Economic activity expanded across most of the twelve Federal Reserve Districts from July to mid-August. Six districts cited moderate growth, while four others cited modest increases. The Cleveland District reported only slight growth since the July release.
Manufacturing reports were positive, with ten of the twelve districts reporting stable or positive growth, while only New York and Kansas City registered declines. Cleveland, Richmond and Chicago reported strong growth in auto-related manufacturing, and Aerospace manufacturing contributed to growth in the Dallas, San Francisco and Chicago Districts. Manufacturers in the Midwest reported that cheap steel imports were depressing demand and leading to low capacity utilization. These cheap imports were attributed to the strong dollar and slow growth in Asia. Three District reports specifically mentioned the Chinese slowdown as a factor, with San Francisco noting reduced demand for wood products, Boston noting reduced demand for chemicals and Dallas noting reduced demand for high-tech goods.
Banking conditions were generally positive as loan demand increased across most reporting Districts. Demand for credit increased in most Districts, and credit conditions remained stable or improved. Credit standards were generally unchanged, and contacts in Boston, Atlanta and Chicago reported increased competition among lenders for loans. Some bankers in the Atlanta region reported a slowdown in lending due to weak energy prices, while bankers in New York, Cleveland and San Francisco reported narrow net interest margins.
Consumer spending reports were mixed across Districts, with some sources in the same Districts reporting sales growth, while others reporting flat or slowing sales. Contacts in regions near the Mexican and Canadian border noted that strong dollar values were negatively affecting sales. Auto sales were a bright spot, with many districts reporting continuing strength in the sector. Expectations are optimistic that auto sales will improve or continue to be strong through the end of the year.
Employment increased at a slight or modest pace, with some Districts reporting labor shortages for IT and technical positions. Wages were stable in most Districts, but several reported upward pressure on wages due to tight labor supply. In Kansas City however, wage growth slowed despite labor shortages.
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