Summary of Economic Activity
Economic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-December through early January. Overall price inflation increased modestly, while upward wage pressures strengthened. Sales of retail goods picked up, and growth in the consumer and business services sectors remained strong. Manufacturing activity changed little on balance, and conditions in the agriculture sector were largely stable. Contacts reported continued strong activity in residential real estate markets, while conditions in the commercial sector strengthened. Lending activity grew at a moderate pace.
Employment and Wages
On balance, wage pressures strengthened. Labor shortages in the technology, health-care, and financial industries boosted wages for skilled workers. Minimum wage legislation increased compensation for unskilled workers across the District. One contact in the media and entertainment industry reported that some companies were postponing filling vacant positions in order to offset rising costs from minimum wage increases. Wage growth for skilled and unskilled labor in the construction industry picked up further, and contacts reported substantial labor shortages among contractors in metropolitan areas.
Prices
Overall, price inflation increased modestly over the reporting period. Contacts in the hospitality and restaurant industries reported increasing the price of goods and services to offset rising labor costs. Price increases for branded drugs and some generic drugs moderated somewhat from a strong pace. In general, prices for commodities and agricultural goods increased minimally and remained relatively low. However, one contact reported that steel prices strengthened from a low level after a modest pick-up in demand.