Beige Book
For use at 2:00 PM EDT
Wednesday
July 17, 2019
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
July 2019
Federal Reserve Districts
Minneapolis
Boston
Chicago
New York
Cleveland
Philadelphia
San Francisco
Kansas City
St. Louis
Richmond
Atlanta
Dallas
Alaska and Hawaii
are part of the
San Francisco District.
The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin
Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
National Summary
Boston
1
A-1
First District
New York
B-1
Second District
Philadelphia
C-1
Third District
Cleveland
D-1
E-1
Fifth District
Atlanta
F-1
Sixth District
Chicago
G-1
Seventh District
St. Louis
H-1
Eighth District
Minneapolis
The Beige Book is a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety
of mostly qualitative information, gathered directly from District
sources.
The qualitative nature of the Beige Book creates an opportunity to
characterize dynamics and identify emerging trends in the economy
that may not be readily apparent in the available economic data. Because this information is collected from a wide range of business and
community contacts through a variety of formal and informal methods,
the Beige Book can complement other forms of regional information
gathering.
How is the information collected?
Fourth District
Richmond
What is The Beige Book?
Each Federal Reserve Bank gathers anecdotal information on current
economic conditions in its District through reports from Bank and
Branch directors, plus phone and in-person interviews with and online
questionnaires completed by businesses, community contacts, economists, market experts, and other sources.
How is the information used?
The anecdotal information collected in the Beige Book supplements the
data and analysis used by Federal Reserve economists and staff to
assess economic conditions in the Federal Reserve Districts. This
information enables comparison of economic conditions in different
parts of the country, which can be helpful for assessing the outlook for
the national economy. The Beige Book also serves as a regular summary of the Federal Reserve System’s efforts to listen to businesses
and community organizations.
I-1
Ninth District
Kansas City
J-1
Tenth District
Dallas
K-1
Eleventh District
San Francisco
Twelfth District
L-1
This report was prepared at the Federal Reserve Bank of San Francisco based on information collected on or before July 8, 2019. This
document summarizes comments received from contacts outside the
Federal Reserve System and is not a commentary on the views of
Federal Reserve officials.
National Summary
The Beige Book ■ July 2019
Overall Economic Activity
Economic activity continued to expand at a modest pace overall from mid-May through early July, with little change
from the prior reporting period. In most Districts, sales of retail goods increased slightly overall, although vehicle sales
were flat. Activity in the nonfinancial services sector rose further. Tourism activity was broadly solid, with Atlanta and
Richmond recording robust growth in this sector. Although some Districts continued to report healthy expansion in the
transportation sector, others noted that activity declined modestly. On balance, home sales picked up somewhat, but
residential construction activity was flat. Nonresidential construction activity increased or remained strong in most reporting Districts, and commercial rents rose. Manufacturing production was generally flat, but a few Districts noted a
modest pickup in activity since the last reporting period. Agricultural output declined modestly following unusually heavy
rainfall in some areas, and oil and gas production fell somewhat. Increased demand for loans was broad-based, with all
but two Districts noting some growth in financing activity. The outlook generally was positive for the coming months,
with expectations of continued modest growth, despite widespread concerns about the possible negative impact of
trade-related uncertainty.
Employment and Wages
On balance, employment grew at a modest pace, slightly slower than the previous reporting period. Labor markets
remained tight, with contacts across the country experiencing difficulties filling open positions. The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care. However, some manufacturing and information technology firms in the Northeast reduced their number of workers. A few
reports highlighted concerns about securing and renewing work visas, flagging this as a source of uncertainty for continued employment growth. Compensation grew at a modest-to-moderate pace, similar to the last reporting period,
although some contacts emphasized significant increases in entry-level wages. Most District reports also noted that
employers expanded benefit packages in response to the tight labor market conditions.
Prices
The reports indicated that the rate of price inflation was stable to down slightly from the prior reporting period. Districts
generally saw some increases in input costs, stemming from higher tariffs and rising labor costs. However, firms’ ability
to pass on cost increases to final prices was restrained by brisk competition. Reduced supply boosted prices for some
agricultural goods. Reports on transportation costs were mixed, with some Districts noting increased upward pricing
pressures, while others highlighted price declines due to reduced demand for shipping services. Prices for professional
and business services fell slightly, and steel and lumber prices softened due to lower demand.
Highlights by Federal Reserve District
wage growth was subdued. Increases in both input prices and selling prices have slowed. Manufacturing activity
declined. Banks reported a pullback in loan demand, and
the financial sector showed signs of softening.
Boston
Economic activity expanded at a modest pace at the end
of the second quarter of 2019. For manufacturers, tariffs
and trade policy uncertainty were major issues. Wage
and price pressure remained modest, however. Labor
markets continued to be tight.
Philadelphia
On balance, business activity continued at a modest
pace of growth during the current Beige Book period.
Trade uncertainty further delayed business investment,
and wage increases edged higher as tight labor markets
New York
Regional economic growth slowed to a modest pace.
Despite tight labor markets, job creation slowed and
1
National Summary
continued to constrain hiring. Still, inflation remained
modest, and the firms remained positive about the sixmonth outlook.
being halted by recent flooding. St. Louis builders expect
increased housing permits in the summer as they make
up for time lost due to wet spring weather. Loan volumes
continued to increase but growth has slowed slightly.
Cleveland
Minneapolis
District economic activity was flat over the period. Demand for financial and nonfinancial services strengthened, but demand for manufacturing and freight softened. Employment increased modestly, mostly in professional and business services. Wages increased modestly, with growth in most sectors. Price inflation decelerated as materials costs, especially for steel, fell.
Ninth District activity grew at a modest-to-moderate
pace. Labor demand was healthy but restrained by lack
of labor availability. Consumer spending rose but saw
conflicting activity. Commercial and residential construction rebounded after several slower months. Manufacturers described demand as stable overall, with some
concerns about a slowdown. Heavy rainfall and flooding
delayed crop planting, further hurting farmers.
Richmond
The regional economy grew at a modest rate, overall.
Manufacturers reported a slight uptick in shipments and
new orders. Port activity remained strong. Trucking
volumes fell below seasonal levels. Nonfinancial services and tourism increased in recent weeks. Meanwhile,
residential and commercial real estate sales, leasing,
and lending picked up modestly, overall. Labor markets
remained tight and wages rose moderately.
Kansas City
District economic activity continued to grow at a slight
pace. Retail and restaurant contacts reported moderately
higher sales, and residential real estate sales remained
robust. Manufacturing, wholesale trade, and professional
and high-tech activity held steady, but transportation
activity slowed modestly. Energy activity expanded
slightly, while the agriculture sector was strained further
by delayed planting and harvesting.
Atlanta
Economic activity modestly improved. Labor market
conditions remained tight. Overall, wage growth was
steady. Firms noted rising input costs. Consumer spending was up since the previous report. Housing sales
improved from low levels earlier this year. Manufacturing
activity grew. Loan activity pulled back slightly.
Dallas
Economic activity expanded moderately. Retail sales
and drilling activity dipped, but growth picked up in nonfinancial services and manufacturing in June after softening in May. Input cost pressures increased in manufacturing likely due to tariffs. Hiring continued at a steady
pace. Outlooks were mixed, with tariff and trade tensions
driving up uncertainty.
Chicago
Economic activity was little changed. Employment increased modestly; business spending increased slightly;
consumer spending and construction and real estate
activity were flat; and manufacturing decreased slightly.
Wages and prices rose modestly and financial conditions
improved modestly. More wet weather put further stress
on farmers.
San Francisco
Economic activity in the Twelfth District continued to
expand at a moderate pace. Labor market conditions
remained tight and wage growth was moderate. Price
inflation was unchanged on balance. Sales of retail
goods increased moderately. Conditions in manufacturing were mixed. Conditions in agriculture deteriorated
modestly. Activity in residential real estate markets expanded moderately. Lending activity increased moderately.
