Beige Book
For use at 2:00 PM EST
Wednesday
November 27, 2019
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
November 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 Dallas based
on information collected on or before November 18, 2019. This docu‐
ment 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 ■ November 2019
Overall Economic Activity
Economic activity expanded modestly from October through mid-November, similar to the pace of growth seen over the
prior reporting period. Most Districts reported stable to moderately growing consumer spending, and increases in auto
sales and tourism were seen across several Districts. In manufacturing, more Districts reported an expansion in the
current period than the previous one, though the majority continued to experience no growth. The picture for nonfinancial services remained quite positive, with most Districts reporting modest to moderate growth. Transportation activity
was rather mixed across Districts. Reports from the banking sector indicated continued but slightly slower growth in
loan volumes. Home sales were mostly flat to up, and residential construction experienced more widespread growth
compared to the prior report. Construction and leasing activity of nonresidential real estate continued to increase at a
modest pace. Agricultural conditions were little changed overall, remaining strained by weather and low crop prices.
Activity in the energy sector deteriorated modestly among reporting Districts. Outlooks generally remained positive,
with some contacts expecting the current pace of growth to continue into next year.
Employment and Wages
Employment continued to rise slightly overall, even as labor markets remained tight across the U.S. Several Districts
noted relatively strong job gains in professional and technical services as well as healthcare. Reports were mixed for
employment in manufacturing, with some Districts noting rising headcounts while others noted stable employment
levels and one District reported layoffs. There were scattered reports of labor reductions in retail and wholesale trade.
The vast majority of Districts continued to note difficulty hiring driven by a lack of qualified applicants as the labor market remained very tight. The shortage of workers spanned most industries and skill levels, and some contacts noted
that their inability to fill vacancies was constraining business growth. Moderate wage growth continued across most
Districts. Wage pressures intensified for low-skill positions.
Prices
Prices rose at a modest pace during the reporting period. Reports regarding input costs and selling prices in the manufacturing sector were mixed, with some Districts noting deceleration in prices, while others cited increased cost pressures and a few indicated little to no change. Retailers mentioned higher costs, which contacts in some Districts attributed to tariffs. Firms’ ability to raise prices to cover higher costs remained limited, though a few Districts noted that
companies affected by the tariffs were more inclined to pass on cost increases. Service sector prices in reporting Districts were mostly flat to up. Energy and steel prices were flat to down, while reports on construction materials and
agricultural commodity prices were mixed. Overall, firms generally expected higher prices going forward.
Highlights by Federal Reserve District
Boston
New York
Economic activity expanded at a modest to moderate
pace as businesses and consumers headed into the
fourth quarter. Prices were largely stable and hiring
steady. Outlooks were mostly positive—an improvement
since the last round.
There was little or no growth in the regional economy.
Employment was little changed, as job creation slowed,
partly reflecting a shortage of available workers, while
wage growth moderated. Input price decelerated, while
selling prices continued to rise modestly. Service sector
activity weakened, and real estate markets softened
somewhat.
1
National Summary
Philadelphia
St. Louis
On balance, business activity continued at a modest
pace of growth during the current Beige Book period.
Labor markets tightened further throughout the District,
accompanied by slowing employment growth and continued moderate wage growth. Price increases remained
modest. Most firms expressed cautious optimism but
continued uncertainty.
Economic conditions have been mixed but relatively
unchanged since our previous report. Contacts continued to note a heightened sense of economic uncertainty.
Labor market conditions remained tight, and many firms
reported raising wages and salaries to attract new workers. The outlook among firms surveyed in mid-November
was slightly pessimistic for the second consecutive
quarter.
Cleveland
Minneapolis
Fourth District economic activity increased modestly.
Strength in professional and business services drove
growth. Manufacturing improved slightly. Home and auto
demand was up, though nondurable consumption was
mixed. Employment grew slightly, driven by hiring in
professional and business services. Wages rose modestly overall. Selling prices increased modestly on balance.
Ninth District activity grew at a modest pace. Employment grew slightly. Labor demand remained healthy, but
some softness was evident, and labor supply remained
tight nonetheless. Consumer spending rose, with increases seen in airport traffic and vehicle sales. Manufacturing contracted, with reports of shrinking backlogs.
Construction and real estate markets reported healthy
activity. Oil drilling decreased slightly.
Richmond
Kansas City
The Fifth District economy grew moderately. Manufacturers saw a pick-up in shipments and new orders but continued to face constraints from tariffs and trade uncertainties. Tourism remained strong while reports on retail
sales were mixed. Financial and nonfinancial services
experienced positive but mild growth. Labor demand
strengthened while wage and price growth remained
moderate, overall.
District economic activity was flat in October and early
November. Consumer spending edged down as sales in
the retail sector rose but fell in the auto, restaurant and
tourism sectors. The professional and high-tech services
and wholesale trade sectors reported rising sales, while
transportation contacts noted a decline. Overall conditions in the energy, agricultural and manufacturing sectors remained weak.
Atlanta
Dallas
Economic conditions improved modestly. Tightness in
the labor market persisted, and low-skill wage pressures
increased. Nonlabor input costs rose. Retail sales and
tourism activity were stable. Residential real estate
activity improved, and commercial real estate activity
was positive. Manufacturing activity accelerated further
during the reporting period.
Economic activity continued to expand moderately.
Growth remained solid in services and retail, and downshifted slightly in manufacturing. Home sales remained
on the rise while energy activity continued to decline.
Selling prices were largely flat, as firms’ ability to pass
through cost increases remained limited. Hiring continued at a steady pace. Outlooks were generally improved,
though uncertainty remained elevated.
Chicago
San Francisco
Economic activity increased slightly. Employment, consumer spending, and manufacturing all increased slightly. Construction and real estate activity was little
changed, while business spending decreased slightly.
Wages and prices rose slightly and financial conditions
improved modestly. More poor weather added to crop
farmers’ difficulties.
Economic activity in the Twelfth District expanded at a
modest pace. The labor market remained tight, and
wage growth was modest. Reports on price inflation
were mixed. Sales of retail goods increased somewhat,
and consumer and business services activity was solid.
The pace of commerce in the manufacturing sector was
little changed, and activity in the agriculture sector was
mixed. Activity in residential and commercial real estate
markets expanded moderately, and lending grew further.
2
Federal Reserve Bank of
Boston
The Beige Book ■ November 2019
Summary of Economic Activity
Business contacts in the First District cited mostly positive results when contacted in November. Both retailers and
manufacturers reported modest to moderate increases in revenues compared with a year earlier, as did staffing firms.
Reports from commercial real estate contacts were similar to the last round, with the greatest strength in the Boston
market, while activity in Hartford was steady at a low level. Residential real estate sales and prices were up in most
areas. Labor markets remained tight and staffing firms noted some substantial pay increases. Most responding firms
cited a positive outlook, with some noting a recent upgrade in their expectations.
the holiday season and beyond. While the underlying
trend in terms of economic fundamentals was reportedly
strong, some contacts expressed concern about the
impact of tariffs. One retailer reported that the intermediary firm that pays their import duties on some European
luxury goods recently announced that the rates it charges will be going up significantly. Two other firms have
reported tariff impacts on sales, either in terms of pricing
or in terms of supply chain disruptions slowing their
product supply.
Employment and Wages
Labor markets remained tight in the First District even as
business contacts cited modest expansion of headcounts in aggregate. Retail contacts reported having no
problems hiring staff or having difficulty hiring only for
selected positions. By contrast, several manufacturers
noted that hiring was difficult and that labor costs had
risen. At the same time, manufacturers reported no
major positive revisions to hiring plans. Staffing respondents saw strong demand for labor and continued to
experience tight labor supplies, particularly of highlyskilled workers. Most staffing contacts were able to
increase bill rates and pay rates concurrently, ranging
from 4 percent to 20 percent; one held both rates unchanged from the last quarter.
Passenger traffic to Logan International was up 2.3
percent for domestic travel and up 11.1 percent for international arrivals year-to-date through September compared with a year earlier. Airlines have continued to add
flights. The 2019 cruise ship season has ended with
homeport passenger counts up 15 percent and port-ofcall passenger counts up 33 percent compared to the
2018 season. Business and leisure travel were expected
to remain robust into 2020.
Prices
Business contacts had little to say about prices. Retailers
mentioned no pressures and most manufacturing contacts reported no unusual pricing patterns. One exception was a dairy-products firm which reported raising
their selling prices by 5 percent to recoup part of a 9
percent increase in input costs.
Manufacturing and Related Services
Reports from eight manufacturing contacts were more
positive in this round than in the recent past. In some
cases, contacts reported their first year-on-year sales
growth since 2018. However, part of the improvement
reflects a weak comparison period a year earlier: The
first half of 2018 was strong, partly because of tax cuts,
but tariffs and general trade uncertainty contributed to
weakness in the second half of 2018. A notable area of
Consumer Spending
Retailers consulted for this round reported posting yearover-year comparable-store sales gains in the mid-single
digits. Total revenue increases including expansion
activity were in the high single digits or low double digits
year-over-year. Sales expectations were optimistic for
A-1
Federal Reserve Bank of Boston
strength was semiconductors, which had been going
through a down cycle that industry participants said was
only partly attributable to global economic patterns;
semiconductor industry cycles are often out-of-sync with
the rest of the economy.
market. One contact expressed concern about growing
political uncertainty.
In the greater Hartford area, commercial leasing activity
levels have not changed since the last cycle. Absorption
in the industrial market was low, and absorption in the
office market was negative for 2019 to date. Retail stores
continued to close. In the investment sales market, prices were steady and the number of bidders in the market
has fallen slightly. Commercial real estate respondents
said business sentiment was neutral in Connecticut.
Two contacts reported positive revisions to their capital
expenditure plans. One is a manufacturer of veterinary
supplies which said, among other things, that swine flu
had led Chinese producers to increase production of
chickens, requiring purchase of new veterinary technologies.
Residential Real Estate
Manufacturing respondents were positive about the near
-term future and half said they had made upward revisions to their forecasts recently. Reasons varied. For a
furniture maker, it was mostly a single large order from a
new type of customer. For other firms, it was the trough
in the semiconductor cycle.
