stores held headcounts steady, as did construction contractors. Some bankers curbed hiring to focus on operational efficiencies and to reduce expenses. By contrast, some firms reduced employment levels as a direct result of softer demand for goods and services. Specifically, some manufacturers froze hiring and reduced hours, and planned to keep payrolls and hours at lower levels until product demand picked up again. Freight haulers (both trucking and rail) reduced headcounts to \"align [human] resources to reduced volume levels.\"\nWages grew modestly on the whole in the Fourth District. Manufacturers continued to increase wages and enhance benefits offerings amid persistently tight labor markets. Higher wages were also reported by general merchandise and auto retailers. Retailers cited difficulty finding qualified workers and heightened competition for labor from distribution centers as contributing factors. Some professional and business services firms increased skill requirements for new hires and therefore raised starting pay relative to wages of existing staff. Many real estate firms increased wages, citing a \"war for talent.\" By contrast, most construction contractors did not raise wages in this period, nor did most freight haulers.\nPrices\nOn balance, selling prices rose modestly. Most changes in this period resulted from firms' adjusting output prices to account for changes in input prices rather than from firms' trying to increase their margins. Apparel and general merchandise retailers reported upward pressure on clothes and food costs, pressure which was exacerbated by the September 1 tariff increases. Most retailers passed through these higher costs to consumers, although a couple of retailers absorbed them into their margins, rather than raising prices, to preserve market share. Many trucking companies reported recent cost increases because geopolitical factors and new diesel taxes have increased prices at the pump. Some freight haulers were able to negotiate higher rates to account for these costs, but others remarked that the freight market was not robust enough to be able to push for higher rates. Manufacturers' prices, which had been falling in the past couple of periods, stabilized in this period. Most construction contractors held prices steady because costs for construction materials were relatively stable. Professional and business services firms held pricing steady, as well, because stiff competition limited individual firms' ability to raise prices.\nConsumer Spending\nRetailers' reports on consumer spending were mixed. Reports from auto dealers were generally more upbeat than those from other segments. Some auto dealers reported that light vehicle sales were up substantially, while others indicated that sales were flat. Apparel spending was relatively flat, and merchants noted that unseasonable weather adversely impacted sales. Contacts in the restaurant industry reported that sales were down in this period because of increased competition from new restaurants.\nManufacturing\nOverall manufacturing conditions appeared to stabilize following a few periods of slowing, although reports from contacts varied. A few manufacturers suggested that their customers let inventories run too low in anticipation of a more significant manufacturing slowdown than has materialized. As a result of the need to restock, demand for these manufacturers' products picked up in recent months. Other manufacturers reported that demand continued to soften, citing a global slowdown in industrial activity and persistent trade-related uncertainties. Two-thirds of contacts reported that capacity utilization was within a normal range, although several noted that labor shortages persist. Some manufacturers had existing capacity that was going unused for lack of workers, a situation which damped plans for further capital spending.\nReal Estate and Construction\nNonresidential construction and real estate saw strong, steady demand over the period. Some nonresidential contractors noted an uptick in contracts for office and healthcare-related buildings. Most nonresidential contractors expected construction to remain strong excepting winter slowdowns. However, some commercial real estate contacts expressed concern about slower demand in the near future; one remarked that he would \"expect increased trepidation as the election draws near.\"\nResidential real estate agents reported moderately higher home sales and expected demand to continue to increase modestly in the near future. Real estate agents pointed to lower interest rates as the primary factor spurring stronger sales. Real estate agents also remarked on growth in the first-time homebuyer segment and in the ratio of homeowners to renters as lower interest rates helped younger adults become homeowners. By contrast, homebuilders reported softening demand, which may suggest that households are uncertain about the medium-run economic outlook.\nFinancial Services\nLoan demand was relatively unchanged. Lower interest rates spurred an increase in demand for auto loans, home mortgage originations, and loan refinancings. Some bankers noted that the pipeline for commercial loans remained strong, while others had noticed a slight softening. Core deposits ticked down, mostly as a result of falling interest rates, although one banker commented that competition had decreased because most banks are facing \"not enough loan demand to go after deposits.\"\nProfessional and Business Services\nActivity in professional and business services strengthened. Contacts reported an increase in demand for a variety of products and services, pointing to strong business conditions for their customers. Firms in consulting services suggested that global issues such as international security concerns and worries of future economic volatility have increased demand for their services. The majority of professional and business services contacts anticipate that favorable economic conditions will carry into the first quarter of next year, although a few expect growth to slow.\nFreight\nFreight activity softened further since the last report. Most contacts reported flat or lower demand for freight services. Contacts cited as contributing to lower freight volumes declines in manufacturing activity, lower volumes of coal shipments, and structural changes to transpacific shipping supply chains. One freight executive summarized the situation as \"our customers have informed us they front-loaded much of their business to Q1 2019 due to perceived or impending tariffs placed on goods to and from China.\" Despite the recent softness, contacts were more optimistic than during last period that freight volumes will pick up in the near future.\nFor more information about District economic conditions visit: www.clevelandfed.org/region/\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nOctober 16, 2019\nThis report was prepared at the Federal Reserve Bank of Cleveland based on information collected on or before October 7, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nThe U.S. economy expanded at a slight to modest pace since the prior report as business activity varied across the country. Reports from Districts representing states in the southern and western U.S. generally were more upbeat than Districts representing the Midwest and Great Plains. Household spending was solid on balance: nonauto retail sales increased modestly, while light vehicle sales were generally robust. Tourism and travel-related spending was up modestly. Housing market conditions changed little. On the business spending side, nonresidential construction increased at a slightly slower yet still modest pace, while leasing activity advanced at a slow but steady rate. Manufacturing activity continued to edge lower. Contacts in some Districts suggested that persistent trade tensions and slower global growth weighed on activity. The early impact of a recent auto strike was limited. Freight shipments stabilized after falling during the previous reporting period. Bankers in many Districts reported moderately rising loan volumes, while activity in nonfinancial services increased solidly. Agricultural conditions deteriorated further due to the ongoing impacts of adverse weather, weak commodity prices, and trade disruptions. Business contacts mostly expect the economic expansion to continue; however, many lowered their outlooks for growth in the coming 6 to 12 months.\nEmployment and Wages\nOn balance, employment rose slightly amid reports of persistent worker shortages. Labor market tightness across skill levels and occupations was widely cited as a factor restraining hiring. Districts often reported relatively stronger demand for workers in the professional services and information technology industries. By contrast, hiring in freight and manufacturing was weak. A number of Districts reported that manufacturers reduced their headcounts because orders were soft. However, some firms were more concerned about the longer-term availability of workers and subsequently chose to reduce hours rather than staff levels. Wages rose moderately in most Districts, with upward pressure noted for lower-skill workers in the retail and hospitality industries and for higher-skill professional and technical workers. A number of smaller firms reported difficulty matching pay offers from larger firms. Broadly, employers continued to use nonwage approaches such as bonuses and benefits to attract and retain talent.\nPrices\nMost Districts characterized the recent pace of price increases as modest. Both retailers and manufacturers noted rising input costs, often for items subject to new tariffs, but retailers had relatively more success passing through these cost increases to their customers. Despite a recent increase in fuel costs, some reports suggested that shipping rates remained lower than they were earlier this year because of excess capacity in the industry.\nHighlights by Federal Reserve District\nBoston\nSigns of slowing have become more widespread in recent weeks, although software and IT services firms reported results that exceeded expectations and real estate markets have not weakened. Outlooks have softened; contacts attribute some of the softening to increased uncertainty, not poorer current results.\nNew York\nRegional economic growth slowed to a subdued pace. Job creation remained sluggish, largely reflecting a shortage of available workers, as labor markets remained very tight and wage growth picked up. Prices continued to rise modestly. Service sector activity weakened noticeably, and real estate markets softened somewhat.