St. Louis
Economic conditions have improved slightly since our
previous report. Barge traffic picked up somewhat after
2
Federal Reserve Bank of
Boston
The Beige Book ■ July 2019
Summary of Economic Activity
Economic activity expanded at a modest rate in the First District at the end of the second quarter of 2019. Retailers
reported lower comparable store sales, which they attributed to temporary factors including unusually strong activity in
the same period last year and inclement weather. Restaurants reported higher sales. Manufacturing firms reported
slower growth. Contacts attributed slower growth to tariffs, which drove up costs. In addition, trade policy uncertainty
reduced capital expenditures. Software and IT services firms reported mixed growth. Commercial and residential real
estate markets enjoyed increased prices and flows of transactions in most markets. Employment growth was mixed:
some manufacturing firms laid off workers while other contacts reported difficulty finding workers. Tariffs drove price
increases at some firms. Wage and pricing pressure was otherwise modest. Outlooks were positive with some downward revision.
ing expectation is that this trend will prove to be temporary. All contacts said filling open positions is hard.
Employment and Wages
Contacts reported that wage pressure remained modest.
Some firms reduced hiring or laid off workers, but those
hiring continued to report a very tight labor market.
Manufacturing firms directly affected by tariffs were
among the firms with reduced demand for labor. Retailers and restaurants reported that finding workers remained a problem but increased numbers of visas
should reduce seasonal labor shortages in tourist areas.
Restaurants sales in Massachusetts were up six percent.
Tourist activity on Cape Cod was adversely affected by
dismal weather, including 20 days of rain in June. More
visas for temporary foreign workers this year mean that
the Cape Cod labor shortage should be less than in
2018. The travel industry expects that growth in 2019 will
be good.
Prices
Manufacturing and Related Services
Firms facing increased costs due to tariffs said that they
had little trouble passing them on. Otherwise contacts
did not report any unusual price pressure either on the
supply or demand side. Retailers said that intense competition limited price increases. Menu prices were up by
about 3 percent at restaurants, relative to a year-earlier,
reflecting higher labor and other operating costs.
Reports from our contacts continued to be mixed. The
big story this cycle is trade policy, which six of seven
contacts discussed in detail. Contacts attributed higher
costs, reduced demand and higher uncertainty to trade
policy. Contacts said it was typically hard or impossible
to divert to non-Chinese suppliers. For firms that produce
components, the costs of “qualifying” new suppliers
usually exceed the benefits. Indirect costs of the tariffs
were also significant. For example, one contact complained about having to hire consultants to change computer systems to track the cost of tariffs.
Retail and Tourism
Retail contacts consulted for this round reported that on
a year-over-year basis, overall comparable store sales
for late May through June were down by 5 to 8 percent.
The explanation for these results varied: one firm cited
an unfavorable comparison to a record high increase
that was set last year, while other sources attributed the
lower-than-expected results to an unseasonably cold
and rainy spring in the Northeast having an adverse
effect on sales and tourist activity. While these lackluster
2019:Q2 results have raised some concerns, the prevail-
Contacts said the US tariffs and foreign retaliation had
weakened demand for their products. Firms that supply
electronic components to capital goods manufacturers
said investment demand had slowed because firms were
delaying capital expenditure plans. One contact said the
brief threat to impose 5 percent tariffs on Mexican goods
A-1
Federal Reserve Bank of Boston
significantly increased uncertainty because it meant that
even with an agreement in place, new tariffs were still
possible. In general, contacts said they were able to
pass the tariff costs onto their customers.
year-over-year basis, and ongoing construction activity is
not expected to boost vacancy rates any time soon.
Sales volume slowed modestly in the second quarter in
Boston’s office and industrial property markets, but this
was attributed to lack of inventory. Elsewhere in the First
District, office leasing picked up slightly in the Providence area and held steady at a slow pace in Hartford,
and in both of those cities, contacts expect activity to
experience a seasonal slowdown in the near term. The
outlook also appears mixed. A Connecticut contact highlighted weak business sentiment and fiscal strain as
ongoing barriers to growth, while Boston contacts
seemed bullish for the near-term but saw external risks
coming from financial markets and a weaker macroeconomic outlook.
One contact reported that previous problems finding
trucking capacity had ebbed.
Five of seven contacts reported flat or reduced employment. A frozen fish manufacturer said it was unable to
find workers. A manufacturer of electronic components
said it had laid people off as a result of the tariffs, with
headcount declining by about 10 percent. For example,
the firm had moved an assembly line from the U.S. to
Germany because most of the components in the product came from China and making the product in Germany allowed them to avoid the tariffs.
Residential Real Estate
Three of our contacts reported downward revisions in
capital expenditure plans. In general, firms did not cancel
but delayed plans in order to get more clarity about
tariffs. One contact reported increased capital expenditure to duplicate production currently done in China.
Residential real estate markets in the First District continued to show strong momentum in May. Single family
homes market saw robust sales activities, with closed
sales and pending sales increased in all reporting areas.
Inventory decreased moderately in Rhode Island, Boston
and Maine, while Massachusetts and New Hampshire
experienced a larger drop.
A majority of contacts said they had negatively revised
their outlooks. The major reason was trade policy.
House prices continued to rise in the region. Prices
reached milestones in several places. The median sales
price of a house surpassed $300,000 in Rhode Island
and $400,000 in Massachusetts both for the first time.■
Software and Information Technology Services
Software and IT firms reported mixed outcomes from this
past quarter. Half our contacts reported demand and
revenue growth that exceeded expectations, attributable
to improving business efficiency, newer cloud-based or
Internet of Things product lines, and introduction of
month-to-month subscription pricing options. Other contacts reported either no change in demand from last
year, or decreases in demand in the low single digits.
Prices showed no change over the last quarter and one
contact who had previously mentioned the potential for
price increases later in the year no longer mentioned that
possibility. Headcount remained stable with no change
quarter over quarter or year over year for the majority of
firms. Most contacts remain largely optimistic going into
the next quarter mixed with slight apprehension looking
toward 2020.
Commercial Real Estate
Commercial real estate markets in the First District
showed somewhat mixed results in recent weeks. The
Boston area saw ongoing robust leasing activity in the
high technology and life sciences sectors as well as for
industrial properties, and rent growth has been very
strong in these sectors over the past twelve months.
Although several new office buildings broke ground in
downtown Boston in recent weeks, the delivery pace of
new office space in the metropolitan area slowed on a
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ July 2019
Summary of Economic Activity
Growth in the Second District economy slowed to a modest pace in the latest reporting period. The labor market remained very tight, though job growth was tepid, and wage growth largely remained subdued. Input price pressures have
moderated slightly, and selling prices have decelerated noticeably. Manufacturing activity declined, while growth in the
trade and distribution industries slowed considerably. However, most service sectors saw steady to modestly growing
activity. Consumer spending has edged up, mainly due to some firming in auto sales, while tourism has been mostly
steady. Housing markets have been mixed but, on balance, a bit firmer—particularly the rental market. Commercial real
estate markets have held steady overall, and new office construction has continued to pick up. Finally, banks reported a
pullback in loan demand across the board, and the financial sector more generally showed signs of softening.
Employment and Wages
Prices
The labor market has remained very tight throughout the
District. Contacts reported persistent difficulties finding
workers across the spectrum—in particular, those with IT
skills, truck drivers, and construction workers. An employment agency indicated that demand for temporary
workers has diminished, as firms are increasingly inclined to hire permanent workers. A payroll service firm
noted that job growth slowed in June, but largely because employers have had more trouble filling job openings. A number of contacts noted difficulties in securing
and renewing H1B visas for specialized workers, and
cited uncertainty about this as a problem.
Businesses reported that input prices and especially
selling prices have decelerated in recent weeks. Input
cost pressures have abated somewhat in the manufacturing, finance, professional & business services, and
leisure & hospitality sectors but have remained fairly
widespread in other industries. Selling prices are reported to have leveled off for businesses in manufacturing,
information, finance, and leisure & hospitality. Prices for
Broadway theater admissions were down roughly 10
percent from a year earlier.