Residential real estate markets in the First District saw
improvements in September. (Most areas reported yearover-year changes from September 2018 to September
2019; New Hampshire reported October statistics and
Vermont reported August data. Connecticut statistics
were unavailable.) For single family homes, closed sales
and median sales prices were up in five reporting areas.
Inventory generally decreased. For condominiums, sales
rose moderately in all reporting areas except Rhode
Island. Median sales prices dropped slightly in Boston,
but increased or stayed flat in all other areas. Condo
inventory improved in Boston and Maine but decreased
in Rhode Island, Massachusetts, and New Hampshire.
Vermont experienced a slowdown in closed sales and an
increase in prices in August (data for Vermont combine
single family homes and condos).
Staffing
Most New England staffing firms reported positive revenue growth in the third quarter of 2019, citing high singledigit year-over-year increases. Some expect healthy
growth in the last quarter of 2019 as well. Job candidates
often do not possess the skillsets and experience desired by employers, so staffing firms have augmented
their training efforts. They have also increased their
presence on online job boards and other advertising
channels. A few respondents have expanded by hiring
more recruiters and building specialized teams for retained search services or permanent placements. All
staffing contacts expressed optimism for additional gains
in 2020.
Contacts expected market activity to slow seasonally
during the remainder of the year. The Maine and Massachusetts respondents both noted that the market for
homes priced below $250,000 is very tight. Contacts
expressed positive outlooks for the coming months,
citing favorable mortgage rates as the main reason.■
Commercial Real Estate
Commercial real estate activity in the First District continued to strengthen into November. Office leasing demand
in Boston has been robust even as leasing activity has
slowed because of extremely low vacancy rates. Construction activity was robust. The investment sales market has also been strong; according to one contact, total
transaction volume increased by 18 percent from Q3
2018 to Q3 2019. The outlook for Boston was cautiously
positive: All contacts reported that there were no signs of
a growth slow-down and the commercial real estate
market was well-balanced. However, one contact mentioned that they did not expect much price appreciation
and had lowered their income expectations for the next
five years.
The Providence area saw moderate commercial market
activity. Office rents were flat, while one-off transactions
(not robust activity) lifted rents in the industrial market.
Demand remained moderate in the investment sales
For more information about District economic conditions visit:
www.bostonfed.org/regional‐economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ November 2019
Summary of Economic Activity
There has been little or no growth in the Second District economy in the latest reporting period. The labor market remained tight, with slowing hiring activity and wage growth. Input prices decelerated, while selling prices continued to rise
at a modest pace. Manufacturing activity was essentially flat, while business in the transportation and distribution sectors grew modestly. However, most service industries reported some softening in business conditions. Business contacts remained fairly restrained in their optimism about the near-term outlook. Consumer spending was mixed, with
strength in auto sales but ongoing weakness in traditional retail. Tourism has remained robust. Housing markets have
been softer, on balance, though the residential rental market has held up fairly well. Commercial real estate markets
have weakened, and new commercial construction has slowed. Finally, finance sector contacts generally reported softening conditions, though banks reported increased demand for mortgage loans.
Employment and Wages
Prices
The labor market has remained tight across the District,
but hiring has slowed. Business contacts have continued
to report trouble finding workers to fill a wide range of
jobs such as software developers and engineers, accountants, retail clerks, mechanical engineers, machinists and welders. Two major employment agencies noted
that almost all job candidates are already working, and
that many are reluctant to switch jobs, particularly at this
time in the year.
Businesses in most sectors reported that input costs
decelerated, while selling prices continued to rise at a
modest pace. However, contacts in wholesale and retail
trade have continued to note more widespread escalation in the prices they pay. Contacts in the leisure &
hospitality sector, however, have continued to report
steady to declining prices. Prices for Broadway theater
tickets, for example, have edged down and are slightly
lower than a year ago. Looking ahead, there was not
much of a change in businesses’ inclination to raise
prices in the months ahead.
Businesses overall continued to report little change in
staffing levels, as job creation slowed. Contacts in manufacturing, education & health, and leisure & hospitality
reported modest net hiring; however, finance, real estate, and wholesale trade firms indicated modest declines in employment, on balance. Looking ahead to the
next six months, businesses in manufacturing and most
service sectors still planned on adding to staff; however,
businesses in the information, finance, and transportation sectors projected modest declines in employment.
Businesses overall reported that wage growth has moderated slightly in the latest reporting period, though
contacts in leisure & hospitality and education & health
reported more widespread increases.
Consumer Spending
Retailers report that sales have been steady to softer
since the last report and were lukewarm in their expectations for the near-term outlook. A number of retail contacts expressed concern about the general business
climate, and a sizable number have scaled back capital
spending plans. Upstate New York retailers noted some
pickup in shopper traffic and sales activity, reflecting
heavier and earlier sales promotion, but note that the
pace of growth remains modest. Most stores indicated
that inventories were in good shape heading into the
holiday season.
B-1
Federal Reserve Bank of New York
rising moderately in most areas and inventories generally stable. Similarly, in upstate New York, the sales market has remained strong, with inventories steady at very
low levels, prices still rising, and bidding wars still fairly
commonplace in the more sought-after areas.
Sales of both new and used vehicles have remained
solid in recent weeks, running above year-earlier levels,
according to dealers in upstate New York. Dealers indicated that manufacturer incentives and year-end
changeovers have boosted sales. Consumer credit
conditions have remained in good shape.
The residential rental market has strengthened further.
While Manhattan rents have leveled off, rents across
much of the city and metro area have continued to rise at
a moderate pace—and at a somewhat faster pace at the
high end of the market, reflecting a shift in demand away
from owning. Rental vacancy rates have edged up but
remain quite low across New York City.
Manufacturing and Distribution
Manufacturers reported that business activity has remained flat. On the distribution side, wholesalers noted a
significant rebound in activity, while transportation contacts said that activity grew modestly.
Looking ahead, manufacturers, wholesalers, and transportation firms indicated that they anticipate modest
growth in the months ahead, on balance. Contacts in all
these sectors have expressed ongoing concern about
tariffs, trade tensions, and related uncertainty, as well as
the rising minimum wage in New York.
Commercial real estate markets across the District have
generally weakened in the latest reporting period. Office
rents have been mostly flat, while availability rates have
climbed modestly in most areas, with leasing activity
steady to slower. Industrial markets have been mixed:
rents have continued to trend up, though the pace has
slowed, and availability rates have been flat to up slightly. The market for retail space has weakened further,
even as the holiday shopping season draws near, with
rents flat and vacancy rates at multi-year highs.
Services
Businesses across almost all service industries reported
some weakening in activity, on balance, since the last
report. A notable exception has been in the leisure &
hospitality sector, where contacts noted moderate
growth in activity. Broadway theaters reported that attendance was fairly sturdy in October but dropped off a
bit in the first half of November, as both attendance and
revenues slipped below comparable year-ago levels.
New multi-family construction starts have held steady
across the District, while the volume of ongoing multifamily construction has remained fairly brisk. New office
and industrial construction has continued to weaken
modestly.
Other service industries generally reported softening
activity—particularly in the information and finance sectors. Professional & business and education & health
service firms reported some modest weakening in conditions. Service firms, even those in leisure & hospitality,
have grown somewhat less optimistic about the nearterm outlook.
Banking and Finance
Financial sector contacts generally reported softer business conditions and expressed concern about a deteriorating business climate. Bankers reported higher demand for residential and commercial mortgages, but
unchanged demand for consumer and C&I loans. Credit
standards were said to be unchanged across all major
categories. Loan spreads narrowed on all categories.
Contacts also reported further decreases in average
deposit rates. Finally, bankers reported stable delinquency rates across all loan categories. ■
Real Estate and Construction
Housing markets across the District have been mixed
but, on balance, weaker in the latest reporting period.
Prices of New York City condos and co-ops have continued to trend lower and are now running moderately
below comparable 2018 levels, with steeper declines at
the high end of the market and in Manhattan. A local real
estate expert noted a precipitous drop in the share of
cash purchases at the higher end of the market, which is
seen as a signal that investors have largely left the market. The inventory of existing homes has continued to
climb to a fairly high level in Manhattan but less so in the
outer boroughs. Housing markets in the suburban areas
around New York have been more stable, with prices still
For more information about District economic conditions visit:
www.newyorkfed.org/regional‐economy
B-2
Federal Reserve Bank of
Philadelphia
The Beige Book ■ November 2019
Summary of Economic Activity
Aggregate Third District business activity continued at a modest pace of growth during the current Beige Book period.
Growth rates slowed from the prior period to a modest pace in manufacturing and nonauto retail sales, and to a slight
pace for tourism. Financial services continued to grow at a moderate pace; nonfinancial services grew at a modest
pace. Construction activity for residential and nonresidential buildings continued to hold steady, as did commercial
leasing activity. Sales of new autos and of existing homes continued to decline – at a slight and a moderate pace, respectively. Labor markets tightened further throughout the District. Wages continued growing moderately, but employment growth appeared to slow to a slight pace. Overall, price pressures remained modest. The firms’ outlook for growth
over the next six months remained positive, with about half of all firms anticipating increases in general activity. Most
contacts expected current business conditions to continue through 2020 but remained cautious in their planning.
Employment and Wages
turing contacts who reported increases in wage and
benefit costs ticked up to 44 percent; just 2 percent
reported decreases.
Employment grew slightly during the current Beige Book
period – a slower pace than in the prior period. About
two-thirds of the firms reported no change in staff. While
the share of manufacturers reporting a higher number of
employees rose, the share among the much larger nonmanufacturing sectors fell. Average work hours continued to edge down since the prior period.
Prices
On balance, the firms continued to report modest increases for both input prices and prices received for their
own goods and services. The share of firms reporting
increases in prices fell for both manufacturing and nonmanufacturing firms; generally, the share reporting decreases in prices rose. About two-thirds of the firms
reported no change in prices over the period.
The firms continued to report very tight labor market
conditions. Staffing firm contacts all noted challenges to
hiring, as the labor shortages continued to constrain
placements. One staffing contact also reported that order
activity was down; another noted that orders had been
delayed, after which clients were trying to catch up with
production – necessitating added incentives to attract
workers for overtime. Another staffing firm noted pressure from a client seeking contact concessions in order
to absorb some of the cost of tariffs on the firm’s products.