\nPhiladelphia\nOn balance, business activity continued at a modest pace of growth during the current Beige Book period. Further labor market tightening caused \"acute pressure,\" described as increased hiring difficulty, constrained growth, and higher wages. Still, wages grew moderately and prices rose modestly overall. Most firms expressed a positive outlook, with ongoing caution amid heightened uncertainty.\nCleveland\nDistrict activity was stable on balance. Professional and business services, auto sales, and home sales rose while residential construction and freight fell. Manufacturing activity stabilized after a couple periods of decline. Employment was stable overall, though there were some scattered reports of softening. Wages increased modestly because of tight labor markets. Selling prices rose modestly.\nRichmond\nThe Fifth District economy continued to grow at a modest rate. Manufacturers saw declines in shipments and new orders; however, port and trucking activity rose. Retail, tourism, and nonfinancial service firms generally experienced slight to moderate growth. Residential and commercial real estate sales, leasing, and construction picked up, overall. Labor markets remained tight. Wages and prices rose moderately.\nAtlanta\nThe economy expanded at a modest pace. Labor markets remained tight, and reports of wage pressures were more widespread among low-skilled positions. Nonlabor input costs rose for some contacts. Overall retail sales were mixed. Residential real estate activity improved, while nonresidential activity was stable. Manufacturing activity rebounded since the previous report.\nChicago\nEconomic activity increased slightly overall. Employment, consumer spending, business spending, and construction and real estate all increased slightly. Manufacturing production declined a bit. Wages and prices rose slightly and financial conditions improved modestly. The crop harvest got off to a slow start, as rains delayed fieldwork.\nSt. Louis\nEconomic conditions have improved slightly since the previous report. Contacts from multiple industries noted a heightened sense of economic uncertainty. Consumer spending activity ticked up. Local bankers reported growth in outstanding loan volumes. However, manufacturing activity contracted slightly, and row crop production levels are expected to be well below 2018 levels.\nMinneapolis\nNinth District activity grew at a slight pace. Employment was flat. Labor demand remained healthy with some signs of softness. Manufacturing activity decreased slightly, with some contacts expecting a further slowdown in the final quarter of 2019. Consumer spending was mixed, but late-summer tourism was solid. Commercial construction and real estate increased, but residential was mixed. Oil drilling increased slightly.\nKansas City\nEconomic activity expanded slightly in late August and September. Consumer spending rose modestly, and sales in the transportation, professional and high-tech services, and wholesale trade sectors were solid. Real estate activity increased, but residential construction activity slowed. However, energy and manufacturing activity declined, and agricultural conditions remained weak.\nDallas\nEconomic activity continued to expand moderately. Energy activity declined, but growth remained solid in manufacturing and services. Home sales increased and loan demand accelerated. Selling prices were largely flat, as firms' ability to pass through cost increases remained limited. Hiring continued at a steady pace. Outlooks were mixed and uncertainty remained elevated.\nSan Francisco\nEconomic activity in the Twelfth District expanded at a modest pace. The labor market remained tight, and wage growth was moderate. Reports on price inflation were mixed. Sales of retail goods increased modestly, and consumer and business services activity expanded slightly. The pace of commerce in the manufacturing sector was little changed, and the agriculture sector slowed further. Activity in residential and commercial real estate markets was solid, and lending grew further.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nOctober 16, 2019\nSummary of Economic Activity\nEconomic activity in the Twelfth District expanded at a modest pace during the reporting period of mid-August through September. The labor market remained tight, employment growth was modest, and wages grew moderately. Reports on price inflation were mixed. Sales of retail goods increased modestly, and activity in consumer and business services expanded slightly. The pace of commerce in the manufacturing sector was little changed, and agriculture sector slowed further. Activity in residential and commercial real estate markets was solid. Lending grew further.\nEmployment and Wages\nThe labor market remained tight, and employment levels grew modestly on balance. Some contacts explicitly pointed to growing customer demand as the impetus for adding employees. In general, labor demand continued to outpace supply in sectors such as construction, finance, and hospitality. However, some businesses observed that they were able to add workers because labor shortages abated somewhat over the reporting period. In Washington, large e-commerce companies continued hiring to staff new distribution centers. A community bank in Oregon added positions in response to swifter lending activity. A restaurateur in Southern California reported that a shortage of qualified workers resulted in some restaurants reducing operating hours. A contact in Oregon reported that retail job growth was slightly negative year-on-year and that some manufacturers were unable to fill positions due to skills gaps.\nWages continued to rise moderately across sectors. Labor shortages in construction boosted wages in that sector and resulted in longer lead times for projects. Contacts reported rising salaries for skilled information technology and software development personnel. A business services provider reported that wage growth has decelerated since last year, but is still very high by historical standards. Several contacts emphasized that rapid employee turnover continued to be a key challenge and was a driver of more generous retention-focused benefit packages and higher wage offers. In California, newly enacted legislation about the designation of independent contractors as employees is expected to increase labor costs for impacted companies significantly in the new year.\nPrices\nReports on prices were mixed, but suggested that inflation was stable or up slightly on balance. Contacts in a variety of sectors reported no noticeable change in pricing over the reporting period. Some attributed this to brisk competition among businesses, which limited the ability to pass on higher labor costs to customers. Selling prices for some businesses in the logistics and professional services industries picked up moderately due to solid product demand, while inflation for health-care services jumped slightly. A few contacts observed higher fuel prices following supply disruptions in the Middle East. Building materials costs rose across the District, with some reports attributing this to a pickup in demand in the residential real estate market. However, lumber prices continued to run well below historical averages due to weak export demand, and some local areas saw declines in building material costs in response to limited construction activity. In the agriculture sector, crop prices softened overall due to weaker demand from abroad, though some products saw higher selling prices on net due to lower yields following poor growing conditions.\nRetail Trade and Services\nSales of retail goods increased modestly. Across the Mountain West, retailers reported that sales volumes rose moderately and margins were healthy even though consumer confidence about the outlook waned slightly on rising uncertainty. Sales at home improvement stores in Oregon were robust. In Arizona, retail sales were stable, while in Alaska, sales continued to decline and a large apparel retailer left the state. Businesses continued to observe consumer demand shift to e-commerce outlets from brick-and-mortar locations.\nActivity in the consumer and business services sectors expanded slightly. Health-care service providers in the Mountain West noted solid customer demand and the capacity to meet it. The restaurant industry in the Pacific Northwest was generally strong, with local tourism and rising incomes supporting spending. In Seattle, a contact noted that a new restaurant opened about every day, on average, though another contact at a quick service beverage company in the area observed flat sales growth across locations. The tourism industry in Southern California slowed somewhat, with a hotel owner reporting lower occupancy rates for that type of lodging.\nManufacturing\nActivity in the manufacturing sector was little changed. A metals manufacturer in the Pacific Northwest reported steady activity across various product lines, while a contact in the semiconductor industry in California reported that sales and inventory levels were normal. The slowing trend in both housing and global growth along with the stronger dollar generally constrained sales at domestic wood product manufacturers, though some noted that a recent tick up in the housing market stabilized demand somewhat.\nAgriculture and Resource-Related Industries\nActivity slowed further in the agricultural sector. Poor weather in Idaho damaged wheat harvests, while potato yields were lower than last year due to poor growing conditions earlier in the season. The outlook for Idaho's corn crop was similarly weak due to colder-than-usual conditions. Demand for agricultural exports continued to run soft, with contacts generally citing tariffs and slower global growth as reasons for the decline in exports. A lumber producer in Oregon noted that lumber exports to China have dropped so much that the industry has started scaling back harvesting capacity to preserve domestic prices. An apple grower in Washington reported an oversupply of fruit in the market, and contacts in California noted that cherry and nut exports to China were down noticeably. Demand from abroad for various meat products was also weak due to tariffs, though a negative supply shock in the Chinese pork industry continued to drive stronger-than-usual demand for swine exports. A contact in California reported that demand for farmland has fallen recently due to realized and potential effects of trade policy developments, resulting in moderating land prices.