Retailers generally indicated that selling prices have
been flat to down slightly. Retail contacts noted that they
have been discounting more steeply in recent months,
with one major chain noting declines in effective selling
prices compared with a year ago.
Businesses generally reported slowing in hiring activity.
Contacts in the manufacturing, transportation, and information sectors reported that, on balance, headcounts
have declined, while professional & business service
firms indicate little change. Contacts in other service
sectors, as well as construction and real estate, reported
continued modest growth in employment. Still, contacts
in both manufacturing and in most service sectors plan
to increase staffing levels in the months ahead.
Consumer Spending
Overall, retail sales were essentially flat in the latest
reporting period. Somewhat more retail contacts reported that business was declining than increasing. However, an upstate New York mall reported solid shopper
traffic and modestly growing sales activity, despite a
number of store closures. In addition, a major retail chain
noted that sales in the region were roughly on plan and
up modestly from a year earlier. Inventories were generally indicated to be at or slightly above desired levels.
Despite persistently tight labor markets, businesses and
employment agencies generally report continued modest
wage growth. Exceptions to this include certain high-skill
occupations, such as IT workers and engineers, as well
workers in the education & health sector more broadly.
B-1
Federal Reserve Bank of New York
sharply curtail activity in the third quarter. Housing markets in the areas surrounding New York City have picked
up modestly.
New vehicle sales grew modestly, while sales of used
autos were steady to somewhat weaker, according to
dealers in upstate New York. New vehicle inventories
remained elevated. Dealers indicated that consumer
credit conditions generally have remained in good
shape.
Residential rents across the District have continued to
rise modestly in recent weeks and are up from a year
earlier. In New York City, rental vacancy rates remain
exceptionally low, and landlord concessions have continued to recede from the high levels of the past two years.
Consumer confidence in the Middle Atlantic states (NY,
NJ, PA) retreated in June, after rising in May, though it
remains at a fairly high level, based on the Conference
Board’s monthly survey.
Commercial real estate markets have been generally
stable since the last report. Office availability rates and
rents across most of the District have been steady and
little changed from a year ago, though some markets
across upstate New York have firmed modestly. Industrial markets have been mixed, as rents have continued to
rise moderately but availability rates have drifted up
somewhat.
Manufacturing and Distribution
The manufacturing and distribution sectors have weakened since the last report. Manufacturers reported that
overall activity and new orders have contracted modestly
in recent weeks. Wholesale distributors reported that
growth slowed sharply, and transportation firms noted
that activity was flat to rising modestly.
New multi-family construction starts have been steady,
while a sizable volume of residential construction has
remained in progress in and around New York City. New
office construction has picked up further—largely in New
York City—while new industrial construction has tapered
off somewhat.
Looking ahead, manufacturing contacts remain fairly
positive about the near-term outlook, while wholesale
distributors and transportation firms have become somewhat less optimistic. Businesses have continued to express concern about tariffs, trade uncertainty, and the
increase in New York State’s minimum wage.
Banking and Finance
Small to medium-sized banks in the Second District
reported lower demand across all categories, as well as
lower refinancing activity. Bankers indicated that credit
standards were unchanged and loan spreads narrowed
across all categories. Contacts also reported an increase
in the average deposit rate. Finally, banks noted slightly
higher delinquency rates on commercial mortgages but
little change in delinquencies across other loan categories. ■
Services
Service-sector businesses reported that activity was
mixed but, on balance, little changed in the latest reporting period. Contacts in real estate, information and leisure & hospitality noted increased business, while contacts in finance reported declining activity. Businesses in
education & health and professional & business services
indicated flat activity.
Broadway theaters reported that attendance was steady
in June and little changed from a year ago. However,
revenues have continued to weaken, running roughly 10
percent below comparable 2018 levels.
Real Estate and Construction
Housing markets across the District have been mixed
but, on balance, slightly firmer since the last report.
Home purchase markets in upstate New York have
strengthened further, and low inventories of unsold
homes have continued to boost prices, with more homes
selling for above asking price. In New York City, in contrast, the inventory of unsold homes has climbed to a 7year high, though not to levels considered problematic.
Apartment sales prices have been flat overall. There was
a brisk pickup in transactions in the second quarter—
largely at the high end of the market—in advance of a
“mansion tax” effective July 1, but this is expected to
For more information about District economic conditions visit:
www.newyorkfed.org/regional-economy
B-2
Federal Reserve Bank of
Philadelphia
The Beige Book ■ July 2019
Summary of Economic Activity
On balance, aggregate Third District business activity continued at a modest pace of growth during the current Beige
Book period. Manufacturing slowed to a slight pace of growth, but nonmanufacturing, nonauto retail sales, and tourism
continued at a modest pace of growth. Homebuilding held steady, while the ongoing trend of declines in existing home
sales appeared to have slowed. Auto sales as well as commercial real estate construction and leasing continued to
decline slightly. Contacts continued to note that trade uncertainty was constraining business investment and expressed
relief that tariffs had not been imposed on Mexican products. Wage pressures appeared to rise further, as the labor
market remained tight. Overall, price pressures eased but remained modest. The firms’ outlook for growth over the next
six months remained positive but softened, with about two-fifths of all firms anticipating increases in general activity and
less than one-fifth expecting decreases.
Employment and Wages
Prices
Employment growth continued at a modest pace during
the current Beige Book period. More than one-fourth of
all firms reported increases in staff. On balance, average
work hours declined across firms.
The firms reported that price increases remained modest
for prices paid, but prices received grew only slightly.
The share of firms reporting increases fell, while the
share reporting decreases rose a bit. Well over half of all
firms reported no change in prices. Builders expressed
few concerns that material price increases were accelerating, and most banking contacts continued to note no
signs of inflation.
Staffing firms noted that new client orders kept pace or
resumed a pace consistent with moderate labor demand,
but a lack of interested, qualified applicants constrained
fulfillment to a modest pace. Commercial real estate
contractors have stepped up training programs to replace their experienced workers as more baby boomers
retire. A shore contact noted that the tight labor market
nationwide led to greater demand for H-2B visas – widely used by seasonal vacation spots. Thus, far fewer visas
were awarded to local businesses than had been expected. Owners were observed working their own counters.
Looking ahead six months, the percentage of manufacturing firms that expect to pay higher prices for inputs fell
below 40 percent, and the share expecting to receive
higher prices for their own goods fell below 30 percent.
Manufacturing
On balance, manufacturers reported slight growth in
activity – a slower pace than in the prior period. Shipments and unfilled orders remained somewhat above
long-term nonrecession averages; however, the new
orders index slipped below its average.
Wage growth continued at a moderate pace, but more
reports of wage and benefit cost increases – ranging
above 3.0 percent to as high as 5.0 percent – suggest
that pressure is rising. The share of nonmanufacturing
contacts who reported increases in wage and benefit
costs rose to over 45 percent; only 2 percent reported
decreases. Staffing contacts noted that some manufacturers cannot offer a wage sufficient to attract workers for
nontraditional shifts (e.g., night shifts and weekends).
Since the prior period, the makers of paper products,
chemicals, fabricated metal products, and industrial
machinery have tended to note gains in new orders and
shipments, and the primary metal producers and makers
of electronic products tended to note decreases. These
C-1
Federal Reserve Bank of Philadelphia
trends were somewhat weaker this year compared with
the same period one year ago for most of the sectors.
Financial Services
Financial firms reported a continuation of moderate
growth in overall loan volumes (excluding credit cards)
on a year-over-year basis and a resumption of moderate
growth in credit card lending.
Most firms continued to note some negative effects from
tariffs, including higher costs, lower profit margins, greater uncertainty, and lower capital expenditures on new
industrial capacity. Food processors noted relief that
tariffs were not imposed on imports from Mexico.
During the current period (reported without seasonal
adjustments), volumes appeared to grow robustly in
commercial real estate, home mortgages, and auto
lending. Loans grew moderately for commercial and
industrial lending and home equity lines. Other consumer
loans (not elsewhere classified) were up slightly.