Looking ahead six months, the anticipation of higher
prices was less widespread among manufacturers than
last period. The percentage of manufacturing firms that
expect higher prices fell, while the percentage expecting
lower prices rose. This was true for prices firms expected
to pay as well as for prices firms expected to receive for
their own goods.
Manufacturing
Wage growth continued at a moderate pace. While the
overall pressure appears to have eased slightly, contacts
noted specific pressures at lower wage rates. One staffing firm reported more difficulty recruiting for firms that
only offered minimum wage, and another indicated that a
different staffing firm was deploying yard signs to recruit
for jobs paying $16 an hour. The share of nonmanufac-
On balance, manufacturers reported modest growth in
activity – somewhat slower than the moderate pace
reported during the prior period. Nearly twice as many
firms reported increases in shipments and new orders
than reported decreases; however, the percentage reporting increases rose to about one-fifth of all firms that
C-1
Federal Reserve Bank of Philadelphia
reported.
Financial Services
The growth was broadly shared, as the makers of lumber
products, paper products, chemicals, primary metal
products, fabricated metal products, and industrial machinery all tended to note gains in new orders and shipments.
Financial firms continued to report moderate growth in
overall loan volumes (excluding credit cards) on a yearover-year basis, although the rate seemed to edge
slightly slower. Credit card lending held steady at a
moderate pace.
Comments were mixed. A couple of primary metals firms
reported positive trends, but the firms from several other
sectors noted weakening orders, competitive business
lost as a consequence of tariffs, and production constraints for lack of labor.
During the current period (reported without seasonal
adjustments), volumes appeared to grow moderately for
home mortgages, modestly for automobile loans, and
slightly for other consumer loans (not elsewhere classified). Commercial real estate and commercial and industrial loan volumes declined slightly, while home equity
lines decreased moderately.
Manufacturers’ expectations of activity over the next six
months were mostly unchanged. Expectations of shipments and of new orders edged higher, remaining above
long-term nonrecession averages. Expectations of future
employment fell, while planned capital spending rose.
Banking contacts continued to report no significant problems with loan delinquencies. Contacts also noted ongoing uncertainty that is slowing business decision-making
and constraining the willingness to invest. However,
most banking contacts remain cautiously optimistic about
continued growth through 2020.
Consumer Spending
Contacts for malls and convenience stores reported
modest growth in nonauto retail sales – a return from the
somewhat faster pace during the prior period. Mall store
operators reported solid year-over-year sales growth.
Convenience store contacts suspected a little economic
softness underlying a slight tick down in their positive
rate of sales growth, although weather may have also
been a factor.
Real Estate and Construction
Homebuilders reported little change in contract signings
in the current period, on balance. One South Jersey
builder reported two strong months of sales in the active
adult market, noting positive feelings about the coming
year but a plan to be conservative.
Existing home sales continued to decline moderately on
a year-over-year basis across most local markets, with
exceptions of moderate growth in the Jersey Shore and
Harrisburg areas. A large Philadelphia-area broker indicated continued inventory constraints heading into a
seasonal lull for home sales.
Auto sales continued to edge lower but remained near
high levels. Pennsylvania dealers noted positive yearover-year sales in October, while New Jersey dealers
reported slight growth in October following a weak September. Year-over-year sales growth through October
year to date remained positive in both states, holding
steady in Pennsylvania but flattening out slightly in New
Jersey.
On balance, commercial real estate construction and
leasing activity seemed to hold steady at relatively high
levels. Contacts reported continued strength in the industrial market, with ongoing demand for new construction. Most contacts also noted a positive quarter for
office space leasing, which may spur demand for new
construction in the future. Management firms continued
to note positive net absorption, falling vacancy rates, and
rising rents in many office and industrial segments. ■
Tourism activity appeared to grow at a slight pace – a bit
slower than in the prior period. A tourism analyst noted
that demand for hotels in downtown Philadelphia remained positive but slowed on a year-over-year basis,
similar to national trends. Atlantic City casino revenues
slowed from the prior period and were down slightly, on
balance.
Nonfinancial Services
On balance, activity at service-sector firms continued at
a modest pace of growth. The percentage of firms reporting increases in new orders nearly doubled, and the
share of firms reporting increases in current revenues
edged higher. Over 55 percent of the firms – more than
in the prior period – expect growth over the next six
months.
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 ■ November 2019
Summary of Economic Activity
Overall economic activity in the Fourth District increased modestly, an improvement after a couple periods of little
growth. Professional and business services contacts continued to see strong and increasing activity. Manufacturers
reported slight demand growth for the first time in several months, noting that while their international sales remained
weak, domestic demand was stronger than they had predicted. Homebuilders indicated that low mortgage rates and
rising wages boosted demand for new homes. Auto sales were bolstered by higher incentives, while reports from nonauto retailers were mixed. Bankers noted growing loan demand for homes and autos. Nonresidential contractors reported that demand ticked up. By contrast, the freight sector saw further weakening. Contacts in many sectors were optimistic about near-term growth prospects. Employment rose slightly on balance, largely on the strength of professional and
business services hiring, while overall wage growth was modest. Output price inflation was modest on balance.
Employment and Wages
Prices
Aggregate employment increased slightly over the period. Professional and business services firms continued
to staff up to meet demand growth, accounting for most
of the net employment gains. Construction contractors
indicated that typical winter layoffs had been delayed this
year. Nonseasonal retail staffing levels were stable. Most
bankers held employment levels steady, but one large
bank implemented layoffs, saying interest rate reductions
had put pressure on margins. Most manufacturers had
stable staffing, but a couple steel manufacturers cut
temporary workers and reduced hours for permanent
employees. Long-haul trucking and rail companies reduced staffing levels because of softening demand.
Selling prices in the District rose modestly on balance.
Much of the price inflation came from services firms;
nonsteel manufacturers’ prices were stable, and retail
inflation was mixed. Some professional and business
services firms negotiated modest price increases. A
staffing contact remarked, “we have good pricing power
due to [strong] demand with inadequate supply." Commercial real estate companies increased rates in response to rising labor costs. Local delivery and rail
freight companies raised rates, while long-haul trucking
rates were flat to down. Manufacturers’ selling prices
were stable, except in the case of steel producers,
whose prices fell with the market. Though tariffs pushed
up costs for some manufacturers, manufacturers’ materials costs decreased on balance, especially for steel. On
the consumer side, a clothing retailer reduced the use of
price discounting to offset higher costs resulting from
tariffs. By contrast, a food retailer said that while tariffs
had increased costs, the company “cannot raise prices
on a whim” because of fierce competition. Homebuilders
reported rising costs; some increased prices to offset
these costs, while others took hits to their margins to
maintain market share.
Wages rose modestly overall. Manufacturers increased
wages and offered retention bonuses to compete for
talent. Retailers across subsectors raised pay rates,
citing tighter labor markets. While professional and business services firms reported only slight wage pressure,
other white-collar industries, including banking and real
estate, saw stronger wage pressure. One community
banker said he needed to raise wages 10 percent to
attract qualified talent. Construction pay was mostly
unchanged. Freight firms reported little pressure to raise
wages.
D-1
Federal Reserve Bank of Cleveland
Consumer Spending
Financial Services
Retailers reported slightly higher sales compared to
those of the previous report. Light-vehicle sales were
solid and increasing. One dealer noted that new-vehicle
sales in October were bolstered by a 7 percent increase
in manufacturer incentives relative to last year’s. Contacts in hospitality and retail apparel reported mixed
activity throughout the Fourth District. While overall sales
were up only slightly this period, retailers were optimistic
about sales in the coming months, looking forward to a
boost from the holiday shopping season.
On balance, demand for credit increased slightly. A large
minority of bankers reported that demand for credit had
increased, while the rest suggested that it was steady. In
particular, contacts indicated that lower interest rates
drove increases in home lending—particularly for mortgage refinancing—and vehicle loans. However, one
contact indicated that demand from small businesses
and large commercial clients weakened. Although bankers indicated that falling interest rates may erode core
deposits going forward, deposit balances have remained
relatively stable to date.
Manufacturing
Manufacturers reported a slight increase in activity,
although overall conditions remained relatively soft.
Domestic demand held up better than manufacturers
had anticipated. However, several contacts said international weakness still weighed on demand, especially
softness in western and central Europe and the ongoing
negative impacts from trade tensions with China. One
steel producer noted that declines in steel prices pushed
up demand as customers negotiated contracts for 2020
in an effort to lock in low prices, while another said that a
falling price environment encouraged customers to hold
lower inventory and buy on an as-needed basis. Aside
from the usual holiday slowdown, manufacturers were
relatively optimistic that conditions would continue to
improve in the coming months, and several noted that
they were working on plans for increased capital investment for 2020.
Professional and Business Services
Activity in the professional and business services sector
has strengthened further since the previous report. Contacts from a variety of subsectors continued to report
strong demand for business services and suggested that
their clients were investing in growth through activities
such as marketing and mergers and acquisitions. One
business development contact reported a considerable
increase in activity in recent weeks because of a number
of businesses that are opening new locations in the area.
Overall, the majority of contacts in professional and
business services expect favorable conditions to continue into the near future.
Freight
Freight sector conditions have weakened further since
the last report. The majority of contacts reported no
change or lower demand for freight services, although
one freight firm reported that September and October
were its strongest months since January. Ongoing weakness in the manufacturing sector was a major factor
contributing to recent softening; one contact noted demand weakness because manufacturing output from
Mexico had fallen significantly. Another contact remarked that economic uncertainty caused businesses to
hold off on investment purchases, resulting in lower
shipping volumes. Finally, contacts pointed to excess
capacity in trucking as exacerbating weaknesses. Overall, freight contacts have downgraded their near-term
outlook since the previous report, from solid to mixed. ■
Real Estate and Construction
Construction contacts reported strengthening demand,
while real estate firms indicated that demand was flat.
Nonresidential contractors noted slight demand growth
over the period because they acquired new projects from
a wide range of industry segments. Nonresidential contractors were upbeat about the near future as well, believing there will be plenty of projects to bid on in 2020.
However, commercial real estate contacts reported flat
demand. A couple commercial real estate contacts said
softening global markets and trade tensions weighed on
demand.