\nReal Estate and Construction\nResidential real estate activity was strong. Permitting for single- and multi-family homes picked up in most areas, though construction starts were constrained by a lack of labor and higher material costs, which led inventories to fall noticeably and lead times to increase. Accordingly, selling prices ticked up across the District as demand outpaced supply. An exception was in the Central Valley of California, where a contact reported that permitting was down and inventory levels increased more than expected. In areas such as eastern Washington and central Oregon, sales activity was brisk due to new buyers arriving from higher-cost areas. A contact in the Mountain West reported that mortgage rates lower than earlier in the year spurred an increase in demand from formerly tepid levels.\nActivity in commercial real estate markets was also solid, and vacancy rates were generally low. In the Pacific Northwest, commercial permitting was especially brisk, and contacts there noted that construction would be centered on transportation infrastructure, health-care services, and public schools. In eastern Washington, rising demand for industrial space from the cannabis industry boosted leasing rates. In central Oregon, three of the largest commercial construction contractors were booked for projects through next year.\nFinancial Institutions\nLending activity grew solidly over the reporting period. Across the District, loan demand was brisk, supported by lower interest rates. Some banks reported that home mortgage refinancing activity increased further. Venture capital funding was strong in Seattle. Lenders to the agriculture sector in the Mountain West were concerned about weakness in that industry leading to loan defaults down the road. Generally, however, contacts reported that credit quality was healthy, with a few bankers noting slightly tighter underwriting standards.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"October 16, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly overall in late August and September, and contacts expected growth to continue at a similar pace over the next 12 months. Employment, consumer spending, business spending, and construction and real estate all increased slightly. Manufacturing production declined a bit. Wages and prices rose slightly and financial conditions improved modestly. The crop harvest got off to a slow start, as rains delayed fieldwork.\nEmployment and Wages\nEmployment increased slightly over the reporting period and contacts expected a similar-sized increase over the next 12 months. Hiring continued to be focused on professional and technical, sales, and production workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. One auto supplier facing a decline in sales due to the GM strike planned to cut workers' hours rather than making layoffs because he felt that in the tight labor market, it would be too difficult to find new workers after the strike ended. A staffing firm reported little change in billable hours. Wages increased slightly overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. Many firms reported rising benefits costs.\nPrices\nPrices rose slightly in late August and September, though contacts expected prices to rise somewhat faster over the next 12 months. Retail prices moved up slightly, with reports of increases related to both realized and potentially higher tariffs. Producer prices edged up, with contacts reporting stable freight costs and slower increases in labor and materials costs.\nConsumer Spending\nConsumer spending increased slightly on balance over the reporting period. Nonauto retail sales moved up a bit, with reports of gains in the appliances, outdoor, and lawn and garden sectors, but declines in apparel. Contacts expected holiday spending to be similar to or slightly higher than last year. Contacts reported lower tourism volumes. New light vehicle sales increased at a moderate pace and dealers reported that margins on new vehicles continued to shrink. Used vehicle sales remained at a strong level, surprising some dealers. Contacts said that the strike at GM hadn't yet hurt new vehicle sales, but believed that it would if the strike continued into November. The strike had created parts shortages though, which resulted in extended wait times for some repairs. In addition, there were reports of dealers providing only basic services for GM vehicles such as oil changes and tire rotations.\nBusiness Spending\nBusiness spending increased slightly in late August and September. Retail inventories were a little high overall, with reports that sales of fall merchandise were below expectations. Contacts said that the strike at GM was slowly depleting inventories of GM vehicles, but that inventories at GM suppliers were expected to keep growing until the strike ends. Most manufacturers reported comfortable inventory levels, though there were reports of shortages of stainless steel. Capital spending moved up slightly, and contacts expected that pace to continue over the next 12 months. Outlays were primarily for replacing industrial and IT equipment and renovating structures. Contacts continued to note that elevated uncertainty about international trade policy was holding back investment and spurring efforts to diversify supply chains. Demand for transportation services declined modestly. Commercial and industrial energy demand was little changed, with increases in commercial consumption offset by declines in industrial consumption.\nConstruction and Real Estate\nConstruction and real estate activity increased slightly over the reporting period. Residential construction rose modestly, with increased starter home construction outweighing lower high-end homebuilding. Contacts indicated that rising costs continued to put a damper on building. Residential real estate activity was little changed on balance, with higher sales of low- and moderately-priced homes offset by fewer sales of high-priced homes. Overall, home values rose slightly. Nonresidential construction activity was little changed. Nonresidential builders also noted that rising costs were slowing activity. Commercial real estate activity increased slightly. Contacts reported that demand from investors for buildings with tenants already in place continued to be strong. Rents, vacancies, and the availability of sublease space were little changed.\nManufacturing\nManufacturing production decreased slightly in late August and September. Demand in the automotive industry decreased some, but remained at a solid level. Contacts noted that the halt in production at GM plants due to the strike was starting to affect auto suppliers' order books. Demand for steel decreased slightly. Heavy machinery manufacturers also reported a slight drop in orders, led by declines in demand from the oil and gas sector. Orders fell for specialty metals manufacturers as well, driven by decreased demand from the auto industry. Demand for heavy trucks increased, though contacts expected demand to slow through the rest of the year.\nBanking and Finance\nOverall, financial conditions improved modestly over the reporting period. Participants in the equity and bond markets reported a slight improvement in conditions. Business loan demand rose modestly, with growth spread across sectors. There were numerous reports of increased refinancing volumes for commercial real estate loans. Loan quality remained solid across most sectors. Contacts again said that lending standards were little changed, but noted that strong competition was creating pressure to loosen them. Consumer loan demand increased modestly, with reports of higher mortgage refinancing and home purchasing volumes. Loan quality and standards were little changed.\nAgriculture\nThe corn and soybean harvest got off to a slow start in the District, as rains delayed fieldwork. In addition, the harvest started later than usual because heavy spring rains had delayed planting and crops were up to a month behind in maturity. Contacts had mounting concerns about how much of this year's crop would be able to fully mature before a hard frost hits. Overall, contacts expected the harvest to be well below those of recent years. Corn and soybean prices moved higher, especially toward the end of the reporting period. Egg and dairy prices were up, but hog and cattle prices drifted down. Contacts noted that although there was still uncertainty about the size of China's purchases of agricultural products, there was positive news for farmers in the newly announced trade deal with Japan and in recent adjustments to the implementation of the Renewable Fuels Standard that will support demand for biofuels.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"October 16, 2019\nSummary of Economic Activity\nBusiness activity showed signs of slowing in the First District. Retail results were mixed, while restaurants and tourism contacts cited recent signs of softening. Few manufacturers provided positive reports. By contrast, software and information technology services firms said revenues were up, some strongly. Commercial real estate activity remained strong in the Boston and Portland metro areas and picked up in Providence. Housing prices across the region continued to rise. Except for software and IT services, most responding firms had downgraded their outlooks since the last round.\nEmployment and Wages\nLabor markets remained tight even as a couple of firms began layoffs. Retailers said the labor market was tight. Among manufacturers, however, no contact reported increasing headcount and two \u2013 which supply industrial customers \u2013 reported significant layoffs, about 5 percent of their staff. One also instituted furloughs and shortened workweeks; another respondent reported a marked increase in unsolicited resumes for skilled machinists. By contrast, two manufacturing contacts reported that they still have difficulty finding qualified employees. Software and IT services contacts indicated that while headcount and turnover were largely unchanged, most planned to hire more front-facing sales roles in addition to technical and R&D staff.