Manufacturers’ expectations of activity over the next six
months changed little and remained subdued. However,
expectations of shipments and of new orders shifted
higher and are at or above long-term nonrecession averages. Expectations of future employment and planned
capital spending also remain above average, with the
latter rising higher over the period.
Banking contacts noted increased uncertainty but remained optimistic about the economic expansion. They
continued to note overly aggressive loan pricing and
some looser standards, but few credit quality problems.
Consumer Spending
On balance, contacts for malls and convenience stores
continued to report modest growth of nonauto retail
sales. Some mall store operators reported declines in
year-over-year sales but steady foot traffic, which may
result from online sales that are picked up at mall stores.
Contacts at convenience stores noted strong sales for
the overall marketplace, especially when the sun shines.
Real Estate and Construction
Auto sales remained near high levels, with continued
signs of slight slowing. One contact attributed a greater
share of recent sales to fleet purchases rather than
consumer purchases. Pennsylvania dealers reported
moderate year-over-year growth through May, but the
pace appeared to have slowed in June. New Jersey
dealers reported a slight decline in year-over-year sales
for May and estimated a modest decline for June.
On balance, existing home sales declined modestly on a
year-over-year basis – a lesser decline than in the prior
period. Continued declines in the Harrisburg and Greater
Philadelphia markets more than offset sales increases in
southern New Jersey. Low inventories continued to limit
sales in all markets, despite demand.
Homebuilders reported little change in contract signings
in May and June. One builder noted that sales have
been sufficient through the first six months to make its
budget for the year but observed that greater opportunities were found building apartments for lease, rather
than homes for sale.
On balance, commercial real estate construction and
leasing activity continued a slight retreat from their recent peaks. In the Greater Philadelphia area, contractors
described a flat market at a healthy level and optimism
for the remainder of the year. Net increases were still
evident in a few industrial markets with sufficient labor
supply. Office markets were characterized with relatively
even net absorption, stable vacancy rates, and incremental rent growth. Contacts were optimistic that current
negotiations would recharge the construction pipeline for
office and life sciences research facilities. ■
Tourism activity continued to grow at a modest pace as
the summer season began. Weekend food and fuel
sales have been strong along the shore routes. Delaware shore contacts noted that the season started early
in May and remained busy through June. During the July
Fourth week, traffic was “massive,” and restaurant waits
were long even on a Tuesday night.
Nonfinancial Services
Service-sector firms noted some slowing, but overall,
they maintained a modest pace of growth. The percentage of firms reporting increases in current revenues fell,
although the percentage reporting increases in new
orders edged up. The firms commented on rising uncertainties, including tariffs, inadequate labor supply, uncertain federal policy, and signs of an economic slowdown.
One large firm noted a slight uptick in delinquent accounts receivables of its consumer base. The share of
firms expecting growth over the next six months fell
considerably to under one-half from nearly two-thirds.
For more information about District economic conditions visit:
www.philadelphiafed.org/research-and-data/regionaleconomy
C-2
Federal Reserve Bank of
Cleveland
The Beige Book ŶJuly 2019
Summary of Economic Activity
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Employment and Wages
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D-1
Federal Reserve Bank of Cleveland
Consumer Spending
Financial Services
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For more information about District economic conditions visit:
www.clevelandfed.org/region/
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ July 2019
Summary of Economic Activity
Since our previous Beige Book report, the Fifth District economy grew at a modest rate. Manufacturers saw a slight increase in shipments and new orders, but continued to face challenges from the current trade environment. Import volumes remained strong and, at one port, the composition of imports is shifting from China to other Asian countries. Trucking firms, on the other hand, had freight volumes fall below seasonal levels. Nonfinancial services firms reported moderate growth, particularly for construction-related and health care services. Tourism contacts indicated that both business
and leisure travel increased in recent weeks, which helped boost restaurant and touring business in some areas. Meanwhile, reports from retailers were mixed. Residential real estate sales picked up modestly, overall, but were constrained
by low inventory levels. Commercial leasing and sales also increased modestly in recent weeks, vacancy rates remained
low, and rental rates were generally reported as stable to increasing modestly. Fifth District bankers reported deposit
growth and a modest increase in loan volumes. Labor markets strengthened, overall, but employers continued to face
challenges finding workers and were increasing wages at a moderate rate. Price growth remained moderate, overall.
Employment and Wages
Manufacturing
Labor demand strengthened moderately in recent
weeks. Employment agencies reported growth in new
job openings across all the industry segments they service. Meanwhile, employers across sectors continued to
report tight labor markets and difficulty filling positions,
particularly for skilled tradespeople, engineers, experienced bankers, IT professionals, and hospitality workers.
Wages reportedly grew at a moderate rate, overall, and
several firms are increasingly using non-wage benefits,
such as flexible work arrangements and additional paid
time off, to attract and retain workers.
On balance, manufacturers in the Fifth District reported
mild growth in recent weeks, with shipments and new
orders increasing slightly. A cabinet manufacturer reported solid growth in business, and a food manufacturer
planned to increase capital expenditures because of
strong demand. On the other hand, several contacts
continued to report challenges with tariffs and the trade
environment. For example, a North Carolina furniture
manufacturer was unable to pass tariff-related cost increases on to customers, and a West Virginia rubber
manufacturer attributed a drop in business from Chinese
customers to the trade wars.
Prices
Ports and Transportation
Since our previous Beige Book, manufacturing firms
generally indicated slower, but still moderate, growth for
prices paid and a slight acceleration of growth for prices
received. Several contacts noted that some raw material
prices eased in recent months, including a notable decline in steel prices. Meanwhile, services firms reported
a slight increase in both prices paid and prices received,
with both growing at a moderate pace. Businesses in
both sectors attributed some of the overall increase in
prices paid to tariffed imports and paying higher wages
to attract and retain workers.
Fifth District ports saw robust activity in recent weeks.
Import volumes rose and remained above export volumes. One port saw record-breaking imports, with particularly strong furniture imports. A separate port contact
noted that furniture imports had shifted away from China,
to other South-Asian countries. One port executive noted
that exports recently picked up; however, lumber exports
to China declined according to multiple Fifth District
ports. Meanwhile, an airport reported strong growth in
cargo shipments, although growth slowed slightly in
recent weeks.
E-1
Federal Reserve Bank of Richmond
Trucking companies reported slowing business since
our last report, with freight volumes below normal seasonal levels. One executive attributed slowing business
to retailers who placed orders to get ahead of the tariffs
and still have excess inventory as a result. Companies
generally reported that the softer demand led to lower
shipping rates, and one company had to eliminate several positions because there was not enough work. On
the other hand, another firm continued to look for drivers
but said that they no longer needed to raise starting
wages.
most markets. A Charlotte, North Carolina, broker reported conversions of older warehouse space to office
space, and also noted high-rise towers with rents starting
to push over $40 per square foot. Multifamily leasing and
construction remained healthy, overall. Vacancy rates
remained low across sub-markets. Lastly, reports indicated that commercial rental rates were stable to increasing modestly.
Banking and Finance
On the whole, loan volumes increased modestly since
our previous report. Residential mortgage demand was
flat to slightly up in recent weeks, but down slightly compared to last year. Bankers commented that the lack of
housing inventory continued to affect the volume of
mortgage loans underwritten so far this year. Commercial lending activity rose modestly in recent weeks. Bankers noted increased demand for business investment
and commercial real estate development loans. Deposits
rose moderately. Bankers said that competition for deposits remained strong, and accordingly interest rates
moved higher. Credit quality remained strong while credit
standards were generally unchanged.
Retail, Travel, and Tourism
The Fifth District tourism sector continued to grow in
recent weeks, with many contacts reporting a strong
start to the summer tourism season. Travel for both
business and leisure increased, although some hotels
struggled with occupancy and rates because of an increasing supply of hotels in their markets. Restaurants
and touring companies did robust business as travel
was high. Firms expect tourism and travel to remain
strong throughout the summer.