On the residential side, homebuilders indicated that
demand increased modestly, citing low mortgage rates
and wage growth as contributing factors. One homebuilder also suggested that stronger demand for resale
homes allowed potential buyers to trade up to new
homes more easily. However, residential real estate
agents characterized sales of existing homes as unchanged. Homebuilders expected continued demand
growth, apart from the expected winter slowdown, while
realtors expected home demand to remain unchanged.
For more information about District economic conditions visit:
www.clevelandfed.org/region/
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ November 2019
Summary of Economic Activity
The Fifth District economy grew moderately since our previous Beige Book. A majority of manufacturers reported growth
in shipments and new orders, although tariffs and trade uncertainty were concerns for many producers. Overall, import
volumes continued to exceed export volumes; however, growth in exports outpaced growth in imports in recent weeks.
Meanwhile, trucking companies reported a decline in rates as demand softened to a moderate rate. Some retailers reported strong sales, although some high end retailers lost sales to customers who sought less expensive alternatives.
Travel and tourism strengthened across most of the Fifth District. Home sales and mortgage lending picked up in recent
weeks, according to real estate agents and lenders. On the commercial side, real estate leasing, sales, and construction
grew at a modest to moderate pace with the exception of retail leasing, which slowed in several markets. Nonfinancial
services firms reported mild growth, overall, and expected slow growth to continue heading into 2020. Executives noted a
slowdown in the oil and gas industry. Farmers have been hesitant to invest in land or equipment. Labor demand strengthened while wage increases were moderate, overall. Price growth also remained moderate in recent weeks.
Employment and Wages
Manufacturing
The demand for labor strengthened moderately in recent weeks. Employment agencies reported a seasonal
pick-up in new job openings and an increase in direct
hire recruitment services, rather than temporary, for
larger clients. Employers continued to report difficulties
finding qualified workers. A few firms sought to fill job
openings with in-house training programs, apprenticeship programs, or partnerships with educational institutions. Wages increased moderately, overall. Meanwhile,
staffing agencies reported increased wage pressures
for jobs in the lower pay scales.
Manufacturing in the Fifth District grew moderately since
our last report. Contacts reported increases in shipments
and new orders, overall, as strong demand supported
continued growth for many manufacturers. However,
tariffs and trade continued to be concerns since tariffs
led to higher costs of raw materials and lower profit
margins. Trade-related uncertainty remained significant.
Lower profitability caused some companies to decrease
production levels and staff headcounts. Meanwhile,
some manufacturers struggled on the demand side, such
as a Virginia yarn manufacturer, who reported that economic uncertainty is hurting demand by leading some
customers to reduce inventory levels.
Prices
Price growth remained moderate since our previous
report. According to manufacturing and service sector
firms, growth of prices paid continued to exceed growth
in prices received. Rising labor costs, including wages
and employer-paid health insurance, were noted as
contributors to the increase in prices paid. Meanwhile,
raw materials prices were reportedly up for some construction materials and tariffed goods while price declines were cited for freight transportation, energy, food
commodities, chemicals, and steel.
Ports and Transportation
Ports in the Fifth District saw modest growth, overall.
Import volumes continued to exceed export volumes, but
several contacts noted that export volumes were growing
faster than import volumes. On the export side, growth
was particularly strong in chemicals, plastics, and meat.
However, some ports saw softness in autos, on both the
import and export side. Firms continued to express concerns about trade with China but were able to divert
some trade through other East Asian countries.
E-1
Federal Reserve Bank of Richmond
Meanwhile, an airport executive saw a drop in cargo to
and from Europe and looked to expand business in
other parts of the world.
Commercial real estate leasing rose moderately in recent weeks. Brokers continued to reported strong demand for industrial space and office leasing increased
modestly in some markets. Retail leasing, however,
slowed across markets and vacancy rates increased
slightly. Meanwhile, rental rates were reportedly stable to
increasing modestly. Commercial sales and construction
increased modestly in some regions. Multifamily leasing
remained healthy in most markets, while multifamily
construction remained steady.
Fifth District trucking companies reported moderate
demand in recent weeks. Executives saw steady business with established customers but softening rates,
lower revenues, and less demand than a year ago.
Some small trucking companies that had opened to
meet high demand in recent years went out of business,
easing pressures on driver availability and wages. Executives differed in their views about the future. For example, a North Carolina trucking firm planned to expand its
fleet of tractors and drivers in 2020, but another company stopped filling open positions because of low revenues and high costs.
Banking and Finance
On the whole, loan demand picked up modestly since
our previous report. Residential mortgage demand was
generally described as stable to increasing modestly.
Some banks noted that low interest rates helped to
increase loan demand, but net interest margins were
compressed. Bankers also noted an increase in mortgage refinancing. Commercial real estate loan demand
and business lending strengthened modestly while automotive lending was flat, on balance. Deposits grew moderately since our last report. Bankers continued to report
vigorous competition for loans and deposits. Measures
of credit quality remained stable at high levels throughout the Fifth District.
Retail, Travel, and Tourism
Travel and tourism in the Fifth District were generally
strong in recent weeks. Hotels and resorts had higher
occupancy and moderate rate increases. Restaurants
around the Fifth District also had steady demand, although some had to cut services or hours because of
difficulty finding employees. In Charleston, South Carolina, tourism recovered well after Hurricane Dorian, but
attractions in the District of Columbia noted some softness. Contacts noted that low gas prices gave people
incentive to travel but expressed concerns that ongoing
delays in operationalizing new aircraft could hamper
growth.
Nonfinancial Services
On balance, nonfinancial services firms reported slight
growth in demand in recent weeks. Hospitals and health
care providers continued to experience solid growth. A
records management firm, on the other hand, saw softer
federal government spending in recent weeks. Advertising and marketing firms were generally positive, although
one marketing executive believed that the outlook in his
industry had shifted from optimistic to cautiously optimistic or “a little nervous”. Several firms indicated that challenges finding qualified workers and general economic
uncertainty were constraining growth and leading to
expectations for slower growth heading into 2020.
Fifth District retailers experienced varied conditions
since our last report. Some reported strong sales, and
one even planned to expand by opening new stores.
However, hardware stores saw softening demand, as
did high-end clothing stores, who attributed weakness to
customers looking for cheaper alternatives. Several
retailers reported that tariffs were raising costs and
hurting profit margins. In Virginia, a home goods store
discontinued several items, particularly small electronic
devices, as a result of tariff-related cost increases.
Natural Resources
Comments on the natural resources sector were somewhat pessimistic. One contact noted a slowdown in oil
and gas drilling and was concerned about bankruptcies
in the coal industry. Meanwhile, farmers were reportedly
hesitant to invest in land or equipment because of unstable commodity prices, limited labor availability, tariffs,
and their income being tied to government subsidies
such as disaster and trade relief funds. ■
Real Estate and Construction
Home sales increased moderately in recent weeks. Real
estate agents indicated that inventories of single-family
homes were little changed as new listings continued to
sell quickly and buyer traffic was steady at open houses
and showings. Meanwhile, new home sales and construction were steady, although construction of lower
priced homes remained limited. Overall, agents reported
modest growth in home prices.
For more information about District economic conditions visit:
www.richmondfed.org/research/regional_economy
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ November 2019
Summary of Economic Activity
Sixth District business contacts indicated that economic activity expanded modestly since the previous report, and the
outlook among contacts remained positive. Tightness in the labor market continued to constrain growth in many sectors.
Contacts noted that wage pressures continued to increase for lower-skilled positions. Firms continued to report rising
nonlabor costs, and businesses affected by tariffs indicated they were likely to pass along cost increases to customers.
Retail sales levels and automobile sales remained steady from October through mid-November. Tourism activity improved since the last report. Residential real estate markets showed signs of improvement, and commercial real estate
activity was steady. Manufacturing activity accelerated, and new orders and production levels rose over the reporting
period. District bankers noted that financial conditions remained healthy, though the pace of loan growth slowed slightly.
Employment and Wages
up 1.7 percent in October. Survey respondents indicated
they expect unit costs to rise 1.8 percent over the next
twelve months.
Firms continued to report that staffing levels were in line
with projections of flat to slightly higher growth in payrolls
compared with the prior year. As reported last period,
exceptions were in retail, trade, and logistics, where
labor force reductions were noted. Contacts in various
geographies and industry segments continued to cite
labor market tightness as constraining growth. Consequently, firms continued to pursue automation of certain
operational processes. Attracting and retaining talent
remained another labor market challenge, as employers
continued to explore innovative recruiting and retention
tactics.
Consumer Spending and Tourism
Retailers noted that consumer spending remained strong
and retail sales levels were steady since the last report.
Contacts anticipate a healthy holiday season with online
sales growth expected to again outpace brick and mortar
sales. Automotive sales were unchanged from the previous report.
Tourism and hospitality contacts indicated a higher level
of uncertainty from a year ago; however, overall business sentiment remains positive for the balance of the
year and into 2020. Overall, tourism activity for the District remained healthy since the last report. Monthly
Mississippi casino gross revenues were up for the first
nine months of the year compared with the same time
frame in 2018.
Annual wage increases, on average, remained in the 3-4
percent range; however, contacts reported that wage
pressures continued to build for lower-skill positions.
Prices
Overall, reports from firms continued to indicate increasing nonlabor costs, albeit at a pace in line with expectations. While some businesses noted pricing power, there
were accounts of some firms considering alternatives to
raising prices in order to maintain margins and offset
increases. However, firms most affected by tariffs indicated they were more likely to pass along cost increases
to customers. The Atlanta Fed’s Business Inflation Expectations survey showed year-over-year unit costs were
Construction and Real Estate
This year’s gradual decline in mortgage rates helped
boost demand for housing throughout the District. Home
sales showed signs of improvement and home prices
appreciated. Supply remained a challenge, however, as
for-sale inventory levels in many markets has not kept up
with demand. Declining supply of developed lots for new
construction and relatively higher construction costs
remained an impediment to improving housing starts.
F-1
Federal Reserve Bank of Atlanta
Although lower mortgage rates made housing more
affordable, rising home prices and limited supply continued to be a challenge for home buyers looking to purchase in many markets throughout the District.
were still near historic lows. Slower loan growth and
increased payoffs added to margin pressures for financial institutions.