\nPrices\nDiverse influences across markets led to varied price pressures. Retailers reported prices were fairly steady while Massachusetts restaurants cited an average 3 percent increase in menu prices year-over-year. Manufacturers indicated that price changes were mixed. On one hand, declines in activity have reduced pricing pressure. Two contacts noted significant drops in paper and pulp pricing due to reduced demand from China. Three contacts said that price and availability of trucking services improved considerably since last year. On the other hand, tariffs have raised costs for several manufacturers. A producer of frozen fish said that tariffs had driven up prices. Software and IT services respondents reported no price increases and no plans to raise prices in the near future.\nRetail and Tourism\nResponding retailers reported sales ranging from down about 6 percent to up about 2 percent year-over-year; the outlook was less optimistic than in the last few rounds. One retailer noted that while the upcoming holiday season may provide a boost, expectations were that sales growth for 2019 and into 2020 would be pretty flat.\nMassachusetts restaurant sales were up 5.5 percent for the year ending June 30. Much of the overall increase was driven by sales in the last half of 2018. The slower first-half trend continued into July and August, as sales in both months were down year-over-year. A surge in home delivery services reportedly ate into restaurant profit margins already under pressure from ongoing increases in operating costs and more competition from an over-supply of restaurants relative to the customer base. These factors combined to make the outlook uncertain.\nCape Cod had an unexpectedly challenging summer tourist season. Bookings for overnight accommodations were down, though day travel to the Cape was up, judged by an increase in passenger traffic on the bridges and weekend train service. One theory was that the strong US dollar prompted more Americans to vacation abroad this summer. Media attention was \"overly\" focused on increased shark sightings and (rare) tornados. Autumn business on Cape Cod was shaping up to be good, but a contact worried that tourism may be entering a slower pattern compared to 2017 and 2018, when tourist activity reached historic highs.\nManufacturing and Related Services\nReports from manufacturers were mostly negative. Four of the seven respondents reported lower sales versus the same period last year, two reported flat sales and only one firm, a defense contractor, reported higher sales. Several contacts attributed declines to trade issues; a manufacturer of filtration membranes said that chip manufacturers were delaying new plant construction due to uncertainty about trade policy. The farm-sector recession reduced demand for heavy equipment.\nNo contacts reported positive revisions to capital spending plans and two reported significant cuts. An industrial supplier planned to cut capital expenditures versus last year by as much as 25 percent versus a previously-planned 5 percent increase.\nFive of seven contacts reported downward revisions to their 2020 outlook. Three of those remained positive but less positive than earlier. One industrial firm expected a recovery to start in the second half of 2020. Several compared now to 2015 when industrial demand slowed markedly but the economy as a whole did not.\nSoftware and Information Technology Services\nGrowth in demand in the past quarter exceeded expectations for the majority of New England software and IT services sector respondents. All three contacts experienced positive demand growth. Two noted that market interest in subscription and cloud-based offerings had picked up month-to-month. Revenue growth remained positive and ranged from 2 percent to 24 percent year-over-year. For most firms, capital expenditures were unchanged, but one mentioned considering a switch from housing their own servers to migrating their operations onto the cloud, which would significantly change the structure of their capital expenses. All in all, contacts were upbeat in light of a third quarter that exceeded expectations, but many remained wary of political and macroeconomic uncertainty in the longer-term.\nCommercial Real Estate\nCommercial real estate activity in the First District continued to strengthen overall, but with inconsistencies in performance across geographic submarkets. Boston's leasing market continued to be strong as all contacts described low vacancy and high absorption. Asking rents in prime Boston locations increased by 20 percent in the last 9 to 12 months according to one contact. Construction activity in Boston was robust. The investment sales market in Boston was also strong, with high loan volume and low interest rates. In the Greater Portland area, both construction and leasing activity in office, industrial, and retail markets were up. In the leasing market, vacancies were low and the average rent rose about 5 percent over the past year. The investment sales market was also strong. The outlook remained positive for Boston and was optimistic for Portland.\nIn the Providence area, the office leasing market picked up as the summer season ended, but demand still remained tepid. Demand for buying industrial buildings was strong, but supply was limited. As a result, office rents increased moderately, while industrial rents rose faster. Market activity was expected to grow in October and early November. Transaction volume in the Providence investment sales market was limited. According to a contact, people were hesitant to commit to new construction and investment projects because of uncertainty about the next recession. In Greater Hartford, leasing activity as well as construction activity stayed low. The industrial leasing market flattened as companies gave up space, and the investment sales market slowed slightly. The outlook for Connecticut was less upbeat than outlooks for other New England states.\nResidential Real Estate\nResidential real estate markets in the First District continued to moderate in August. For single family homes, closed sales decreased moderately from August 2018 to August 2019 in Rhode Island, Massachusetts, Boston, and New Hampshire. Median sales prices rose in all four reporting areas. Massachusetts, Boston, and New Hampshire experienced double-digit drops in inventory. For condos, sales were down in Massachusetts, Boston, and New Hampshire and up in Rhode Island. Median sales prices for condos were up in all reporting areas but Boston. Vermont and Maine \u2013 reporting combined statistics for single family homes and condos \u2013 cited moderate price increases, slight drops in closed sales in Vermont, and modest sales increases in Maine.\nThe ongoing shortage of active listings drew attention from many respondents. According to the Rhode Island contact, \"Regardless of what happens to interest rates over the next year, we can't sell what we don't have available for sale.\"\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"September 4, 2019\nSummary of Economic Activity\nOn balance, aggregate Third District business activity continued at a modest pace of growth during the current Beige Book period. Manufacturing accelerated to a moderate pace of growth, and nonmanufacturing, nonauto retail sales, and tourism continued at a modest pace of growth. Sales for new autos as well as commercial real estate construction and leasing continued to decline slightly. Homebuilding softened somewhat, and existing home sales declined further. Wage increases remained moderate, as the labor market remained tight. Overall, price pressures remained modest. The firms' outlook for growth over the next six months remained positive, with about half of all firms anticipating increases in general activity and less than one-fifth expecting decreases. However, contacts noted a slightly more cautious outlook given trade and market uncertainty.\nEmployment and Wages\nEmployment growth continued at a modest pace during the current Beige Book period. More than one-fourth of all firms reported increases in staff, similar to the previous period, however, the share of manufacturers reporting decreases rose. Average work hours were little changed across firms over the period.\nContacts continued to report that tight labor market conditions were constraining growth, as many noted difficulty in finding qualified workers for needed positions in various sectors. Staffing firms reported continued struggles in finding qualified candidates, with one firm describing the labor pool in its area as \"nearly nonexistent.\"\nWage growth continued at a moderate pace, with contacts reporting wage increases ranging from above 3 percent to above 5 percent on a year-over-year basis. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged down below 45 percent; only 1 percent reported decreases. Several contacts reported no change or a leveling-off in wages from the prior period.\nPrices\nThe firms reported overall modest increases for both input prices and prices received for their own goods and services. The share of nonmanufacturing firms reporting increases in prices rose, while the share of manufacturing firms reporting increases held mostly steady. Roughly two-thirds to three-quarters of firms reported no change in prices over the period. Most banking contacts continued to note no signs of inflation.\nLooking ahead six months, manufacturers continued to anticipate higher prices for inputs and for their own goods, on balance. The percentage of manufacturing firms that expect to pay higher prices for inputs rose to above 45 percent, and the share expecting to receive higher prices for their own goods increased to almost 35 percent.\nManufacturing\nOn balance, manufacturers reported moderate growth in activity \u2013 a pickup from the slight pace of growth during the prior period. Indexes for shipments and unfilled orders remained above long-term nonrecession averages, and the new orders index improved to an above-average level as well.\nThe makers of lumber products, chemicals, and fabricated metal products noted gains in new orders and shipments since the prior period. The primary metal and industrial machinery producers reported little change, and the makers of electronic products noted declines. These trends were somewhat weaker this year compared with the same period one year ago for most of the sectors.\nManufacturers' expectations of activity over the next six months improved somewhat. Expectations of shipments and of new orders were above long-term nonrecession averages, with the latter rising above average over the period. Expectations of future employment and planned capital spending also remained above average but were little changed. Some firms reported that uncertainty continued to hamper their investment decisions.