Comments from Fifth District retailers varied considerably. A Virginia hardware store had an uptick in business
as weather improved. A North Carolina auto dealer saw
strong buyer traffic and sales, but expressed concerns
about how unrest in the Middle East might affect business in the coming months. Meanwhile, a Virginia highend clothing retailer reported that business continued to
weaken after several soft months, but hoped that July
sales events would improve revenues. A North Carolina
retailer reported rising prices from suppliers, which was
attributed to tariffs.
Nonfinancial Services
On balance, demand for nonfinancial services strengthened moderately in recent weeks. Engineering and
architecture consulting firms saw strong growth. Overall,
health care providers reported growth in services and
reimbursements; however, revenues declined in rural
hospitals in one area in Virginia. Some firms were concerned that growth could slow in the near future, but they
had not altered capital expenditure plans. In fact, one
contact reported increased spending on software upgrades and PC replacements. ■
Real Estate and Construction
Residential real estate firms indicated modest growth,
overall. Home sales were reportedly stable to increasing
modestly in recent weeks. Brokers continued to report
that low levels of inventory were constraining sales, and
agents said that new listings continued to sell quickly.
Meanwhile, residential construction activity remained flat
in most areas; however, a broker in Columbia, South
Carolina, reported an increase in recent weeks.
Commercial real estate leasing and sales rose modestly,
since our previous Beige Book. Fifth District brokers
reported increased demand for industrial space and
higher fast casual restaurant leasing. Meanwhile, retail
activity varied as small retail sites were generally leasing
well but larger anchor tenant leasing had slowed. Commercial office leasing was steady to increasing slightly in
For more information about District economic conditions visit:
www.richmondfed.org/research/regional_economy
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ July 2019
Summary of Economic Activity
On balance, reports from Sixth District business contacts indicated that economic activity continued to expand at a
modest pace from mid-May through June. Although contacts shared concerns over uncertainty related to tariffs, the
overall outlook among businesses remains positive as most expect continued modest growth for the second half of the
year. District firms continued to report difficulties filling positions. On balance, wage growth remained steady. Businesses reported increases in non-labor input costs. District merchants noted sales activity increased since the previous
reporting period. The tourism sector experienced solid activity throughout most of the District. Real estate contacts
noted that home sales, albeit down from a year-ago, increased since the spring season. Overall, the housing market
experienced moderate price appreciation. Commercial real estate contacts indicated that activity was steady. Manufacturers reported growth in new orders and increasing production levels. Bankers indicated a slight softening in overall
loan activity.
Employment and Wages
ness Inflation Expectations survey showed year-overyear unit costs were up 2.1 percent in June. Survey
respondents indicated they expect unit costs to rise 2.0
percent over the next twelve months.
Contacts continued to report hiring challenges. However,
a few transportation contacts observed some easing in
the labor market tightness for drivers over the last couple
of months. Some employers noted relaxed policies or
standards to hire and retain workers. Broadly, firms
continued efforts to expand their pools of prospective
employees, e.g., pursuing recent veterans, and partnering with other organizations to develop or enhance vocational centers. Firms indicated investing significantly in
training programs to attract new workers or upskill existing staff. A number of contacts expressed that hiring and
retention costs were rising, primarily associated with
training and certification programs.
Consumer Spending and Tourism
Contacts reported little change to retail sales levels since
the last report. Online sales continued to grow at a faster
pace than sales from brick-and-mortar stores. Contacts
in the retail and the automobile industry noted concerns
with uncertainty in relation to tariffs and the effects
changes may have on pricing and demand.
District tourism and hospitality contacts continued to
report healthy activity since the last report. The start of
the summer season was robust with the number of visitors to Florida, Georgia, and Louisiana exceeding expectations. Although advanced bookings remained healthy
through 2019, contacts expressed concern over the
potential impact geo-political uncertainty might have on
international travel to the United States.
Annual wage increases, on average, remained between
3-4 percent. For lower-skilled hourly workers, several
employers reported increasing wages to $15 per hour,
depending on competition. While many contacts pointed
out that employee bargaining power increased, nonfinancial benefits focused on work-life balance often
dominated demands, rather than higher wages.
Construction and Real Estate
A decline in mortgage rates coupled with a relatively
healthy economy continued to support improving demand for housing throughout the District. Overall home
sales, though still down year-over-year, increased
through the spring selling season. Demand was strongest in the more affordable price segments, where inventory remained limited. Still, overall inventories increased
Prices
Contacts continued to report rising input costs with many
expecting the pace to continue through 2019. Despite
previous efforts to minimize cost and margin pressures,
some companies found it necessary to pass through
additional costs owing to tariffs. The Atlanta Fed’s Busi-
F-1
Federal Reserve Bank of Atlanta
modestly over the reporting period, leading to more
moderate home price appreciation in most markets.
However, affordability remained a concern as higher
construction costs continued to make it difficult for homebuilders to deliver reasonably priced products.
Energy
The District’s petrochemical sector continued to experience strong demand and high levels of output. Contacts
cited numerous chemical and petrochemical expansion
projects initiated over the reporting period and project
starts are expected to accelerate through year-end.
However, some contacts expressed that Chinese tariffs
on U.S. liquefied natural gas (LNG) exports created
uncertainty among global firms pursuing new LNG processing plants or expansions in the U.S. Still, exports of
most energy products to global markets continued to
grow. Gulf Coast refiners indicated that crude refining
capacity continued to grow and investment in pipeline
infrastructure to transport oil and gas products to District
refiners remained at elevated levels. Utilities contacts
reported that while growth will continue to soften because of customers’ efficiency gains, the industry has
initiated extensive capital investment, including industrial
transmission expansions; various renewable energy
projects, notably solar plants and wind farms; new power
plants; and smart grid investments.
Commercial real estate contacts reported steady leasing
and sales activity throughout the District; however, some
contacts reported experiencing longer transaction times.
Overall, most sectors experienced positive dynamics as
rents continued to grow and vacancies trended downward at a modest pace, and contacts reported an uptick
in new projects. Industry participants noted continuing
strength in the multifamily and industrial sectors, and
financing capital was reported to be readily available for
projects.
Manufacturing
Manufacturers reported a modest increase in overall
business activity. New orders and production levels
continued to increase, although the pace decelerated
slightly from the previous reporting period. Purchasing
managers indicated that finished inventory levels rose
modestly and wait times for supply deliveries were slightly longer. Several contacts suggested that tariffs were
creating a heightened level of uncertainty. Expectations
for future production levels decreased, with just over one
third of contacts expecting higher production levels over
the next six months.
Agriculture
Agricultural conditions across the District were mixed.
Recent reports indicated much of the District was
drought-free although parts of Alabama, southern Georgia, the Florida panhandle, and Tennessee experienced
abnormally dry to moderate drought conditions. The
District’s cotton, soybean, peanut, and rice crops were
mostly on par with five-year planting averages. Florida
orange forecast was down in June from the prior month's
forecast, but was higher than the last two season's production levels. On a year-over-year basis, prices paid to
farmers in May were up for cotton but down for corn,
rice, soybeans, broilers, and eggs. ■
Transportation
District transportation firm reports were mixed during the
reporting period. Port contacts noted continued growth in
container volumes, though at slightly lower pace. Inland
waterway contacts reported modestly higher demand
year-over-year. Freight forwarders saw strong growth in
volume and revenue driven by e-commerce shipments.
However, some ocean carriers noted that demand was
down from year-ago levels and lower than 2019 expectations. Air cargo activity reportedly weakened as world
trade growth decelerated amid trade tensions, Brexit
uncertainty, and slowing economic activity, especially in
European and Pacific arenas. Railroads continued to see
substantial year-over-year decreases in overall traffic;
intermodal volumes also fell.
