03/29/2024

Beige Book-January 13, 2016

Economic activity in the District grew at a moderate pace during the reporting period of late November through early January. Overall price inflation was minimal, and upward wage pressures increased further. Retail sales expanded moderately, as did demand for business and consumer services. Manufacturing output declined somewhat. On balance, activity in the agriculture sector was flat. Activity in residential and commercial real estate markets expanded further. Lending activity grew at a modest pace.

Prices and Wages
Overall price inflation remained minimal during the reporting period. Prices for apparel products fell during the holiday season due to weaker-than-expected demand, which raised inventories and prompted more discounting than in previous holiday seasons. Reduced component costs and vigorous supplier competition held down prices for consumer electronics. Prices for health-care services rose somewhat, while prices for pharmaceuticals grew rapidly, particularly for branded products. Shortages of labor, selected materials, and land in desired locations for building continued to push up construction costs in some metropolitan areas.

Upward wage pressures increased across the District. Wage growth for high-skilled workers, notably in the technology and financial sectors, continued to exceed that for lower-skilled workers; however, contacts in a few areas noted growing labor shortages and greater upward wage pressures for entry-level employees. Wage pressures intensified in the health-care sector, particularly for specialized positions, with a few contacts reporting that salaries had been adjusted midyear to help retain staff. Strong demand for skilled labor in the technology sector increased compensation; however, contacts reported that firms generally opted to improve vacation and work-life benefits rather than increase salaries. Wage pressures for low-skilled workers in the hospitality industry grew moderately as the effects of recent minimum wage legislation began to take hold.

View Article