Economic activity has been mixed in recent weeks, according to the Federal Reserve Beige Book.
Economic activity fell slightly in the Minneapolis region amid moderate wage growth, flat employment and softening hiring conditions. Prices dropped but still increased at a slower pace, according to the Federal Reserve. Consumer spending slightly dropped, but tourism was resilient and vehicle sales increased, according to the Federal Reserve.
Economic activity grew in the Chicago region as employment and business spending increased. “Manufacturing activity and consumer spending were flat; nonbusiness contacts saw little change in activity; and construction and real estate activity edged down,” according to the Federal Reserve. “Prices were up modestly, wages rose moderately, and financial conditions were little changed.”
Economic activity was stagnant in the St. Louis region amid weakening household finances and lower demand. Employment was stable, and wage growth continued to moderate toward longer-term trends.
The ag economy was mixed. Expectations for farm income in the Chicago region continued falling as corn and soybean prices dropped. Crop conditions were strong across most of the district, even as some areas were dry. Fall harvests are projected to approach previous records in the Chicago region. “Amidst low prices, farmers were holding higher-than-usual levels of crops in storage,” according to the report.
Ag conditions “remained weak on balance” in the Minneapolis region, according to the report. While low prices for crops continued to limit income, livestock and dairy producers were in better shape. Crops were mainly “in good or excellent condition in most of the district, and soil moisture conditions improved in some areas that were experiencing flooding earlier in the summer,” according to the Federal Reserve.
Ag conditions were mixed in the St. Louis region as several contacts reported sales being below expectations due to a drop in demand. “However, crops were in generally good shape due to a wet planting season and rains in July,” according to the report. “In Arkansas, the summer heat wave and severe drought has driven up irrigation costs and stresses on livestock.”
District contacts said commodity prices had fallen below expectations, which negatively impacted the repayment capacity of farmers who took on operating loans and projected a higher cash flow.
Financial conditions were little changed in the Chicago region as bond values increased and equity values were flat. Business loan volume fell slightly, with higher demand for construction loans more than offset by lower demand for commercial real estate and commercial and industrial loans. Consumer loan volumes were flat.
Manufacturing fell across most districts. Residential construction and real estate activity was mixed, with most districts seeing softer home sales. CRE activity along with prices and rents fell slightly in the Chicago region.
Contacts in the Chicago region reported challenges filling higher-skilled positions as slower demand in the manufacturing and service sectors led to layoffs or shift reductions. Contacts in the Kansas City region reported reducing hiring from plans at the beginning of the year. Firms nationwide felt less pressure to increase salaries and wages as competition for workers and staff turnover eased, according to the report.
“Employment levels were steady overall, though there were isolated reports that firms filled only necessary positions, reduced hours or shifts, or lowered overall employment levels through attrition,” according to the report. “Still, reports of layoffs remained rare. Wage growth was modest, while increases in nonlabor input costs and selling prices ranged from slight to moderate.”