Banking and Finance
Though still healthy, District banking conditions softened
slightly. Loan growth at financial institutions continued,
albeit at a slower pace, particularly for consumer and
commercial real estate lending. Net interest margins
declined modestly due to lower loan growth, lower yields
on loans, and increased competition for deposits. Nonperforming assets, however, remained steady and near
historic lows.
For more information about District economic conditions visit:
www.frbatlanta.org/economy-matters/regional-economics
F-2
Federal Reserve Bank of
Chicago
The Beige Book ■ July 2019
Summary of Economic Activity
Economic activity in the Seventh District was little changed on balance in late May and June, though contacts expected
it to grow at a modest pace over the next 12 months. Employment increased modestly; business spending increased
slightly; consumer spending and construction and real estate activity were flat; and manufacturing decreased slightly.
Wages and prices rose modestly and financial conditions improved modestly. More wet weather put further stress on
farmers.
Employment and Wages
Consumer Spending
Employment increased modestly over the reporting
period and contacts expected a similar-sized increase
over the next 12 months. Hiring continued to be focused
on professional and technical, sales, and production
workers. As they have for some time, contacts indicated
that the labor market was tight and that it was difficult to
fill positions at all skill levels. A staffing firm reported little
change in billable hours. Wage growth remained modest
overall. Contacts were most likely to report wage increases for professional and technical, administrative,
and production workers. Many firms reported increased
benefits costs.
Consumer spending was little changed over the reporting period. Nonauto retail sales were flat, with reports of
increased activity in the furniture and appliance sectors
and decreases in the apparel and jewelry sectors. Contacts indicated that restaurant sales increased. Total light
vehicle sales were flat, with lower new vehicle sales
offset by higher volumes in the used vehicle market.
Dealers said that reduced incentives from manufacturers
had hurt new vehicle sales; they also noted that the
strength in used vehicle sales was sufficient to maintain
overall profitability.
Prices
Business spending increased slightly in late May and
June. Retail inventories were generally at comfortable
levels. Manufacturing inventories were also generally at
comfortable levels, but there was some increase in the
number of contacts reporting higher-than-normal inventories due to slower demand. In contrast, one heavy-duty
truck dealer noted a shortage of new trucks. Capital
spending moved up slightly, though contacts expected a
larger pickup over the next 12 months. Outlays were
primarily for replacing industrial and IT equipment and
for renovating structures. Contacts from a number of
sectors said that elevated uncertainty about the future
state of the economy and international trade policy was
Business Spending
Prices rose slightly in late May and June, though contacts expected prices to rise at a somewhat higher rate
over the next 12 months. Retail prices were little
changed. Producer prices rose modestly, reflecting in
part higher labor, materials, and freight costs. That said,
contacts noted that growth in freight prices had slowed in
recent months. Contacts in the auto industry reported
that automakers and suppliers were not yet passing on
much of their higher costs related to tariffs.
G-1
Federal Reserve Bank of Chicago
holding back investment. Demand for transportation
services was flat, but remained at a strong level. Commercial and industrial energy demand edged down.
farmers would be forced to make insurance claims and
plant less-profitable cover crops. Corn and soybean
prices moved up as expected yields for the fall harvest
declined. Egg and dairy prices increased, while hog and
cattle prices decreased. Contacts noted that struggling
dairy operations were slaughtering more cows, which
contributed to the lower cattle prices. ■
Construction and Real Estate
Construction and real estate activity was little changed
over the reporting period. Contacts reported a downtick
in residential construction. Home sales were flat overall,
with increased sales of lower-end homes offset by decreased sales of higher-end homes. Home prices and
rents rose slightly. Nonresidential construction increased
modestly overall. One contact noted that there was a
slowdown in industrial building, particularly for the auto
industry, but that civil construction was still doing well.
Nonresidential construction contacts again reported that
high materials and labor costs were holding back growth.
Commercial real estate activity was little changed, as
were rents, vacancies, and the availability of sublease
space.
Manufacturing
Manufacturing production decreased slightly in late May
and June; in general, however, contacts remained comfortable with the level of activity. Demand for steel declined; the drop was broad-based with the exception of
the energy sector, where demand was flat. Specialty
metals manufacturers reported a slight drop in demand,
as lower demand from the auto and construction industries outweighed growth in the aerospace and defense
sectors. Order books for heavy machinery manufacturers
decreased slightly, due to lower demand from agriculture. Demand for heavy trucks and auto production both
slowed some, but remained at solid levels.
Banking and Finance
Financial conditions improved modestly overall during
the reporting period. Financial market participants reported some improvement in market conditions, though
volatility was slightly elevated. Business loan demand
rose modestly, led by growth in the construction sector.
Loan quality deteriorated slightly. Standards loosened
some as lenders reported strong competition for quality
clients. Consumer loan demand increased modestly,
with contacts noting that lower interest rates were encouraging increased mortgage activity. Consumer loan
quality and loan standards were little changed.
Agriculture
More wet weather in late May and June caused further
delays in planting and even poorer growing conditions.
One contact in Indiana said, “I have been farming for 48
years now and this is the worst spring/summer planting
season we have experienced.” Because it is now too late
to plant corn and soybeans, contacts said that many
For more information about District economic conditions visit:
chicagofed.org/cfsbc
G-2
Federal Reserve Bank of
St. Louis
The Beige Book ■ July 2019
Summary of Economic Activity
Reports from contacts suggest economic conditions have improved slightly since our previous report. Labor market
conditions remained tight, with slight growth in employment and a moderate increase in wages. Price pressures
strengthened slightly. Multiple contacts cited tariffs as a contributing factor to higher input prices, but responses were
mixed as to whether they would pass these costs on to their customers. Manufacturing activity improved moderately.
Barge traffic began to pick up after being halted by the severe spring flooding in the region. Outstanding loan volumes
continued to increase, but growth slowed slightly compared with three months prior. Crop quality is noticeably below that
of a year ago, mainly due to the recent flooding.
cent, respectively, since the previous report. Local contacts noted that increased feed prices will likely translate
into higher meat prices in the future. On the other hand,
cotton prices showed slight decreases over the same
time period and year-over-year losses in excess of 20
percent. The price of coal also fell modestly.
Employment and Wages
Employment has increased slightly since the previous
report. Survey-based measures of employment indicated
slight-to-modest growth in manufacturing employment in
Arkansas and Missouri. Small business employment
declined slightly throughout the District. Contacts continued to report labor market tightness for employees
across a broad range of skill levels. To attract and retain
workers, firms reported offering a wide array of benefits,
including extended parental leave, teleworking opportunities, and assistance with student loans. Furthermore,
local governments and companies announced several
new education and training initiatives as part of longterm efforts to fill skilled trades, transportation, and tech
positions.
Local contacts in retail and manufacturing held that
tariffs affecting access to China and the EU continued to
place upward pressure on input prices. However, there
were significant differences among firms in their ability to
pass elevated costs on to consumers, with some noting
that online competition was a limiting force.
Consumer Spending
Reports from general retailers and hoteliers indicate
consumer activity has slightly improved since the previous report. May real sales tax collections increased in
Arkansas, Kentucky, Missouri, and Tennessee relative to
a year ago. Consumers in West Tennessee, on net,
expect to spend slightly more than they did last year.
However, the consumer outlook in the region has fallen
since March. Missouri contacts reported that tourism
spending was slightly lower than a year ago.
Wages have grown moderately since the previous report, in part due to upward pressure from the tight labor
market. Contacts in healthcare and the public sector in
particular reported pay increases resulting from increased competition for workers. However, small business wage growth was more modest.
Prices
Price pressures have increased slightly since the previous report. Grain crop prices have risen sharply due in
large part to recent flooding that has limited the quantity
and quality of planted crops. Soybeans, sorghum, wheat,
and corn prices have increased 10, 4, 17, and 22 per-
Manufacturing
Manufacturing activity has increased moderately since
our previous report. Overall manufacturing activity in
May was stronger than one month earlier in both Arkan-
H-1
Federal Reserve Bank of St. Louis
sas and Missouri, although the pace of growth slowed.
Both production and new orders increased in each state.