\nConsumer Spending\nContacts for malls and convenience stores continued to report modest growth in nonauto retail sales, on balance. Some mall store operators reported modest increases in year-over-year sales and foot traffic. Convenience store contacts continued to report strong sales.\nSales of new autos continued to show signs of slowing but remained near high levels. Pennsylvania dealers reported moderate year-over-year growth through July for both new and used cars and noted recent weakness in new car sales. In New Jersey, early estimates by dealers indicated modest declines in year-over-year sales for July and August, following weak sales in June. One contact cited weakening consumer confidence and rising new car prices as contributing factors.\nTourism activity continued to grow at a modest pace. One contact noted that the Jersey shore season has been fine, with high occupancy, and that restaurants and other retail are performing well. Casino revenues in Atlantic City were up modestly. Occupancy rates recovered in the Poconos for the summer season following softness earlier in the year. Hotel demand in the Greater Philadelphia market was generally in line with the prior period but slowed somewhat, partly owing to shorter booking windows for business travel.\nNonfinancial Services\nOn balance, activity at service-sector firms continued at a modest pace of growth. The percentage of firms reporting increases in current revenues rose, although the percentage reporting increases in new orders fell. Roughly one-half of firms expect growth over the next six months, unchanged over the period. One large firm noted that it had a modestly more conservative outlook and that it was cutting back on capital spending a bit because of recent uncertainty.\nFinancial Services\nFinancial firms reported continued moderate growth in both overall loan volumes (excluding credit cards) and credit card lending on a year-over-year basis.\nDuring the current period (reported without seasonal adjustments), volumes appeared to grow robustly in home mortgages and auto lending. Commercial and industrial loans grew moderately, as did other consumer loans (not elsewhere classified). Home equity lines declined modestly.\nBanking contacts continued to note increased uncertainty, but while some contacts reported that businesses were hanging on the sidelines or hitting pause, other contacts have not seen customers holding off on making investments. Contacts generally remained optimistic for the remainder of 2019, although somewhat less so than in the prior period.\nReal Estate and Construction\nHomebuilders reported a modest decrease in contract signings in the current period, down from the prior period. Contacts noted some strength in southern New Jersey housing markets across most price ranges but a slowing in traffic and sales at all price points in central Pennsylvania.\nExisting home sales declined moderately on a year-over-year basis \u2013 a larger decline than in the prior period \u2013across most local markets. Low inventories continued to limit sales in all markets. A large Philadelphia broker noted a slight boost in refinancing activity following the FOMC's rate cut.\nOn balance, commercial real estate construction and leasing activity continued to pull back from relatively high levels. Contacts noted that fundamentals in larger markets seemed sound. Office and industrial markets were characterized by relatively even to positive net absorption, stable vacancy rates, and incremental rent growth.\nFor more information about District economic conditions visit: www.philadelphiafed.org/research-and-data/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"September 4, 2019\nSummary of Economic Activity\nMost First District business contacts reported modest revenue growth in the second quarter and into the summer months, but some retailers, hotels, and manufacturers cited stronger sales growth and a couple of manufacturers said revenue was down from a year earlier. Tariffs and general trade uncertainty continued to be mentioned as risk factors. Staffing firms were more upbeat than three months ago, reporting improvements in the pace of revenue growth. Commercial real estate markets also improved somewhat, with Boston continuing to be the strongest area. Residential real estate market activity moderated during the summer months. While some firms mentioned raising wages somewhat to attract and keep employees, most said the labor market was steady. Outlooks ranged from guardedly optimist to generally positive.\nEmployment and Wages\nLabor markets were reportedly not much changed from the last report. One fast-growing retailer reported a successful on-campus recruiting push, filling technical and other jobs and raising wages to do so. Another retailer continued to cite little difficulty hiring sales people. Manufacturing respondents, with one exception, reported no major revisions to their hiring plans. The exception was a semiconductor-related firm facing sales declines, who said they would probably start layoffs within six to eight weeks. Staffing firms said the number of job requests overall remained strong for both temporary and permanent openings. Most staffing contacts reported stable bill and pay rates, but two firms increased both rates by low single-digit percentages.\nPrices\nContacts said very little about prices. Retailers noted no price concerns. Tariffs continued to be a minor but persistent pricing issue for manufacturers; firms generally tried to pass price increases on to buyers and reported success most of the time. Aside from tariffs, manufacturers reported no unusual pricing pressure.\nRetail and Tourism\nFirst District retail respondents this round reported comparable-store sales increases ranging from flat to up by mid-single digit percentages or higher year-over-year. Some contacts said results exceeded their expectations, while others cited July sales a little slower than anticipated. One explanation was a slowdown in getting products from non-Chinese Asian manufacturers, as the ports in these countries were said to be not yet able to handle the increased shipping demand. The retail outlook for the rest of the year is largely positive.\nAn automotive industry contact in Connecticut reported that sales through June were up slightly from the first quarter. Dealers were selling more used cars than new models, with consumer credit readily available for financing either new or used vehicles. The contact argued that imposing additional tariffs on China would have a disproportionately adverse effect on U.S. autos.\nA travel industry contact reported that Boston hotel room demand increased 3.2 percent in June over last year, and that the average room rate was 4.2 percent higher. Boston hoteliers said they were happy with the summer tourism season to date, as strong business and leisure travel kept room demand high. Year-to-date through June, average room revenue for Boston hotels was up 6.9 percent, compared with the national average of 3.3 percent. These mid-year results and anecdotal reports through mid-August lead the tourism industry to expect 2019 revenues to be up solidly over 2018.\nManufacturing and Related Services\nReports from manufacturing contacts continued to be mixed. Three of the nine firms contacted this round are in the semiconductor industry; two reported sales declines versus the same period a year earlier, including one with a 20 percent drop. Several contacts in other industries reported that growth, while still positive, was slower than in earlier periods. A manufacturer of electrical equipment attributed some of its slowdown to lower energy prices reducing demand from energy extraction firms. An aerospace firm which supplies parts to Boeing's 737 MAX aircraft indicated that that aircraft's well-publicized problems had not translated into lower sales yet. A manufacturer of dairy products said demand for their products was the strongest in a long time.\nNo contacts reported significant revisions to capital expenditure plans. One respondent in the electrical equipment business said that the tariffs had led them to invest more in automating factories in the U.S. as opposed to moving them to Mexico.\nOutside of the semiconductor industry, the outlook remained generally positive for most contacts. Many continued to mention trade tensions as an issue.\nStaffing Services\nNew England staffing firms reported positive revenue trends for the second quarter of 2019. All firms cited improved growth rates compared to the previous quarter, with rates as high as 20 percent quarter-over-quarter. Two mentioned that their business results were among the top five performing firms in their respective region. On the other hand, scarce labor supply continues to be the most challenging issue among staffing businesses. Several respondents noted difficulty in matching the skill sets job seekers possessed with those desired by employers. Consequently, companies wanting to hire have been accepting less qualified workers and offering higher pay rates. Staffing firms mentioned aggressive use of online recruiting job boards and offering competitive rates and benefits to candidates. With unemployment low and labor supply limited, staffing respondents cited a guardedly optimistic outlook.\nCommercial Real Estate\nCommercial real estate activity in the First District strengthened somewhat overall, but differences in performance across geographic submarkets persisted. The Boston area saw robust leasing demand in both the office and industrial sectors. Class A office rents in prime Boston locations increased substantially in the past six months, and the office vacancy rate, at roughly 8 percent, was said by one contact to be at an all-time low. Industrial rents in Boston climbed 6 percent to 10 percent over the year as e-commerce users competed fiercely for scarce warehouse space. Construction activity held steady in the Boston area; in recent months, the share of office construction has risen relative to apartments.\nIn the Providence area, industrial leasing activity remained robust, exceeding expectations, and two-year rent growth in that market was estimated at 33 percent. Office leasing in Providence softened and office asking rents were stable despite a vacancy uptick; a contact expects effective rents to soften moving forward. In greater Hartford, leasing activity for both office and industrial space was described as very slow but stable.