Economic activity expanded across most of the twelve Federal Reserve Districts according to the January edition of the Federal Reserve Beige Book. Nine Districts reported moderate to modest growth, while conditions in the New York and Kansas City Districts were essentially flat.
Labor markets continued to improve. The Richmond District reported moderate employment increases, while Philadelphia, Chicago and Dallas reported slight to modest job growth. In New York, Cleveland, Atlanta and Minneapolis, labor markets were described as tight or tightening. Seven Districts noted greater wage pressure for both skilled and unskilled workers, citing pressure from both state minimum wage laws and high turnover among entry-level positions.
Banking conditions were positive as lending activity and loan demand increased during the period. Philadelphia reported strong loan growth for autos, CRE and C&I lending. San Francisco also saw increased auto lending, along with an increase in mortgages. Several Districts reported improved credit quality, along with declining delinquencies.
Consumer spending picked up through the holiday season, with growth ranging from slight to strong depending on the region. Unseasonably warm weather was blamed for dampening sales in several Districts. Auto sales continued to be positive, with many District contacts attributing the increase in sales to lower gas prices.
Manufacturing activity was mixed, Cleveland, Richmond and Chicago reported modest to moderate manufacturing growth, while nearly half of the Districts reported declines. Some Districts noted the strong dollar’s negative impact on exports was not offset by the savings from low energy prices. Motor vehicle and motor vehicle parts also experienced strong demand.
Read the Fed release.