Several companies across a variety of industries announced new capital expenditure and hiring plans
throughout the District.
and the percentage of rice rated fair or better increased
slightly. The percentages of all four crops rated fair or
better were moderately below those from the same time
last year. Contacts have frequently attributed the decline
in crop quality to the historic flooding along the Mississippi River this spring.
Nonfinancial Services
Natural resource extraction conditions declined slightly
from the previous reporting period, with seasonally adjusted coal production falling by less than one percent.
Similarly, year-to-date coal production was relatively
unchanged compared with this time in 2018. ■
Activity in the services sector has improved slightly since
the previous report. The number of posted vacancies for
nonfinancial services occupations increased from April to
May in Louisville, Memphis, and St. Louis. Transportation activity improved modestly. Both freight and passenger traffic at District airports increased year over year.
Barge activity began to recover after being halted by
severe flooding in the spring, but overall traffic levels
remained depressed.
Real Estate and Construction
Residential real estate activity has improved slightly
since the previous report. Seasonally adjusted home
sales increased slightly in May across Louisville, Memphis, and St. Louis but dipped slightly in Little Rock.
Inventory levels remained low.
Residential construction activity was unchanged. May
permit activity was mixed across District MSAs relative to
the previous month but increased slightly overall. Local
contacts continued to report that labor shortages are
restricting construction activity. Builders in St. Louis
expect increased permit numbers in the summer as they
make up for muted activity earlier in the year caused by
wet weather.
Banking and Finance
Banking conditions in the District have improved modestly since the previous report. According to reports from
bankers, outstanding loan volumes grew by 4 percent
relative to year-ago levels in the second quarter, which
was a slight decrease from the first quarter of 2019.
District growth remained below the national rate for the
third consecutive quarter. Commercial and industrial
lending continued to expand, but growth slowed significantly to 5 percent year-over-year from 9 percent in the
previous quarter. Commercial and residential real estate
lending maintained positive, and slightly lower, growth
rates compared with the previous quarter.
Agriculture and Natural Resources
District agriculture conditions have declined modestly
since the previous reporting period and have deteriorated moderately relative to a year ago. Compared with one
month prior, the percentage of corn and cotton rated fair
or better at the end of June declined modestly, the percentage of soybeans rated fair or better declined slightly,
For more information about District economic conditions, visit:
https://research.stlouisfed.org/regecon/
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ July 2019
Summary of Economic Activity
The Ninth District economy grew at a modest-to-moderate pace since the last report. Employment grew modestly, while
wage pressures were moderate and price pressures were modest. The District economy saw growth in consumer
spending, services, commercial and residential construction and real estate, and manufacturing. Energy activity fell
slightly, and agriculture worsened from an already weak position.
Employment and Wages
Wage pressures were moderate overall, but varied.
Despite strong hiring demand and tight labor, nearly 70
percent of respondents to the ad hoc poll of greater
Minnesota businesses said wages rose less than 3
percent over the past 12 months, and a notable share
said they rose less than 1 percent. Their wage
expectations for the coming 12 months were slightly
lower. Among professional services firms, two-thirds
reported wage increases of 3 percent or more, but their
wage outlook for the year ahead was also lower.
Minnesota staffing firms reported stronger wage growth,
with almost half reporting 12-month wage growth of 5
percent or more. However, expectations of future wage
increases were somewhat lower.
Employment grew modestly since the last report. Recent
surveys by the Minneapolis Fed and others suggested
that labor demand continued at a healthy pace. A quarter
of respondents to the Minneapolis Fed’s annual survey
of professional services firms planned to increase
staffing levels over the coming year, while only 5 percent
expected to cut head counts. A poll of greater Minnesota
firms showed that 63 percent were hiring, about half of
whom were expanding head counts; only 3 percent were
cutting employees. A poll of staffing firms, most of them
in Minneapolis-St. Paul, found that total job orders and
clients have risen modestly over the past two months
compared with the same period a year ago; expectations
for job orders over the remainder of the summer were
slightly higher. Larger employment gains were restrained
by low labor supply. Unfilled job orders have risen
modestly among staffing firms, and many said labor
market tightness was getting worse. “Toughest market I
have ever seen,” said one. A health care contact in
Montana said, “We flat out cannot find enough workers.”
Four of five respondents to the poll of greater Minnesota
firms said that tight labor was negatively affecting
business. Some softness was also present in the job
market. Initial unemployment claims rose by 3 percent
over the most recent six-week period (ending in early
June) compared with a year earlier; each District state
saw an increase. However, continuing claims trundled
lower, falling by almost 8 percent over the same period.
Prices
Price pressures since the previous reporting period were
modest. A third of respondents to the annual
professional services survey indicated that they
increased final prices over the past year, compared with
only a quarter who expected to increase prices in the
year ahead. A majority of respondents reported
increases in input costs, however. A separate
Minneapolis Fed business conditions survey indicated
that firms increased output prices slightly on average in
the second quarter of 2019 relative to the same period a
year earlier; a strong majority expected to leave prices
unchanged in the third quarter. A larger share of firms
reported input price pressures. Contacts reported
I-1
Federal Reserve Bank of Minneapolis
remain spotty, with May permitting values lower
compared with a year earlier in many of the District’s
larger markets, including Minneapolis-St. Paul.
Residential construction rebounded after several
lackluster months, with May housing permits rising
across much of the District compared with last year.
June permit data were not widely available at deadline,
with the exception of Minneapolis-St. Paul, which
showed strong single- and multifamily activity in May and
June.
substantial increases in trucking costs and health
insurance premiums. Retail fuel prices in District states
as of early July were moderately lower relative to the
previous reporting period. Prices received by farmers in
May increased from a year earlier for hay, hogs, milk,
and turkeys, while prices for corn, wheat, soybeans,
eggs, and chickens decreased; prices for cattle were
unchanged from a year ago.
Consumer Spending
Consumer spending rose slightly overall since the last
report, with some mixed activity. Gross sales in
Wisconsin were flat in May compared with a year earlier,
but rose by 7 percent in South Dakota. New and used
vehicle sales were lower in May and moved sideways in
June in western areas of the District. Resort operators in
northern Minnesota reported strong bookings. However,
a Montana contact noted that spending from Canadian
tourists was down due to the strong U.S. dollar. Airline
passenger traffic was strong in May across many of the
District’s airports, with some seeing double-digit growth.
But hotel occupancy rates in Minnesota were slightly
lower in May, and lodging and accommodation taxes in
Montana were also lower after seeing robust gains in
previous months. Total gaming revenue in South Dakota
rose 3 percent in May over a year earlier. However,
national park visits Districtwide over the same period
were notably slower. Monthly traffic across the Mackinac
Bridge in Michigan’s Upper Peninsula was flat compared
with last year.
Commercial real estate grew modestly since the last
report. Multifamily vacancy rates in Minneapolis-St. Paul
continued to be among the lowest in the country, and
office and industrial vacancies remained steady. Retail
vacancy rates there were expected to rise slightly in the
future, but would be helped by a “thin” pipeline for new
construction, according to an industry source.
Residential real estate activity rose moderately in most
of the District after several slow months. Closed sales in
May rose across Minnesota compared with a year
earlier, as well as in western and northern counties of
Wisconsin. But closed sales were mixed in North Dakota
and Montana markets.
Manufacturing
District manufacturing activity increased modestly. An
index of manufacturing conditions indicated increased
activity in June compared with a month earlier in
Minnesota and the Dakotas. A steel manufacturer
reported solid demand that they were unable to meet
due to labor force constraints. Several diversified
contract manufacturers described activity as stable, with
demand from nondurable goods generally stronger than
from consumer products. However, some manufacturing
contacts reported concerns about a slowdown in the
sector. Producers of agricultural equipment continued to
report reduced domestic demand.
Services
Professional services grew moderately. Respondents to
the Minneapolis Fed’s annual services survey reported
growth in sales, productivity, profits, and employment
over the past year. Expectations for the coming 12
months were slightly stronger. Contacts in the trucking
industry generally reported increased freight volumes,
with demand far outstripping the supply of drivers.