\nInvestment sales were slow across the District. Contacts expect sales to resume in the fall, with the potential for increased demand following declines in long-term Treasury yields and increasingly favorable borrowing conditions. Concerning the outlook, contacts see no risks of overbuilding or overleverage in commercial property in the District. In Boston, the lack of profitability of high-tech firms occupying large blocks of space was cited as a risk factor. Otherwise, respondents expect stable activity.\nResidential Real Estate\nActivity in residential real estate markets in the First District moderated in June or July following strong sales results in May. (Rhode Island, New Hampshire, and Maine reported year-over-year changes from July 2018 to July 2019, while Massachusetts, Vermont, and Greater Boston reported statistics through June. Connecticut statistics were unavailable.) For single family homes, closed sales decreased moderately from a year earlier in Massachusetts, Boston, and New Hampshire, and increased in Rhode Island and Maine. Median sales prices rose and inventory declined in all reporting areas. In particular, Rhode Island, Massachusetts, and New Hampshire experienced double-digit inventory drops over the year. For condos, closed sales were down and prices were up in all areas except Maine. Condo inventories improved in Maine, Massachusetts, and Boston, and decreased sharply in New Hampshire and Rhode Island. In Vermont, closed sales and inventory dropped for single family homes and condos combined.\nContacts expressed a positive near-term outlook, citing persistent high demand and low interest rates as reasons. However, contacts voiced affordability concerns as intense bidding and multiple offers still prevail.\nFor more information about District economic conditions visit: www.bostonfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"September 4, 2019\nSummary of Economic Activity\nEconomic activity in the Seventh District increased slightly overall in July and early August, and contacts expected growth to continue at a similar pace over the next 12 months. Consumer spending increased modestly; employment and business spending increased slightly; and manufacturing and construction and real estate were little changed. Wages and prices rose slightly. Financial conditions were little changed on balance. Farm income prospects improved some, but remained poor for most agriculture sectors.\nEmployment and Wages\nEmployment increased slightly over the reporting period and contacts expected a similar-sized increase over the next 12 months. Hiring continued to be focused on professional and technical, sales, and production workers, with a noticeable increase in the number of contacts hiring professional and technical workers. As they have for some time, contacts indicated that the labor market was tight and that it was difficult to fill positions at all skill levels. A staffing firm reported little change in billable hours. Wages increased slightly overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. Many firms reported rising benefits costs.\nPrices\nPrices rose slightly in July and early August, though contacts expected prices to rise a bit faster over the next 12 months. Retail prices increased slightly. One contact said that the effect on retail prices of the scheduled new tariffs on Chinese imports wouldn't be felt until early 2020. In contrast, another contact reported that some retailers had already started implementing incremental price increases to avoid a single, noticeable increase when the tariffs came into effect. Producer prices rose slightly, with contacts reporting falling freight costs and slower increases in labor and materials costs.\nConsumer Spending\nConsumer spending increased at a modest pace over the reporting period. Nonauto retail sales were up modestly, with gains in the apparel and general merchandise sectors but declines in the furniture and building materials sectors. Contacts noted that malls and department stores continued to struggle. Back-to-school sales were meeting expectations, with reports of particularly good results for discount stores and big box supercenters. Sales of new and used light vehicles increased modestly.\nBusiness Spending\nBusiness spending increased slightly in July and early August. Retail inventories were generally at comfortable levels. One contact reported that a few apparel and big box retailers had ordered aggressively for the holiday shopping season but that most retailers were placing orders that were more conservative. Manufacturing inventories were somewhat elevated overall. Capital spending moved up slightly, and contacts expected that pace to continue over the next 12 months. Outlays were primarily for replacing industrial and IT equipment. There was a noticeable decline in the number of contacts reporting spending for renovating structures. Contacts continued to note that elevated uncertainty about the future state of the economy and international trade policy was holding back investment and spurring efforts to diversify supply chains. Demand for transportation services declined moderately. Commercial and industrial energy demand increased slightly, led by increases in manufacturing utilization.\nConstruction and Real Estate\nConstruction and real estate activity was little changed over the reporting period. Residential construction was flat, with increases in the multifamily sector offset by decreases in luxury single-family building. Residential real estate activity decreased modestly as tight inventories for starter homes continued to hold back sales. Contacts continued to report that it was unprofitable to build starter homes because of high costs. Contacts indicated that the effect of lower mortgage rates on home buying was weaker than usual. Nonresidential construction increased slightly, and one contact reported that bidding activity remained high. Like residential builders, nonresidential builders also noted that high costs were slowing the rate of construction. Commercial real estate activity was unchanged, with steady activity across most sectors. Rents ticked up, while vacancies and the availability of sublease space were flat.\nManufacturing\nManufacturing production was little changed in July and early August, though contacts were generally satisfied with the level of activity. Steel demand increased slightly. Demand for heavy machinery declined some, though one contact expected orders to increase during the second half of the year, particularly from the mining industry. Specialty metals manufacturers reported a slight decline in orders, as decreased demand from the auto and heavy equipment industries was only partially offset by increased demand from the defense and aerospace industries. Orders for heavy trucks increased, though contacts expected demand to slow through the second half of the year. Manufacturers of construction materials reported a modest increase in shipments. Auto production was flat.\nBanking and Finance\nFinancial conditions were little changed on balance over the reporting period. Financial market participants attributed lower equity and higher bond prices to greater uncertainty about the future state of the economy. Business loan demand rose modestly, with reports of increased equipment purchases and M&A activity but lower commercial real estate activity. Loan quality remained solid across most sectors. Contacts said that lending standards were little changed, but noted that strong competition was creating pressure to loosen them. Consumer loan demand increased slightly, with little change in loan quality or standards. There were reports of a small increase in mortgage refinancing due to lower interest rates.\nAgriculture\nFarm income prospects improved some, but remained poor for most agriculture sectors. Expectations for corn and soybean output improved some but were still much lower compared to a year ago, and the condition of crops was highly variable. Crop development was as much as a month behind normal because the wet spring delayed planting. Prices for corn and soybeans declined. Egg and dairy prices moved higher, while hog and cattle prices moved lower. Contacts noted that another round of payments from the Market Facilitation Program, along with other government programs, were helping to make up for low farm incomes.\nFor more information about District economic conditions visit: chicagofed.org/cfsbc\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nSeptember 4, 2019\nThis report was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before August 23, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nOverall Economic Activity\nOn balance, reports from Federal Reserve Districts suggested that the economy expanded at a modest pace through the end of August. Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook. Reports on consumer spending were mixed, although auto sales for most Districts grew at a modest pace. Tourism activity since the previous report remained solid in most reporting Districts. On balance, transportation activity softened, which some reporting Districts attributed to slowing global demand and heightened trade tensions. Home sales remained constrained in the majority of Districts due primarily to low inventory levels, and new home construction activity remained flat. Commercial real estate construction and sales activity were steady, while the pace of leasing increased slightly over the prior period. Overall manufacturing activity was down slightly from the previous report. Among reporting Districts, agricultural conditions remained weak as a result of unfavorable weather conditions, low commodity prices, and trade-related uncertainties. Lending volumes grew modestly across several Districts. Reports on activity in the nonfinancial services sector were positive, with reporting Districts noting similar or improved activity from the last report.\nEmployment and Wages\nOverall, Districts indicated that employment grew at a modest pace, on par with the previous reporting period. While employment growth varied by industry, some Districts noted manufacturing employment was flat to down. Firms and staffing agencies universally cited tightness across various labor market segments and skill levels, which continued to constrain growth in overall business activity. On balance, Districts reported that the pace of wage growth remained modest to moderate, similar to the previous reporting period. Districts continued to report strong upward pressure on pay for entry-level and low-skill workers, as well as for technology, construction, and some professional services positions. In addition to wage increases, some Districts noted other efforts\u2014such as enhanced benefits offerings, work arrangement flexibility, and signing bonuses\u2014to attract and retain employees.