National economic activity continued to expand from early April to mid-May; however, conditions varied across industries and districts, according to latest data from the U.S. Federal Reserve’s Beige Book.
Most districts reported slight or modest growth, while two noted no change in activity. The latest data was prepared at the Federal Reserve Bank of Dallas based on information collected on or before May 20.
Tight credit standards and high interest rates continued to constrain lending growth across the country. Housing demand rose modestly, and single-family construction increased, though there were reports of rising rates impacting sales activity. Conditions in the commercial real estate sector softened amid supply concerns, tight credit conditions, and elevated borrowing costs, Federal Reserve officials said.
Employment rose at a slight pace overall. Eight districts reported negligible to modest job gains, and the remaining four districts reported no changes in employment. A majority of districts noted better labor availability, though some shortages remained in select industries or areas.
Multiple districts said employee turnover has decreased, and one noted that employers’ bargaining power has increased. Hiring plans were mixed — a couple of districts expect a continuation of modest job gains, while others noted a pullback in hiring expectations amid weaker business demand and reluctance due to the uncertain economic environment.
Wage growth remained mostly moderate. Several districts reported wage growth was at pre-pandemic historical averages or was normalizing toward those rates.
Highlights by Federal Reserve district include:
Boston
Economic activity was about flat on balance. Prices increased modestly, and wage growth was slow-to-moderate amid stable employment levels. Real estate activity, for both commercial and residential properties, weakened slightly after showing signs of improvement earlier in the year. The outlook became more uncertain for some contacts but remained cautiously optimistic overall.
New York
On balance, regional economic activity grew slightly. Housing markets remained solid, though low inventory continued to restrain sales. Selling price increases remained modest. Labor market conditions remained solid, and labor demand and labor supply continued to come into better balance. Consumer spending picked up slightly after slow sales in the spring..
Philadelphia
Business activity grew slightly in the current Beige Book period, up from no change last period. Existing home sales grew slightly, and new-home sales held steady at high levels. Employment edged up slightly, owing to increased demand and supply of labor. Wage and firm price inflation were up modestly. Expectations for future growth edged down and were less widespread for nonmanufacturers but remained positive overall.
Cleveland
District business activity increased slightly but somewhat more slowly than it had in the prior reporting period. Some contacts attributed the slowdown to interest rates staying higher for longer than anticipated. Consumer spending declined modestly, which some manufacturers said dampened demand for their goods. The majority of contacts indicated wages, input costs, and selling prices continued to stabilize in recent weeks.
Richmond
Economic activity in the region expanded modestly this period. Consumer spending rose moderately overall, which was driven by individuals with discretionary income as lower income individuals pulled back or traded down to lower priced goods. Import activity increased and the port of Baltimore was able to reopen one channel into the port. Manufacturing and nonfinancial services firms reported no change in demand in recent weeks.
Atlanta
The Sixth District economy grew slightly. Labor markets continued to stabilize; wage pressures eased. Growth of some nonlabor costs slowed. Commercial real estate conditions were mixed. Loan demand was flat. Consumer demand was generally healthy. Tourism remained strong. Transportation activity varied. Energy activity was robust. Agricultural conditions softened.
Chicago
Economic activity increased slightly. Employment and construction and real estate activity increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw little change in activity; and manufacturing activity edged down. Prices and wages rose moderately, while financial conditions tightened a bit.
St. Louis
Economic activity across the Eighth District continued to increase slightly since the previous report. The outlook among contacts was slightly pessimistic, which is weaker than the previous report but better than one year ago.
Minneapolis
District economic activity grew slightly. Commercial and residential construction improved slightly, and home sales grew strongly. Employment grew but labor demand softened. Wage pressures were present but eased, while prices ticked up. Consumer spending rose but contacts were cautious, and manufacturing rose slightly.
Kansas City
The Tenth District economy expanded at a moderate pace. Household spending rose moderately, driven by increases in hotel stays, outings to restaurants, and auto maintenance. Job gains were modest, yet contacts indicated their employment outlooks were less vulnerable to a deterioration in conditions compared to six months ago. Prices grew slightly with broad reports that strategies regarding price changes were shifting.
Dallas
Economic activity was flat to up slightly over the reporting period. Some growth was seen in the manufacturing, banking and energy sectors, while activity in nonfinancial services was flat, and declines were seen in retail sales. Employment levels held mostly steady overall, according to contacts. Outlooks were generally stable to slightly more pessimistic compared with the prior reporting period.
San Francisco
Economic activity and employment levels were largely unchanged. Prices, wages, and retail sales grew slightly. Activity in services sectors and residential real estate markets weakened a bit. Commercial real estate activity and financial sector conditions were largely unchanged. Demand for manufactured products picked up slightly, and conditions in agriculture were mixed.