However, some trucking contacts reported major
disruptions due to flooding.
Agriculture, Energy, and Natural Resources
District agricultural conditions worsened from an already
weak position. Heavy rainfall and flooding substantially
delayed crop planting in many areas of the District. In
some areas farmers switched from corn to soybeans or
other crops that could start growing later, while in other
areas crops did not get planted at all. Contacts in
affected areas expressed concerns that the impacts
could be severe. District oil and gas exploration activity
as of early July was down slightly relative to the previous
report. District iron ore mines continued to operate at
near capacity. Contacts in nonferrous mining described
activity as stable. ■
Construction and Real Estate
Commercial construction grew moderately since the last
report. The value of construction starts across the
District saw a healthy rise in May compared with a year
earlier after several months of flat or declining activity. A
second database that tracks construction projects found
that new and active projects in the District through midJune were moderately higher than last year. Commercial
permitting figures suggested that future activity might
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ŶJuly 2019
Summary of Economic Activity
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For more information about District economic conditions visit:
www.KansasCityFed.org/Research/RegionalEconomy
J-2
Federal Reserve Bank of
Dallas
The Beige Book ŶJuly 2019
Summary of Economic Activity
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Federal Reserve Bank of Dallas
Nonfinancial Services
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For more information about District economic conditions visit:
www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of
San Francisco
The Beige Book ■ July 2019
Summary of Economic Activity
Economic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-May
through June. Conditions in the labor market remained tight, employment growth was modest, and wage growth was
moderate. Price inflation remained unchanged on balance. Sales of retail goods increased moderately, while activity in
consumer and business services increased somewhat. Conditions in the manufacturing sector were mixed. Conditions
in agriculture deteriorated modestly. Contacts reported that residential real estate market activity expanded moderately,
and commercial activity grew modestly. Lending activity picked up moderately.
Employment and Wages
many businesses, brisk competition in final goods markets limited the ability to raise selling prices to offset
higher costs, which rose because of compensation pressures and higher input costs. A few businesses that
import heavily from China reported higher input costs
due to tariffs. Lumber prices remained substantially
lower than they were last year. Prices for most other
building materials increased somewhat over the reporting period. In Seattle, a restaurant industry contact reported weak upward price pressures for food and beverages, while a payments services provider noted that
higher hardware costs were being passed on to clients.
Inflation in the agriculture sector overall remained modest, but market prices for beef and pork rose noticeably
due to decreases in global supply.
The labor market remained tight and employment growth
was modest. Some contacts reported that employment
growth would have been higher if not for persistent shortages of qualified labor. In Eastern Washington, a large
employer in the utility sector shifted some of its existing
workforce into information technology-related functions,
given the difficulty of hiring for those roles. To fill vacancies in construction positions, some employers in Idaho
discussed whether to relax certain hiring standards
related to drug testing. In Southern California, some
employers increased investments in workforce development programs to hire and train workers from labor pools
that may have been overlooked in the past.
Wages continued to rise moderately over the reporting
period due to brisk competition for qualified workers
across sectors. Wages for construction jobs rose solidly
in parts of the District where building activity picked up.
Hourly rates for delivery drivers at a major shipping and
logistics business in California rose moderately. A few
businesses continued to adjust to increased minimum
wages in their states, which have put upward pressures
on starting pay. Some businesses relied increasingly on
signing bonuses and expanded benefits packages to fill
vacancies.
Retail Trade and Services
Sales of retail goods increased moderately. In the Pacific
Northwest and the Mountain West, tight labor markets
with solidly rising wages supported brisk consumer
spending. In Oregon, sales at home improvement stores
rose moderately on a year-over-year basis, and a major
apparel company based there reported that demand was
healthy and should remain so, thanks to elevated consumer confidence. Spending at e-commerce outlets
continued to displace some foot traffic at brick-andmortar retailers, but the impact has been uneven across
the District.
Prices
Price inflation remained unchanged on balance. For
L-1
Federal Reserve Bank of San Francisco
Activity in the consumer and business services sectors
increased somewhat. Demand for shipping and logistics
services remained solid. A major service provider in the
District noted that they expect continued brisk shipping
activity thanks to strong consumer spending and innovations in their service offerings, such as expanded mobile
checkout options. Restaurants in the Pacific Northwest
reported moderate sales growth because of the healthy
regional economy. Growth in airline passenger volumes
in the Los Angeles area slowed slightly, though retail
revenue growth at airports picked up as per-passenger
spending increased. In the wider Southern California
region, contacts reported weakening conditions in the
hospitality industry, visible in fewer bookings for both
leisure and business guests and a shift in preferences to
more affordable rooms.
ments. A contact in Central California observed stable
domestic demand for a variety of crops, though uncertainty surrounding global demand ticked up. Domestic
producers of beef, pork, and poultry continued to benefit
from the impacts of a swine fever outbreak in China,
which limited Chinese meat imports. In the utilities sector
of Southern California, electricity sales growth was flat
and generation capacity remained well above demand.
Real Estate and Construction
Residential real estate markets expanded moderately. In
most areas, demand remained elevated while supply
continued to be somewhat constrained by worker and
materials shortages, putting further upward pressures on
selling prices. In the Mountain West, construction activity
did not keep pace with growing demand for both singlefamily and multifamily housing in urban areas, raising
affordability concerns further. In Oregon, the completion
of several apartment complexes and single-family developments resulted in brisk selling activity, especially for
more affordable units. A couple of contacts reported a
tick down in housing demand in Washington and Central
California, as evidenced by growing time-on-the-market,
but still expected generally stable market activity over
the rest of the year.
Manufacturing
Activity in the manufacturing sector was mixed. Production of heavy building machinery and construction materials like asphalt declined somewhat due to lower domestic demand. Some of the weaker demand was attributed to poor weather in regions outside of the District,
which delayed building projects there. A business that
supplies natural gas and electricity to various manufacturers noted that demand from their aerospace and
metals-producing customers was especially solid, likely
reflecting the impact of recent protective tariffs in the
case of the metals producers. In Northern California,
activity in the semiconductor sector recovered from a dip
in recent months, with healthier sales and inventory
levels.
In the commercial real estate market, contacts reported
modest expansion. In Washington, construction activity
was strong, and builders had long lists of planned projects, especially in urban areas. Demand for office space
in Seattle was high, and the vacancy rate was nearly the
lowest in the country. A contact in Central Oregon reported that demand for retail space picked up noticeably, but
remained at a slightly lower level relative to previous
economic expansions. Commercial permitting for Idaho
and Oregon as a whole was down modestly.
Agriculture and Resource-Related Industries
Conditions in the agriculture sector deteriorated modestly. Poor growing conditions for wheat and corn resulted
in yields weaker than normal in the Mountain West,
though some contacts said this boosted profitability
slightly on net as selling prices ticked up. Demand for
lumber from major trading partners like China continued
to run soft due to trade tensions, and domestic demand
was also weak due to slower national building activity in
recent months. A lumber producer in Oregon observed
that some landowners initiated plans to reduce log supply in response to continued weak demand. Fruit growers in the Pacific Northwest also noted subdued demand
from foreign trading partners owing to trade develop-
Financial Institutions
Lending activity picked up moderately over the reporting
period. Contacts across the District noted healthy demand for loans, supported by historically low interest
rates, and observed that credit availability was steady. In
the mortgage market, refinancing activity increased
modestly as mortgage rates declined. Loan quality remained solid, though a contact in Oregon reported that
loan quality in their region’s agriculture industry deteriorated slightly due to declines in profitability in the sector.
■
L-2
Cite this document
Federal Reserve (2019, July 30). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20190731
@misc{wtfs_beige_book_20190731,
author = {Federal Reserve},
title = {Beige Book},
year = {2019},
month = {Jul},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20190731},
note = {Retrieved via When the Fed Speaks corpus}
}