Beige Book: Economic Activity Expanding at a Moderate Pace

Economic activity expanded at a moderate pace across the twelve Federal Reserve Districts in late April and early May, according to the just-released Federal Reserve Beige Book. The report was based on information collected through May 21.

The economic expansion over the period was driven in part by a pickup in manufacturing, particularly fabricated metals, heavy industrial machinery, and electronics equipment. A third of the Districts classified the activity as “strong,” even though contacts noted some concern over the uncertainty of international trade policy. Consumer spending softened in most Districts, as non-auto retail sales moderated a bit and auto sales were flat. Nonresidential construction expanded at a moderate pace, while homebuilding and home sales increased at a moderate pace. Agricultural conditions were mixed across the regions.

Employment was modest to moderate on balance in most Districts. Labor markets once again remained tight, and employers in most Districts continued to report greater difficulty attracting and retaining qualified workers. Businesses responded in a variety of ways, including raising pay and increasing compensation packages.

Modest wage growth was seen in most Districts as upward wage pressures continue to persist. Prices increased at a moderate pace across most Districts. Contacts reported rising materials costs, especially for steel, aluminum, oil, and lumber. Businesses reported upward pressure on prices in the transportation, construction, and manufacturing sectors due to input cost increases, along with labor shortages and strengthening demand. Some Districts reported that retail contacts were more able to pass along price increases to their customers than in the recent past.

Read the full Federal Reserve report.