Commercial real estate (CRE) leasing and sales activity
generally remained positive and steady across most
District markets and property sectors during the reporting
period. Overall, most CRE sectors experienced positive
dynamics as rents continued to grow and vacancy trends
remained stable or declined at a modest pace. Industry
contacts reported continued strength in the multifamily,
industrial, hospitality and office sectors. The pace of
CRE project construction activity remained healthy.
Contacts reported that capital was readily available for
most CRE projects via banks and non-bank entities and
that lending competition appeared to be accelerating.
Chemical and petrochemical manufacturers described a
slight softening in production related to slowing global
economic conditions. However, capital investment and
hiring is expected to pick up in the near term as facility
expansion plans move forward. While demand for pipeline infrastructure persisted, some energy contacts mentioned that new pipeline construction was fraught with
challenges and cost overruns. Utilities contacts reported
slowing momentum among certain industrial and commercial segments, although their Southeast outlook was
positive and capital investment budgets expanded yearover-year. Renewables sales and production activity
remained strong as adoption, especially wind and solar,
accelerated.
Energy
Manufacturing
Manufacturers indicated that overall business activity
accelerated slightly since the last report. New orders and
production levels rose, while finished inventories remained relatively flat. Purchasing managers reported
that wait times for supply deliveries were slightly longer.
Optimism for future production among manufacturing
contacts decreased, with only one-fifth of contacts expecting higher levels of production over the next six
months, compared to one-third in the last reporting period. Contacts continued to mention trade policy as a
potential downside risk to their outlook.
Agriculture
Agricultural conditions remained mixed. Reports indicated parts of the District, particularly in Georgia but also in
large parts of Alabama, the Florida panhandle, and
Tennessee, experienced drought-conditions ranging
from abnormally dry to extreme drought. The November
forecast for Florida’s orange and grapefruit crops was
unchanged from last month but ahead of last year’s
production. On a year-over-year basis, prices paid to
farmers in September were up for corn but down for
cotton, rice, soybeans, beef, broilers, and eggs. However, on a month-over-month basis, prices increased for
cotton, rice, and soybeans but declined for corn, beef,
broilers and eggs. ■
Transportation
District transportation firms cited varying levels of activity
over the reporting period. Freight forwarders saw strong
growth in package volume and revenue. Port contacts
reported increased freight activity, and some noted record year-over-year increases in container volumes.
However, some slowing in breakbulk cargos, such as
imported steel, plywood, and non-ferrous metals, primarily due to tariffs, was noted. Inland barge companies
reported an increase in demand from year-earlier levels.
Railroads saw significant declines in shipments of food
products (excluding grain), primary metal products, iron
and steel scrap, and coal, which were partially offset by
increases in coke and metallic ores; intermodal shipments continued to decline by near double digits. The
majority of contacts expect activity over the next year to
be flat to slightly up.
Banking and Finance
Conditions at financial institutions cooled slightly but
remained healthy. Bankers indicated that loan growth
continued, though at a slower pace, particularly for consumer loans and commercial real estate. While there
was a slight increase in nonperforming assets, values
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 ■ November 2019
Summary of Economic Activity
Economic activity in the Seventh District increased slightly overall in October and early November, and contacts expected growth to continue at a similar pace over the next 12 months. Employment, consumer spending, and manufacturing all increased slightly. Construction and real estate activity was little changed, while business spending decreased
slightly. Wages and prices rose slightly and financial conditions improved modestly. More poor weather added to crop
farmers’ difficulties.
Employment and Wages
retailers continued to raise prices to reflect higher potential and realized tariffs. Producer prices were flat, with
contacts reporting little change in input costs.
Employment increased slightly over the reporting period,
though contacts expected a somewhat faster rate of
growth 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. Multiple contacts
reported bringing back retired workers as a way to fill
openings. Manufacturers facing slow demand again
reported cutting hours rather than laying off workers
because they were worried the tight labor market would
make it too difficult to hire when demand recovered. A
staffing firm reported a slight decrease in billable hours
due to lower demand from manufacturers. Wages increased slightly overall; contacts were most likely to
report increases for managerial, professional and technical, and administrative workers. Benefits costs increased slightly as well.
Consumer Spending
Consumer spending increased slightly on balance over
the reporting period. Nonauto retail sales decreased
slightly, as declines in apparel, appliances, and furniture
outweighed gains in the grocery, home improvement,
hospitality, and lawn and garden sectors. Contacts noted
that brick and mortar department stores continued to
struggle as e-commerce spending grows. Contacts
remained optimistic that holiday spending would be
higher than last year. Light vehicle sales increased moderately over the reporting period. The UAW-GM strike
had a limited effect on GM vehicle sales on net, with a
decline in sales in October offset by a pickup in November. However, dealers reported a noticeable shortage in
GM parts, particularly those needed by collision repair
shops. Used light vehicle sales also moved up moderately.
Prices
Prices moved up slightly in October and early November,
though contacts expected prices to rise at a somewhat
faster pace over the next 12 months. Retail prices increased modestly. One contact said that food, home
goods, and apparel retailers were struggling to pass on
higher costs; in contrast, another contact noted that
Business Spending
Business spending decreased slightly in October and
early November. Retail inventories were a little high
overall. One contact indicated that retailers were building
stocks as a hedge against potential tariff increases.
G-1
Federal Reserve Bank of Chicago
Inventories of GM vehicles were lower than normal due
to the UAW strike, but contacts expected them to return
to normal by the end of the year. Most manufacturers
reported comfortable inventory levels. Capital spending
declined some, though contacts expected a modest
increase in spending over the next 12 months. Outlays
were primarily for IT equipment and intellectual property.
A majority of contacts reported that their newly purchased capital had increased capacity. Demand for
transportation services declined modestly, most noticeably for long distance trucking. Commercial and industrial
energy usage declined modestly due to lower demand
from the industrial sector. Contacts attributed at least
part of the decline to the GM strike.
new orders. Manufacturers of building materials reported
a slight increase in sales.
Banking and Finance
Financial conditions improved modestly on balance over
the reporting period. Business loan demand increased
slightly, with reports of strength in the commercial construction sector, but weakness in the agricultural sector.
Loan quality edged down and standards were little
changed. Consumer loan volumes increased modestly
as lower rates continued to spur mortgage refinancing.
Quality and standards were little changed.
Agriculture
Early frost and snow further delayed this year’s harvest
and diminished yields. Overall, contacts expected the
District’s corn and soybean harvests would be much
smaller than a year ago. In addition, contacts expressed
concern about crop quality, especially with short propane
supplies in some places, which limited the amount of
crop drying farmers could do. Corn and soybean prices
were down from the previous reporting period, but up
from a year earlier. Nevertheless, lower expected yields
meant crop revenues would be down from a year ago.
Milk, egg, hog, and cattle prices moved up during the
reporting period. Contacts noted that demand for pork
from China had grown despite U.S. tariffs because African swine fever had decimated China’s hog herd. More
generally, contacts reported a pickup in overall agricultural exports, with some noting that news on trade negotiations sounded promising for future exports. Farm
incomes generally are expected to be down from last
year, although government payments from the Market
Facilitation Program will provide some support. ■
Construction and Real Estate
Construction and real estate activity was little changed
over the reporting period. Residential construction increased slightly. There were reports that slower growth
in demand had led some single-family homebuilders to
slow the pace of new development projects. One contact
noted an increase in remodeling demand. Home sales
declined slightly overall, with larger decreases for homes
at higher price points. Overall, home prices were unchanged, while rents increased. Nonresidential construction activity decreased marginally. Commercial real
estate activity was little changed at a strong level. Contacts noted that demand for industrial space, particularly
for warehousing and logistics, continued to be solid, and
activity in the hospitality sector was also strong. Contacts
reported that demand for commercial real estate as an
investment vehicle was robust because of relatively high
capitalization rates in the District compared to other
regions. Vacancy rates edged lower and the availability
of sublease space increased slightly. Rents were unchanged.
Manufacturing
Manufacturing production increased slightly overall in
October and early November in spite of the strike at GM.
Steel demand increased slightly, with one contact reporting strong demand from energy transmission firms but
slightly weaker demand from the auto sector. Heavy
machinery demand increased slightly, spurred by growth
in the construction and mining industries. Auto production declined due to the GM strike, but contacts reported
that overall auto industry demand was flat and at a solid
level. Contacts supplying GM reported lower shipments
due to the strike and expected the recovery in activity to
take until the end of the year. Specialty metals manufacturers reported little change in order books, with flat
activity across most major sectors. Contacts reported
increased shipments of heavy trucks, but a decline in
For more information about District economic conditions visit:
chicagofed.org/cfsbc
G-2
Federal Reserve Bank of
St. Louis
The Beige Book ■ November 2019
Summary of Economic Activity
Economic conditions have been mixed but generally unchanged since our previous report. Contacts across multiple
industries continued to note a heightened sense of economic uncertainty. There was a slight uptick in employment.
Wage increases were widespread and higher than in previous years for the vast majority of firms. Contacts continued to
report only a slight uptick in prices charged to consumers despite moderate increases to nonlabor input costs. Reports
from manufacturing firms were mixed. Agriculture conditions remained strained by low crop prices and generally poor
production and yields. Across all industries, the outlook among surveyed contacts remained slightly pessimistic; on net,
12 percent of respondents expect conditions during 2020 to be worse or somewhat worse than in 2019.
Employment and Wages
Prices
Employment has increased slightly since the previous
reporting period. On net, 11 percent of survey respondents reported that employment was higher than a year
ago, and 41 percent, on net, expect to hire additional
workers over the next 12 months. Labor market tightness
persisted across the District; on net, 34 percent of contacts reported difficulty finding qualified workers. Firms
continued to deal with worker scarcity by raising benefits,
lowering hiring standards, investing in technology, and/or
retraining existing employees. Employment conditions in
manufacturing remained more subdued. Fifty-seven
percent of manufacturing contacts reported a desire to
hire more workers, but other survey-based results
showed slight employment declines in the sector.
Prices have increased slightly since the previous report.
On net, just 6 percent of business contacts reported that
prices charged to consumers increased in the current
quarter relative to the same time last year. This is the
fifth consecutive survey in which the share reporting
higher selling prices has declined. Despite the reported
softness in prices charged to consumers, firms’ input
costs continued to increase at a moderate rate. On net,
32 percent of business contacts reported higher nonlabor costs, the same share as in the previous quarter.
