Economic activity in the District grew at a moderate pace during the reporting period of early October to mid-November. Overall price inflation ticked up, and upward wage pressures increased further. Retail sales grew moderately, while demand for business and consumer services expanded. Manufacturing output was largely unchanged. Agricultural activity edged up modestly. Conditions in residential and commercial real estate markets continued to strengthen. Activity in the financial services sector expanded at a modest pace.
Prices and Wages
Overall price inflation appeared to tick up slightly on balance. Prices for branded pharmaceuticals increased rapidly, while price growth for generic drugs was down relative to the same period last year. Shortages of labor, selected materials, and land in desired locations for building continued to push up construction costs in some metropolitan areas. Lower natural gas prices reduced electricity costs. In the technology sector, competitive pressures and technological advances reduced prices for consumer electronics, while price growth for technology services slowed as data centers continued to realize economies of scale.
Upward wage pressures increased across the District. On balance, wage growth for high-skilled workers exceeded that of low-skilled workers; however, contacts in a few areas reported that labor shortages for entry-level employees increased relative to the previous survey period. Wage pressures grew in the health-care sector, particularly for specialized positions such as nurses and software developers. Labor shortages in the financial sector have increased pressure on firms to raise compensation levels, but some contacts reported reliance on favorable benefit packages rather than salary increases to retain and attract talent. In the technology sector, higher demand for labor bumped up wages for both experienced and entry-level workers. Wage increases in the grocery industry were modest; one contact noted that available labor supply is largely in line with demand, and stiff competition among retailers limits their ability to pass wage increases on to prices.
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