\nPrices\nOn net, Districts indicated modest price increases since the last report. Retailers and manufacturers in some Districts reported slight increases in input costs. Although firms in some Districts noted an ability to pass along price increases, manufacturers relayed limited ability to raise prices. District reports on the impact of tariffs on pricing were mixed, with some Districts anticipating that the effects would not be felt for a few months.\nHighlights by Federal Reserve District\nBoston\nEconomic activity expanded at a modest pace since the last Beige Book report, although some manufacturers saw declines while tourism and the staffing sector reported strength. Commercial real estate markets strengthened on balance. Residential real estate inventories were down and contacts noted bidding wars.\nNew York\nRegional economic growth continued at a modest pace. Job creation was sluggish, but labor markets remained tight and wage growth picked up a bit. Prices continued to rise modestly. Manufacturing activity picked up slightly. Residential rental markets firmed. Banks reported a rebound in loan demand, but the financial sector overall showed signs of softening.\nPhiladelphia\nOn balance, business activity continued at a modest pace of growth during the current Beige Book period. Contacts continued to report difficulty in finding qualified labor, and wage increases remained moderate. Still, inflation remained modest. Firms remained positive about the six-month outlook, although some expressed more caution given uncertainty.\nCleveland\nOn balance, economic activity was steady over the period. Consumer spending picked up, while manufacturing and freight activity slowed down. Employment remained stable overall, while wages rose moderately across the board. Prices were little changed, with contacts citing as contributing factors a lack of materials cost inflation, intense competition, and softening demand.\nRichmond\nThe Fifth District economy continued to grow at a modest rate. Manufacturers and trucking companies saw some declines in shipments. Ports, tourism, and nonfinancial service firms generally indicated increasing activity. Residential and commercial real estate markets were stable to improving modestly. Labor markets remained tight, wages rose modestly, and prices increased at a moderate rate.\nAtlanta\nEconomic activity moderated slightly over the reporting period. Labor market tightness persisted. Wage growth remained steady and input costs rose slightly. Retail sales and tourism activity were mixed. Real estate sales and construction were down from a year ago. Manufacturing activity softened. Banking conditions remained steady.\nChicago\nEconomic activity increased slightly. Consumer spending increased modestly; employment and business spending increased slightly; and manufacturing and construction and real estate were little changed. Wages and prices rose slightly. Financial conditions were little changed on balance. Farm income prospects improved some, but remained poor for most agriculture sectors.\nSt. Louis\nEconomic conditions were unchanged from our previous report. Construction activity ticked up. Barge traffic continued to improve, but air cargo traffic decreased slightly from a year ago. Farming conditions remain strained by low commodity prices and residual effects from flooding in the spring. Overall, contacts' economic outlook for the remainder of the year turned slightly pessimistic.\nMinneapolis\nNinth District activity was steady overall. Labor demand remained healthy but employment was flat, as labor availability continued to constrain hiring. Manufacturing grew slightly, but contacts pointed to some signs of softening. Agricultural conditions remained weak due to poor weather during planting, while commercial construction grew strongly as firms caught up with a backlog caused by the slow start to the season.\nKansas City\nDistrict economic activity edged up in July and early August. Consumer spending increased modestly, with gains in retail, auto, restaurant and tourism sales. Real estate activity also expanded, but residential construction activity slowed. Manufacturing activity declined slightly, while activity held steady in the energy sector. The agricultural sector remained weak, with low prices and trade uncertainty weighing on farm income.\nDallas\nEconomic activity continued to expand moderately. Retail sales were flat and drilling activity dipped, but output growth strengthened in manufacturing. Selling price increases were modest, as most firms were limited in their ability to pass through higher costs. Hiring continued at a steady pace. Outlooks were mixed, with tariffs, trade tensions, stock market volatility, and slowing global growth driving up uncertainty.\nSan Francisco\nEconomic activity in the Twelfth District continued to expand at a moderate pace. The labor market remained tight and wage growth was moderate. Price inflation was largely stable. Sales of retail goods increased notably, as did activity in the consumer and business services sectors. The manufacturing and agricultural sectors slowed somewhat. Activity in residential and commercial real estate markets expanded moderately, and lending grew further.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nSeptember 4, 2019\nSummary of Economic Activity\nThe Second District economy continued to expand at a modest pace in the latest reporting period. The labor market remained very tight, as employment levels were flat, and wage growth picked up slightly. Input price pressures have remained subdued, while selling prices have been flat to up moderately. Manufacturing activity was steady to slightly higher, while trade and distribution activity was mixed. However, most service sectors saw steady to modestly growing activity. Consumer spending was up modestly, largely reflecting a pickup in auto sales. Tourism has picked up noticeably. Housing markets have been mixed, though the residential rental market has firmed throughout the District. Commercial real estate markets have been steady to softer, and new commercial construction has tapered off somewhat. Finally, banks reported a rebound in loan demand, though the financial sector overall showed signs of softening.\nEmployment and Wages\nThe labor market has remained very tight across the District. Contacts have continued to report trouble finding qualified workers in a wide variety of roles, including engineers, teachers, construction workers, truck drivers, and retail clerks. An employment agency noted that one factor holding back hiring has been a wide gap between job candidates' salary demands and employers' offers.\nBusinesses in most industries continued to report little or no net hiring. Contacts in the manufacturing, transportation, information, finance, and professional & business services sectors reported flat to slightly declining staffing levels, while businesses in education & health, real estate, and leisure & hospitality reported modest increases in headcounts. The one industry noting fairly brisk net hiring has been wholesale trade. Looking ahead to the next six months, though, businesses in manufacturing and most service sectors still plan on adding to staff.\nWhile businesses generally report that wage growth has remained moderate, there have been scattered signs of a pickup. A large New York City employment agency notes somewhat more upward pressure on salaries, and a finance sector contact in upstate New York notes that they recently upped pay scales for entry-level workers in response to the tight labor market.\nPrices\nOverall, businesses indicated that both input costs and selling prices continued to rise at a modest pace, though there have been some divergent trends across industries. Manufacturers report that their input prices have continued to rise at a modest pace but that their selling prices have flattened out. Looking ahead, an increasingly large share of manufacturers said that they expect their input costs to rise faster than the prices they receive. Contacts in the service sector, on the other hand, reported ongoing growth in their selling prices\u2014particularly in the transportation and education & health industries\u2014along with continued moderate growth in input prices.\nRetailers generally indicated that selling prices have been mostly flat to down slightly, reflecting somewhat steeper discounting. Contacts in both auto sales and retail indicated that trade tensions have not yet had a noticeable effect on prices. In contrast, a major retail chain noted that they had raised prices on furniture and other big-ticket items, but that they were likely to reverse those hikes, as consumers were not responding well.\nConsumer Spending\nRetail sales remained steady in recent weeks and flat to up slightly from a year earlier. A major retailer noted some slowing in sales in early August (partly reflecting tariff-driven price hikes), but the advent of back-to-school season has mitigated that decline. An upstate New York mall reported continued modest growth in sales activity and shopper traffic. In general, inventories were said to be near desired levels, helped by increased discounting over the summer.\nSales of both new and used vehicles picked up noticeably, according to dealers in upstate New York. Still, inventories of new vehicles remained above desired levels. Dealers indicated that service departments have remained busy and characterized consumer credit conditions as being in good shape.\nManufacturing and Distribution\nThe manufacturing and distribution sectors have improved somewhat since the last report. Manufacturers reported that overall activity and new orders have been steady to slightly higher in the latest reporting period, after a pullback during the late spring. Wholesale distributors reported that growth rebounded to a fairly brisk pace. However, transportation firms noted a moderate drop-off in activity in recent weeks.\nWhile manufacturers remain fairly positive about the near-term outlook, wholesale distributors and especially transportation firms have become noticeably less optimistic. Contacts in these sectors, as well as in manufacturing, have expressed ongoing concern about tariffs and trade tensions and about uncertainty going forward.