Business contacts in retail and manufacturing reported
facing increased price pressures due to tariffs.
Consumer Spending
Reports from general retailers, auto dealers, and hoteliers indicate that consumer activity has been mixed since
the previous report. October real sales tax collections
increased in Arkansas and Kentucky but were flat in
Missouri relative to a year ago. September real sales tax
collections increased in West Tennessee relative to a
year ago. General retailers reported that sales have
been about the same or slightly lower than this time last
year, and their outlook on future economic conditions
has turned pessimistic. Most surveyed auto dealers
reported that sales have been about the same as this
time last year but have fallen short of expectations, citing
The tight labor market has continued to put upward
pressure on wages, which have increased moderately
since the previous report. On net, 38 percent of survey
respondents indicated that wages were higher than a
year ago. Seventy-four percent of those seeking to hire
new workers reported raising wages for some or most
job categories, and 63 percent of all contacts reported
raising wages for existing employees by more than they
have in the past few years.
H-1
Federal Reserve Bank of St. Louis
rising prices as deterrents to consumer confidence.
Multiple dealers continued to note seeing an increased
preference for used and low-end vehicles. Hospitality
contacts in the St. Louis region shared mixed accounts
of recent tourism activity relative to a year ago but remained optimistic about the coming months.
Builders in the St. Louis area expect an uptick in activity
in the near future due to lower mortgage rates and a
reduction in home inventory.
Commercial real estate activity has increased slightly
since the previous report. Survey respondents reported a
slight increase in demand for office space relative to one
year ago, a slight decrease in demand for retail space,
and no change in demand for industrial space. Contacts,
on net, also noted slightly higher demand for multifamily
properties.
Manufacturing
Manufacturing activity has been mixed since our previous report. For the second consecutive quarter, a majority of survey respondents reported declines in production,
new orders, and capacity utilization relative to one year
ago. Makers of vehicle parts noted that a slowdown in
the automotive industry has negatively impacted sales.
However, survey-based indexes indicate that manufacturing activity overall expanded slightly in Arkansas and
Missouri from September to October, with new orders
and production increasing moderately in both states.
Contacts were slightly optimistic about the future; on net,
most survey respondents expect manufacturing conditions to improve slightly in the first quarter of 2020.
Commercial construction activity was mixed. Survey
respondents reported higher demand for office and
industrial property construction. However, there were
some reports of firms putting future projects on hold
because of economic uncertainty.
Banking and Finance
Banking conditions in the District have experienced little
change since the previous report. Demand for mortgages and auto loans decreased slightly relative to one year
ago, and demand for commercial and industry loans fell
modestly. However, there was a sharp increase in credit
card borrowing relative to the same time last year. Bankers expect a slight increase in total loan demand in the
first quarter of 2020. Credit standards tightened overall
compared with year-ago levels. Delinquencies were flat
on a year-over-year basis but are expected to increase
moderately in the first quarter of 2020.
Nonfinancial Services
Activity in the services sector has improved modestly
since the previous report. On net, around 40 percent of
survey respondents reported higher sales compared with
the same time last year, and 45 percent expect this
growth to continue into the first quarter of 2020. However, nearly a third of contacts noted that sales halfway
through the fourth quarter have fallen short of expectations, which some credited to increased economic uncertainty. Transportation activity has been mixed since the
previous report. Trucking contacts reported that lackluster demand for freight transportation has put downward
pressure on prices. Barge traffic in Little Rock exceeded
expectations in the first half of the fourth quarter.
Agriculture and Natural Resources
District agriculture conditions have remained unchanged
from the previous reporting period and well below those
from a year ago. Corn and soybean yield forecasts increased from October, while cotton yield forecasts have
declined modestly. All three crops and rice are projected
to have lower yields than last year. Production forecasts
for corn, cotton, and soybeans have increased slightly
since the previous report. Production levels for corn, rice,
and soybeans are expected to be significantly lower than
in 2018, while that for cotton is expected to increase
modestly. District contacts continued to express concerns over depressed agriculture commodity prices.
Real Estate and Construction
Residential real estate activity has been mixed since the
previous report. Seasonally adjusted home sales increased slightly from August to September in Little Rock,
Louisville, and Memphis but decreased slightly in St.
Louis. On net, 10 percent of survey respondents reported a decrease in demand for single-family homes relative to a year ago, and some contacts noted that fourthquarter sales have fallen short of expectations. Inventory
levels remained depressed.
Natural resource extraction conditions declined modestly
from September to October, with seasonally adjusted
production declining by nearly 4 percent. October production decreased 8 percent from a year ago. ■
Residential construction activity increased slightly. There
was a slight uptick in September permit activity across
District MSAs relative to the previous month. On net, 10
percent of survey respondents reported higher construction activity compared with the same time last year, and
20 percent expect continued growth in the next quarter.
For more information about District economic conditions, visit:
https://research.stlouisfed.org/regecon/
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ November 2019
Summary of Economic Activity
The Ninth District economy grew at a modest pace since the last report. Employment grew slightly, while wage pressures were moderate overall and price pressures remained modest. The District economy saw growth in consumer
spending, commercial and residential construction and real estate, and energy. However, manufacturing declined slightly, while agricultural conditions remained weak.
Employment and Wages
Wage pressures were moderate overall. Staffing
contacts suggested varying degrees of wage pressure.
Among a group of six staffing offices (all with the same
franchise, located mostly in Minnesota), average wages
rose less than 2 percent at three locations over the
previous 12 months, but more than 5 percent at two
locations, and almost 10 percent at the remaining office.
In the span of one week in October, a staffing contact in
western Wisconsin said four manufacturing clients
increased wages by $1 to $3 an hour. A Minneapolis Fed
survey of Districtwide businesses found that 62 percent
of employers raised wages by 3 percent or more
compared with a year earlier. However, among a small
sample of large Minnesota firms, most reported
increasing wages by less than 3 percent over the past 12
months. As has been the pattern for some time,
however, contacts continued to believe that future wage
increases will be slightly to modestly softer than previous
wage gains.
Employment was slightly higher since the last report. In
several ad hoc polls, conducted in three states among a
mix of business types, a majority of respondents said
they were hiring in some capacity. A broader poll of
contacts across the District found somewhat softer (but
still positive) sentiment about recent and future
employment levels at their firms. An October survey of
manufacturers in Minnesota and the Dakotas found that
hiring sentiment had improved from contractionary levels
a month earlier. A second survey among bankers and
other rural businesses in these same states found that
new-hiring sentiment was quite positive. Job postings
this fall were modestly higher in the Dakotas and
Michigan’s Upper Peninsula, while Minnesota’s were
lower. A major layoff at a manufacturer in central
Minnesota, involving more than 800, was seen by some
local employers as a contribution to the local labor pool.
However, contacts widely noted difficulty filling open
positions, including in manufacturing, which has been
experiencing some overall softness. Many staffing
contacts reported lower job orders from clients,
particularly in manufacturing, with some seeing declines
of 20 percent, year over year. Initial unemployment
insurance claims over the most recent six-week period
(through the end of October) were about 3 percent
higher than a year earlier, with increases seen in
Montana, North Dakota, and Wisconsin, while Minnesota
saw a slight decline.
Prices
Price pressures remained modest since the previous
report. A majority of respondents to a survey of large
District firms reported recent increases in nonlabor input
costs of less than 2 percent, with a similar outlook for the
coming 12 months. Retail fuel prices as of midNovember were slightly lower in most areas of the
District relative to the previous reporting period. Home
heating costs were expected to rise more in District
I-1
Federal Reserve Bank of Minneapolis
states than nationwide this winter, largely due to
differences in regional increases in the prices of natural
gas. Prices received by farmers in September increased
from a year earlier for corn, potatoes, milk, hogs, and
turkeys, while prices for wheat, soybeans, hay, cattle,
eggs, and chickens decreased.
strongly higher in Minneapolis-St. Paul in September and
October.
Commercial real estate improved modestly since the last
report. In Minneapolis-St. Paul, office vacancy rates
were down slightly compared with this summer.
Industrial space in the region continued to expand, but
strong leasing activity kept vacancy rates low. Retail
vacancy rates have remained among the lowest in the
country, thanks to strong leasing and lower levels of new
construction. Rental rates, however, have been flat or
falling. Office vacancies have trended lower this year in
Sioux Falls, and industrial vacancies were stable;
however, retail vacancies there were still elevated.
Multifamily vacancy rates remained low across most of
the District, according to sources. Residential real estate
was modestly higher across the District. Closed home
sales in September and October in Minnesota were
about 2 percent higher over the same period a year
earlier. Higher sales over this period were also seen in
western Wisconsin, Grand Forks and Fargo, N.D., and
Bozeman and Missoula, Mont. However, slower sales
were seen in northern Wisconsin and Sioux Falls.
Consumer Spending
Consumer spending increased moderately since the last
report. Gross retail sales in South Dakota jumped more
than 6 percent in September compared with a year
earlier. The state also saw 11 percent growth in gaming
receipts. But gross sales in Wisconsin were down 1
percent over the same period, following fairly strong
summer sales. Sales tax receipts in Minnesota and
North Dakota have also trended higher than forecasts. A
vehicle dealership with multiple sales outlets in the
western portion of the District saw vehicle sales fall
modestly in September compared with a year earlier, but
rebounded with an 8 percent increase in October. Airport
traffic in September and October was strong across
many of the District’s regional airports. In Minnesota,
hotel occupancy and revenue per available room
improved modestly in September (year over year).
Lodging and accommodations taxes in Montana were
also slightly higher in the third quarter compared with
2018. However, several bankers noted that consumer
loan demand was mixed. Monthly visitors to several
major national parks in the District also saw double-digit
declines in September (year over year). Restaurants and
other businesses catering to consumers reported having
to shorten hours of operation due to lack of staffing.
Manufacturing
District manufacturing activity declined modestly from the
last report. Contacts continued to point to decreases in
orders, production, and capital spending. A heavy
equipment producer noted a slowdown in sales that they
initially blamed on heavy rainfall this year, but said this
“masks a much deeper contraction in capital equipment
spending.” Custom manufacturers reported a decrease
in order backlogs. In contrast, an index of manufacturing
conditions indicated increased activity in October
compared with a month earlier in Minnesota and South
Dakota and flat activity in North Dakota.
