Economic activity expanded across most of the twelve Federal Reserve Districts, according to the February edition of the Federal Reserve Beige Book. Six Districts reported moderate to modest growth, while conditions in New York and Dallas were essentially flat. Kansas City reported a moderate decline in activity.
Labor markets continued to improve, as the majority of Districts reported modest growth. Conditions in Atlanta, Dallas and San Francisco were mixed however, amid decreased employment in the energy sector. Contacts in several cities reported difficulty filling low-skilled positions, as well as difficulty finding skilled workers in IT, engineering and healthcare. Wages increased as most Districts experienced slight to strong wage growth.
Banking conditions were positive, as loan demand increased in most Districts. St. Louis and Atlanta reported strong and healthy demand for mortgage lending and refinancing. In the Dallas region, lending grew in most categories, but contacts indicated that low oil prices were hurting demand. Credit quality was stable in most Districts. However, the San Francisco District noted that low commodity prices could undermine asset quality in the months ahead.
Consumer spending picked up in recent months, with retailers reporting sales that were slightly higher than a year ago. Reports about the effect of lower gas prices on spending were mixed, as some contacts attributed the lower prices to increased consumer spending, while others were disappointed at the extent to which low gas prices were increasing spending.
Manufacturing activity was mixed, with about half of Districts reporting flat to moderate growth, and half reporting slight to moderate declines. Many of the declines were attributed to weak energy sector demand, as well as the strengthening dollar and weakening global outlook negatively affecting exports.
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