03/29/2024

Beige Book–November 30, 2016

Economic activity in the District continued to expand at a moderate pace during the reporting period of early October through mid-November. Overall price inflation was limited, while upward wage pressures increased further. Sales of retail goods continued to expand at a moderate pace, and growth in the consumer and business services sectors was solid. Manufacturing activity changed little on balance. Agricultural yields and sales grew further. Activity in the residential and commercial real estate sectors remained high. Lending activity expanded moderately.
Employment, Prices, and Wages
Overall price inflation was limited over the reporting period. Commodity price growth remained quite limited on balance, but one contact noted that steel prices picked up somewhat in anticipation of a possible increase in public infrastructure spending. Price pressures for semiconductors were mixed, with some contacts reporting firming while others noted that supplier competition continued to hold down prices.
Wage pressures picked up from the previous reporting period but were uneven across industries and regions. Labor shortages in the financial services, health-care, and technology sectors pushed up wages further for skilled IT professionals. In metropolitan areas, concerns about housing affordability and long commute times, coupled with strong demand for entry-level labor, increased compensation pressures in the hospitality industry. In response to recent minimum wage increases, some restaurants in Southern California are actively considering replacing tips with a mandatory service charge that would be distributed equitably among staff. Contacts in the aerospace industry reported that modest employment cutbacks have eased upward wage pressures for skilled workers such as machinists and engineers. Upward wage pressures in the steel industry remained weak for all except the most experienced workers, with one contact noting that many companies have reduced labor inputs significantly over the past few years to reduce production costs.

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