Construction and Real Estate
Commercial construction rose moderately since the last
report. A construction database showed that new and
active projects across the District over the most recent
six-week period (ending in early November) were
modestly higher than the same period a year earlier.
Most contacts in engineering, architecture, and
construction reported solid backlogs and were optimistic
heading into a traditionally slower period. Commercial
permitting this fall was broadly higher across most of the
District’s larger cities, and was particularly strong in
Sioux Falls, S.D.; one notable exception was the city of
Minneapolis, where permitting slowed in October. A
contact in Michigan’s Upper Peninsula said the region
was seeing normal seasonal slowdown, and there were
fewer projects to bid on for work next year. Residential
construction was moderately higher; single-family
construction was higher in many locations, but flat in a
few places; multifamily construction was mostly lower.
However, both single- and multifamily construction were
Agriculture, Energy, and Natural Resources
District agricultural conditions declined from an already
weak position. Roughly three in five lenders responding
to the Minneapolis Fed’s third-quarter (October) survey
of agricultural credit conditions reported that farm
incomes decreased in the third quarter relative to a year
earlier, with a similar proportion reporting decreased
capital spending. Persistent heavy rains have delayed
harvests and damaged crop quality in substantial
portions of the District. District oil and gas exploration
activity was steady since the previous report. The
number of active drilling rigs as of early November fell
slightly from a month earlier, but the most recent figures
(as of August) indicated that oil production hit a new
record. ■
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ November 2019
Summary of Economic Activity
Tenth District economic activity held steady in October and early November, although conditions were mixed across
sectors. Consumer spending edged down since the previous survey period as higher retail sales were offset by lower
sales in the auto, restaurant, and tourism sectors. Manufacturers noted weaker activity, led by continued declines in
durable goods production, but manufacturers expected activity to stabilize in the months ahead. Contacts in the transportation sector noted slightly lower sales, while sales in the wholesale trade and professional and high-tech services
sectors rose. District real estate conditions rose slightly, although residential construction contacts expected lower activity moving into the winter months. Energy activity continued to fall in the District, and the outlook for drilling and business
activity softened. The agriculture sector remained weak, and credit conditions worsened as farm income and loan repayment rates fell. District employment and employee hours held steady since the previous survey period, but a majority of
contacts reported ongoing shortages of qualified labor. Wages continued to expand at a modest pace, and contacts
expected moderate growth in the months ahead. Services sector contacts noted higher input and selling prices since the
previous survey period, while manufacturers noted slightly lower prices for finished products and raw materials.
Employment and Wages
reporting sectors. Contacts in the retail trade sector
noted moderate input price gains and modestly higher
selling prices. Input and selling prices in the restaurant
sector rose modestly, and were strongly above year-ago
levels. The transportation sector saw modest gains in
both input and selling prices. Construction supply respondents noted steady selling prices since the previous
survey period, although selling prices were below yearago levels. Manufacturers noted slightly lower prices for
finished products and raw materials. Construction supply
and manufacturing respondents expected small price
increases moving forward.
District employment and employee hours held steady
since the last survey period, and both remained above
year-ago levels. Job gains in the professional and technical services, real estate, health services and wholesale
trade sectors were offset by losses in the manufacturing,
auto sales, transportation, and tourism and hotel sectors.
Employment in all industries, with the exception of the
auto sales sector, was at or above levels from the same
period a year ago, and contacts expected employment to
rise in the next few months.
A majority of contacts continued to report labor shortages across all skill levels, and a lack of qualified applicants was cited as the number one reason for not filling
open positions over the last three months. Specifically,
respondents noted shortages for truck drivers, hourly
retail and food-services positions, auto-technicians, IT
personnel, nurses, engineers and skilled construction
trades. Wages continued to grow modestly since the
previous survey period, and strong gains were expected
in the months ahead.
Consumer Spending
Consumer spending edged down in October and early
November relative to the previous survey period, however contacts expected sales to expand during the upcoming holiday season. Retail sales grew modestly compared to the previous survey period, and remained
above year-ago levels. After steady increases through
the late summer months, auto sales fell modestly compared to both the previous survey period and year-ago
levels. Contacts noted that SUVs and trucks sold well,
while sedans sold poorly. Both auto and retail trade
contacts were optimistic about future sales and expected
increases in the coming months. Restaurant sales fell
slightly compared to the previous survey, but were
sharply higher than a year ago. Tourism activity was
Prices
Input and selling prices rose modestly in October and
early November in the services sector, while manufacturers noted slightly lower prices. Both input and selling
prices were expected to increase moving forward for all
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Federal Reserve Bank of Kansas City
weaker than the last survey, but slightly above levels
from a year ago. Above average snowfall in the mountain areas has led to increased optimism about winter
tourism activity this season.
major loan categories. Deposits edged up, although
several bankers noted poor demand for certificates of
deposits during the survey period.
Energy
Manufacturing and Other Business Activity
District energy activity decreased since the previous
survey period, and expectations for future drilling and
business activity eased. The number of active rigs continued to decline across most states but was primarily
driven by a decrease in Oklahoma. Oil and gas production eased slightly, but still remained at generally high
levels. As a result, production levels continued to support
strong mid-stream and transportation activity. Revenues
and profit levels of regional firms fell compared to a year
ago and earlier this year, in part due to lower commodity
prices. District employment levels and capital expenditures in the industry also eased.
Manufacturing activity fell slightly in October and early
November due to persistent declines in durable goods
factory activity, however manufacturers expected activity
to slightly increase in the months ahead. Factory production, order backlogs, and new orders each declined compared to the previous survey period, and contacts expected production, shipments, and the volume of new
orders to increase in the months ahead. Capital spending was modestly above year-ago levels, and contacts
anticipated slight growth in spending in the months
ahead.
Outside of manufacturing, firms in the transportation
sector experienced slightly lower sales, while sales
increased strongly in the wholesale trade sector and
modestly in the professional and high-tech services
sector. All three sectors expected sales to increase in
the months ahead. Transportation sector contacts anticipated slight decreases in capital spending in the coming
months, while wholesale trade and professional and high
-tech services contacts expected spending to increase.
Agriculture
The Tenth District farm economy remained weak, and
agricultural credit conditions deteriorated slightly. In the
most recent survey period, regional contacts reported
that farm income and loan repayment rates continued to
decline at a modest pace. Demand for farm loans remained strong, but the pace of growth slowed from previous survey periods. Despite some support from government payments connected to ongoing trade disputes,
most bankers pointed to an ongoing environment of low
agricultural commodity prices and elevated costs as the
primary factors contributing to further weakness. As
profit opportunities remained limited, producer working
capital deteriorated slightly, and a modest number of
borrowers were expected to sell assets before the end of
the year to improve liquidity. ■
Real Estate and Construction
District real estate activity rose slightly since the last
survey period and was above year-ago levels. Residential real estate sales held steady in October and early
November, although sales were higher than a year ago.
Residential construction activity rose modestly over the
previous survey period as starts, traffic of potential buyers, and construction supply sales rose. However, expectations were for a decrease in residential construction
activity moving into the winter months. Commercial real
estate activity inched up as sales, absorption, and completions rose while vacancy rates fell and construction
underway held steady. Overall activity in the commercial
real estate sector was projected to grow slightly.
Banking
Overall loan demand rose slightly during the survey
period, although demand across categories was mixed.
Bankers noted higher demand for commercial real estate
and consumer installment loans, but experienced flat
demand for residential real estate loans, and lower demand for commercial and industrial and agricultural
loans. Bankers continued to see modest improvement in
loan quality compared to levels at the same time last
year and expected loan quality to hold steady during the
next six months. Credit standards held steady across all
For more information about District economic conditions visit:
www.KansasCityFed.org/Research/RegionalEconomy
J-2
Federal Reserve Bank of
Dallas
The Beige Book ■ November 2019
Summary of Economic Activity
Moderate expansion continued in the Eleventh District economy. Growth held fairly steady in services and retail but
decelerated slightly in manufacturing. Home sales remained on the rise while energy activity continued to decline. The
agriculture picture was mixed, with continued drought conditions but rising prices and decent production prospects.
Employment growth was solid and upward wage pressures continued. Selling prices were largely flat, as firms’ ability to
pass through increased costs remained limited. Outlooks generally improved, except in energy and financial services.
Uncertainty generally remained elevated, driven by trade tensions, the political climate, and weaker global growth.
contacts noted that slowing demand was due to energy
sector weakness and a general pullback among customers due to heightened uncertainty. Production declines
were noted in machinery and fabricated metals manufacturing—two segments with ties to the energy sector.
Meanwhile, output of nondurable goods picked up pace
over the reporting period. Refiners and chemical producers said softening global demand, tariffs, and ongoing
trade policy uncertainty were squeezing margins.
Employment and Wages
Employment continued to expand at a solid pace. Hiring
accelerated slightly in the service sector and remained
above average in manufacturing. Headcounts continued
to fall in the oil and gas sector. Labor shortages remained pervasive, with multiple contacts specifically
mentioning the drag this was having on business growth.
Staffing services contacts reported a very tight labor
market with most companies struggling to find qualified
workers across skill levels.
Outlooks among manufacturers remained positive, and
expectations for manufacturing activity six months ahead
increased across a variety of measures. Trade tensions
remained a concern, however, and some contacts noted
that uncertainty was making planning difficult.
Wages continued to increase, with pressures picking up
slightly over the reporting period.
Prices
Input prices continued to rise at a moderate pace, except
in the energy sector where they remained flat at low
levels. Some contacts, particularly manufacturers and
retailers, pointed to tariffs as a primary driver of increased costs. Selling prices were largely flat, although
airline contacts noted a slight increase in ticket prices
over the past six weeks. Some contacts said they are
unable to sufficiently raise prices to cover their increasing costs.
Retail Sales
Retail sales continued to grow at a moderate pace over
the reporting period, although some weakness was seen
in autos and among wholesalers. Retailers experiencing
a pickup in sales pointed to lower interest rates, favorable weather, and increased internet sales as factors
boosting growth. One retailer noted that sales at stores
near the Mexican border continued to be challenging
compared with previous years. Overall retail outlooks
improved notably, although some contacts cited trade
issues as a headwind, including instability in some countries where they do business.