\nServices\nService-sector businesses reported that activity has been mixed but, on balance, a bit stronger since the last report. Contacts in leisure & hospitality noted a substantial pickup in business. An authority on New York City's tourism industry reported that visitations picked up and were strong in August but that visitors were spending less, on average. Broadway theaters reported that attendance slipped somewhat in July and early August and was down modestly from a year ago. Hotel occupancy rates were solid, though average room rates were down due to more people staying at budget hotels.\nOther service industries have not been as robust. Businesses engaged in professional & business services and education & health reported modest growth in activity, while finance and real estate firms generally reported flat activity. Contacts in the information sector reported some pullback in activity. Service firms, in general, were fairly optimistic about the near-term outlook, except for those in the finance sector.\nReal Estate and Construction\nHousing markets across the District have firmed somewhat since the last report, with the rental market strengthening but the sales market mixed. The market for existing homes in upstate New York has continued to strengthen, as persistently low inventories of unsold homes has continued to boost prices and contributed to bidding wars. In New York City, by contrast, the inventory of unsold co-ops and condos has hovered at a 7-year high, though not excessively high by historical standards. Apartment sales prices have drifted down, and transactions activity has retreated from brisk second-quarter levels. Housing markets in the areas surrounding New York City have been mixed.\nResidential rents have accelerated somewhat across the District and are now up 3-6 percent from a year earlier. Rental vacancy rates have declined further, particularly in New York City, and landlord concessions have continued to recede from the high levels of recent years.\nCommercial real estate markets across the District have been steady to softer since the last report. Office rents have been mostly flat, while availability rates have been steady to slightly higher. Industrial markets have been mixed, as rents have continued to rise moderately, while availability rates have edged up further. The market for retail space has been particularly soft, with availability rates climbing to multi-year highs and rents declining modestly.\nNew multi-family construction starts have tapered off a bit, but ongoing construction has remained fairly brisk across the New York City area. New office construction has been steady, while new industrial construction has slowed somewhat. There has been quite extensive new hotel development in New York City's outer boroughs.\nBanking and Finance\nBankers reported higher demand for consumer loans, residential mortgages, and commercial mortgages, all of which had declined in the previous reporting period. Refinancing activity rose. Credit standards for consumer loans, residential mortgages, and C&I loans were unchanged, but tightening standards were reported for commercial mortgages. Bankers reported narrowing loan spreads across all categories. Finally, delinquency rates were reported to be stable across all categories.\nFor more information about District economic conditions visit: www.newyorkfed.org/regional-economy\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2019/2019-09-da

"September 4, 2019\nSummary of Economic Activity\nModerate expansion continued in the Eleventh District economy. Output growth in manufacturing strengthened, and expansion in the service sector was strong in July but eased in August. Home sales rose, and loan volumes expanded albeit at a slower pace. Retail sales were flat and drilling activity continued to decline. Agricultural conditions deteriorated due to hot and dry weather. Employment growth was solid and wage pressures remained elevated. Selling prices rose modestly, as firms' ability to pass through cost increases remained limited. Outlooks improved slightly in manufacturing but softened in the service, energy, and agricultural sectors, with uncertainty surrounding trade policy, tariffs, stock market volatility, and slowing global growth weighing on business sentiment.\nEmployment and Wages\nEmployment expanded at a solid pace. A lack of qualified candidates continued to challenge businesses across sectors and skill levels, but shortages remained most severe for mid-skilled positions. Construction craft labor shortages were reportedly less acute, though food services firms said they were still struggling to find workers. Airlines and energy firms' headcounts were stable, with hiring limited to certain skill sets. Several firms noted that retention of employees was a challenge as well.\nWage pressures remained elevated. Many respondents said they were struggling to fill positions partly because applicants were looking for higher pay than was offered.\nPrices\nInput price pressures were moderate in the service and manufacturing sectors, but ticked up in retail. Selling prices dipped in manufacturing and increases were generally modest in services, as firms' ability to pass through higher costs to customers remained constrained. About 60 percent of firms responding to supplemental questions in the August Texas Business Outlook Surveys said they were able to pass on at least some cost increases, but this share was down from 76 percent in December. Refiners and chemical producers indicated that softening global demand growth and lower oil prices were putting downward pressure on an array of product prices.\nManufacturing\nExpansion in the manufacturing sector continued at a moderate pace in July, but reports of August activity showed a sizeable and broad-based pickup in output growth. Fabricated metals and construction-related manufacturing in particular saw notable strength among durables. Demand growth in nondurables was led by food manufacturing. Chemical production growth slowed in part due to softening global demand. Gulf Coast refinery utilization remained healthy on a seasonally adjusted basis.\nOutlooks turned positive, though uncertainty remained elevated as trade negotiations and tariffs continued to affect business sentiment.\nRetail Sales\nRetailers continued to note weak activity, with sales flat over the reporting period. Auto demand, including used car sales, strengthened, but weakness prevailed in some seasonal segments. Outlooks remained pessimistic and highly uncertain, primarily driven by tariffs and trade tensions, though one contact noted interest rate uncertainty as a factor as well.\nNonfinancial Services\nNonfinancial services activity expanded strongly in July but growth eased in August. Expansion during the reporting period was led by growth in professional and technical services. Most staffing services companies continued to experience year-over-year demand increases. A few that noted softness said it was in part due to heightened uncertainty among clients. Activity in the transportation and warehousing sector was mixed, although shipments of select commodities such as steel and petroleum products rose strongly. Airlines cited healthy passenger demand, with strength in domestic business and leisure segments. Revenues also expanded in the accommodation and food services and health services industries, and one contact said that increased wait times and security at the Texas-Mexico border had reduced the number of Mexican nationals visiting San Antonio.\nService-sector outlooks were lackluster, with uncertainty surrounding trade policy, stock market volatility, slowing global growth, and expectations of a looming U.S. recession were a drag on expectations.\nConstruction and Real Estate\nHomes sales rose during the reporting period. Existing-home sales were generally strong in July, particularly in Houston, and new-home sales were characterized as stable to solid as well. However, a few contacts noted that activity was not as robust as expected given low mortgage rates. Lot development and single-family construction was still being affected, particularly in Dallas\u2013Fort Worth, by earlier weather-related delays. Deal flow volumes were down, as builders remained cautious about signing on new lot agreements. A few contacts mentioned that the build-to-rent (single-family rental) market was gaining traction. Outlooks stayed optimistic with builders generally on plan for 2019.\nApartment demand remained steady, supporting occupancy and rent growth in most major metros. Rents were flat in Houston, but contacts expect them to firm up by year end. A contact said that high land and construction costs were making it difficult to pencil new deals.\nReports on the office market indicated leasing was still most active for new class A space. Industrial demand stayed strong and generally in lockstep with the high volume of deliveries. Industrial construction continued to be elevated.\nFinancial Services\nLoan volumes rose at a slower pace compared with the previous reporting period, with growth mixed across categories. Commercial and residential real estate lending expanded at a similar pace, but commercial and industrial loan volumes dipped and consumer loans were flat over the reporting period. Credit standards continued to tighten modestly. The cost of funds ticked up, and net interest margins fell further. Outlooks were less optimistic, as expectations of lower loan demand, trade policy uncertainty, and financial market volatility weighed on sentiment.\nEnergy\nDrilling activity in the Eleventh District slipped further as firms continued to rein in spending and orders for new equipment. However, the number of wells being brought into production increased. International demand for oil field services was a bright spot, with excess capacity being absorbed due to improved foreign offshore drilling and spending. Outlooks were more pessimistic as a result of reduced expectations for global economic growth.\nAgriculture\nHigher temperatures and a lack of rainfall negatively impacted the agriculture sector over the past six weeks, with drought conditions creeping back in to parts of the district. Dryland grain crops were largely well established before weather conditions deteriorated, so solid yields were expected. Irrigated crops planted later in the growing season were feeling more of the negative impact of the weather. Most agricultural commodity prices moved down over the reporting period, prompting some pessimism among agricultural producers.\nFor more information about District economic conditions visit: www.dallasfed.org/research/texas\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"