09/28/2022

Beige Book-October 24, 2018

Economic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of September through early October. Conditions in the labor market tightened noticeably, and wage pressures picked up. Price inflation increased moderately. Sales of retail goods picked up slightly, while activity in consumer and business services was solid. Activity in the manufacturing sector expanded moderately, and conditions in agriculture improved somewhat. Contacts reported that residential and commercial real estate market activity expanded at a strong pace. Lending activity picked up moderately.

. . . Wage growth picked up broadly. Contacts across the District noted continued upward compensation pressures for a variety of skilled occupations, including finance professionals, health-care providers, and business consultants. A contact in the retail industry raised starting wages in anticipation of intensifying labor shortages during the holiday season. A few contacts noted that some businesses increased benefits like vacation allowances and onetime bonuses rather than wages.

. . . Price inflation increased moderately over the reporting period. Several contacts noted a moderate pickup in price growth for metal inputs due mostly to the continued impact of tariffs. Rising energy costs resulted in pricing pressures for transportation services and petroleum-based inputs to construction and manufacturing. Final prices at quick service restaurants increased somewhat. A contact in the hospitality industry in Southern California reported that many hotels were passing along higher labor and input costs to guests in the form of one-off surcharges. Pricing pressures in the agriculture markets across the District were mixed, but flat on balance. Lumber prices continued to decline due to a softening in construction starts in some regions.

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