Manufacturing
Expansion in the manufacturing sector slowed to a more
modest pace, and demand weakened slightly. Several
K-1
Federal Reserve Bank of Dallas
Nonfinancial Services
Energy
Nonfinancial services activity continued to expand moderately over the reporting period, even picking up pace
slightly. Growth in professional and technical services
continued to lead the expansion, joined in the latest
period by healthcare services. Weakness was seen in
administrative and support services. Staffing services
contacts reported mostly softer demand, though still at
relatively high levels. Staffing contacts noted strength in
healthcare and banking but weakness in energy. Activity
in the transportation and warehousing sector remained
mixed, with strong airline passenger demand and rising
sea cargo volumes but some weakness in rail cargo.
Drilling activity in the Eleventh District continued to
erode, with firms cutting spending and orders for new
equipment. Well completion activity has proved more
resilient, particularly in the Permian Basin, slipping only
slightly from recent highs. The oilfield services market
remained depressed, with little optimism about better
margins next year.
Firms were more pessimistic in their outlooks through
the end of 2020 than during the prior reporting period
due to a weaker economic outlook and tightening credit
conditions. Contacts noted that some firms were pivoting
to international markets for growth opportunities and
where there is hope for higher margins.
Service-sector outlooks improved over the past six
weeks, although uncertainty remained elevated. Global
economic uncertainty and trade tensions continued to be
the predominant factors hampering future planning.
Domestic political uncertainty moving into the 2020
elections also came up as an area of concern for several
contacts.
Agriculture
Much of Texas remained abnormally dry or in drought.
Even still, crop conditions were mostly fair to good, and
were more favorable than this time last year. Texas crop
production estimates for 2019 exceed 2018 for several
crops, including corn, sorghum and cotton. Crop and
livestock prices generally trended higher over the reporting period. Milk prices also rose, nearing a profitable
level for dairies after a couple of difficult years, according
to contacts. Contacts noted continued concern among
agricultural producers over trade issues with China but
noted there was increased optimism regarding trade
talks and the possibility of some tariffs being removed. ■
Construction and Real Estate
Home sales continued to rise, although a few contacts
noted slight seasonal weakness. Sales were up year
over year partly due to lower mortgage rates, and most
builders were meeting or exceeding expectations. Builders have managed to sell off inventory, bringing the
supply of finished vacant homes down to normal levels.
Some builders were able to pass through select price
increases, improving their margins, and outlooks were
mostly optimistic. Recent tornadoes in Dallas-Fort Worth
damaged homes, which spurred demand for rentals.
Apartment demand generally remained healthy, with
occupancy tightest in Austin. Rents rose slightly. Investor
appetite was solid, and apartment construction continued
to be elevated. Leasing of office and industrial space
remained active.
Financial Services
Growth in loan demand continued at a moderate pace
over the reporting period, bolstered primarily by commercial and residential real estate loans. Commercial and
industrial loan volumes held steady while consumer loan
volumes again contracted slightly. Credit standards
continued to tighten across the board. While business
activity picked up since the last reporting period, the
outlook for activity six months from now deteriorated
slightly. Bankers cited concerns regarding the uncertain
business climate and lower interest rates hampering
pricing flexibility.
For more information about District economic conditions visit:
www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of
San Francisco
The Beige Book ■ November 2019
Summary of Economic Activity
Economic activity in the Twelfth District expanded at a modest pace during the reporting period of October through midNovember. The labor market remained tight, employment growth picked up moderately, and wages rose modestly.
Reports on price inflation were mixed. Sales of retail goods increased somewhat, and activity in consumer and business
services was solid. The pace of commerce in the manufacturing sector was little changed, and activity in the agriculture
sector was mixed. Residential and commercial real estate markets expanded moderately. Lending grew further.
Employment and Wages
ing increases in the minimum wage taking effect in the
new year would result in higher wages for most hourly
workers as employers adjust pay scales upwards.
The labor market remained tight, and employment
growth picked up moderately. Businesses in sectors
including health care, finance, and manufacturing noted
solid hiring activity, while others reported that shortages
of qualified labor prevented them from filling vacancies.
In the Mountain West, a producer of building products
hired tradespeople in response to improved construction
activity, and a contact in Boise reported that a major ecommerce business was opening a distribution center in
the area, resulting in anticipatory hiring. In the Pacific
Northwest, a health-care provider expanded its workforce in response to higher demand. Worker turnover
also spurred hiring activity, as in the case of a credit
union in Northern California. A community banking contact in Oregon saw previously robust demand for workers moderate slightly.
Prices
Reports on prices were mixed, but suggested that inflation was up slightly on balance. A handful of businesses,
such as a quick service restaurant chain and a professional security provider, reported that selling prices were
higher due to a pickup in wage costs that could not be
sustainably absorbed by profit margins. Health-care
service providers noted that inflation ticked up for many
products and treatments due to solid patient traffic.
Some producers of building materials and wood products
increased selling prices in response to improved construction activity, while others lowered prices somewhat
in response to weak export demand. Contacts in metals
manufacturing and public utilities reported stable prices
on inputs such as copper and natural gas. In Southern
California, subdued demand for hotel lodging resulted in
a slowdown in room rate inflation and, for some hotels,
modest declines in prices.
Wages rose modestly across sectors as companies tried
to attract qualified workers in highly competitive labor
markets. Wages picked up further for skilled finance and
technology workers, according to community banks,
credit unions, and financial technology companies
across the District. A provider of business security services in Seattle observed that labor costs have risen to
the highest level in company history. A few businesses in
higher cost urban areas noted efforts to relocate jobs to
lower cost areas of the District in order to contain labor
compensation. Several reports mentioned that forthcom-
Retail Trade and Services
Sales of retail goods increased somewhat. Most reports
indicated that consumer demand was steady, with
spending supported by increasing incomes borne of tight
labor markets. Sales at specialized outlets, such as
home improvement stores and pet supply stores, rose
L-1
Federal Reserve Bank of San Francisco
noticeably. Retailers were generally optimistic about
holiday sales, given solid consumer spending over the
past year and other factors like continued service improvements at e-commerce outlets. A few businesses
expected to rely more on discount pricing schemes than
in previous holiday seasons due to brisk competition.
Some businesses that depend primarily on brick-andmortar sales were concerned about inclement weather
constraining foot traffic; one contact noted that, with
Thanksgiving falling later than usual, the shorter holiday
shopping season could damp sales.
somewhat. A lumber producer from the Pacific Northwest reported that production has been steady, but
exports continue to decline due to trade tensions and
slowing foreign economies. For some wheat growers in
Eastern Washington, recent inclement weather prevented them from planting, while tensions with trading partners have resulted in an oversupply in domestic markets
and tighter profit margins.
Real Estate and Construction
Residential real estate activity expanded moderately on
balance. Several reports noted that permitting picked up,
along with sales, due in part to lower interest rates spurring construction and demand. Labor shortages and
higher materials costs still limited construction starts
somewhat, but a few respondents indicated that materials were now more readily available and wait times for
contractors had shortened modestly. Prices grew a bit,
with historically elevated selling prices and rents leading
buyers in some urban areas to relocate. Robust demand
continued to outpace supply and push up prices in the
Mountain West, especially in metro areas like Boise. In
Seattle and Los Angeles, contacts noted a mixed picture
of the residential market, with some indicating that timeon-market for houses increased amid flagging demand
and others observing robust construction activity and
sales.
Activity in the consumer and business services sectors
was solid. Across the District, demand for health services was strong and in some cases led service providers to open new locations. In the entertainment sector,
the robust growth of streaming services has resulted in a
boom in television and movie production that could lead
to expansion in locales in the District outside of Southern
California. Sales at quick service restaurants grew steadily, though one contact in Southern California noted a
few restaurants closed in response to labor and operating costs that exceeded sales revenue. In California, the
tourism sector saw mixed activity, with sales at leisure
cruise companies rising somewhat and occupancy rates
at hotels around San Diego falling modestly.
Manufacturing
Activity in the manufacturing sector was little changed. A
metals manufacturer in the Pacific Northwest reported
that demand was steady, though order backlogs for most
producers were no longer growing. Domestic wood
product manufacturers saw the pace of sales pick up
modestly thanks to the stabilizing housing market, which
followed the broad decline in mortgage rates. In general,
these manufacturers also noted stiff competition with
producers from countries that have not been targeted
with tariffs. However, one contact noted that production
constraints at sawmills in Canada have benefited domestic producers by reducing Canadian supply to the
United States.
Activity in commercial real estate markets also expanded
moderately. Demand for industrial spaces like factories
and distribution centers was brisk in Southern California.
Commercial construction activity was stable to up slightly
in Oregon. In Seattle, major developers have initiated
new commercial projects to meet the demand of businesses that have expanded employment and operations.
In the Los Angeles area, rents have risen to such high
levels in response to past robust demand for office
space that leasing activity has cooled slightly. A contact
in the Central Valley of California observed a modest
decline in commercial permitting.
Agriculture and Resource-Related Industries
Lending activity grew solidly, with most reports noting a
further pickup in loan demand and a few noting no
change over the reporting period. In general, lower interest rates drove more lending activity, but also resulted in
narrower interest margins for many banks. A financial
technology company that lends primarily to small businesses reported steady activity. Credit quality was strong
across most of the District, though a few banks reported
tighter underwriting standards for new loans in the face
of uncertainty about future economic conditions. ■
Financial Institutions
Reports on activity in the agricultural sector were mixed.
In the Central Valley of California, one contact noted
solid yields and sales for crops like tomatoes, beans,
and grapes, while another observed disappointing nut
yields and continued weak export demand. Profitability
for growers improved slightly, however, as they adjusted
their supply levels in response to the new environment of
subdued demand from abroad. Activity in the livestock
sector was also mixed, with demand for beef and dairy
cattle ticking down and demand for swine picking up
L-2
Cite this document
Federal Reserve (2019, December 10). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20191211
@misc{wtfs_beige_book_20191211,
author = {Federal Reserve},
title = {Beige Book},
year = {2019},
month = {Dec},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20191211},
note = {Retrieved via When the Fed Speaks corpus}
}