Reports from the 12 Federal Reserve districts indicated that the economy expanded at a modest to moderate pace from early January through mid-February, according to the Federal Reserve Board’s latest report on regional economies (known as the “beige book”). Manufacturing activity accelerated somewhat, with most districts characterizing the pace of growth as moderate. Employment grew in most of the nation, though some districts characterized growth as modest, and two reported that it was little changed. Labor markets remained tight, with some districts noting widening labor shortages. A number of districts noted that staffing firms were seeing brisk business for this time of year, and also noted that shortages of skilled workers—particularly engineers and information technology workers—were driving up wages. Businesses were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the previous report.


District businesses reported modest to moderate increases in activity from a year earlier. A majority of manufacturers saw revenue gains and reported that employment was up, although for most it was a very minor change. Manufacturers continued to say they had difficulty finding skilled engineers. Staffing firms mostly saw slight year-to-year declines in revenues, attributable in part to tight labor supply. Sectors with particularly low labor supply were IT, accounting, and health care. Staffing firms indicated that bill and pay rates had increased since the previous quarter, and most reported little pushback to increasing bill rates. Some firms expressed increased uncertainty, but most continued to say they were upbeat about 2017.

New York

Economic activity in the district expanded at a modest pace. Manufacturers noted a brisk pickup in business activity and reported steady employment. Service sector contacts reported steady to moderately expanding activity, and hiring picked up. Businesses engaged in education, health, information, professional and business services, and wholesale trade reported that they have increased staffing levels. Businesses in almost every industry sector plan to add staff in the months ahead and reported continued modest wage growth. Employment companies reported that the labor market has remained tight and that hiring activity has been brisk for this time of year. Contacts at major employment firms across the district reported that starting salary offers have generally been steady or risen modestly, and have risen more noticeably for some highly skilled workers who were in short supply.


Aggregate business activity in the district continued at a modest pace. A greater percentage of firms in a broader range of sectors reported increased manufacturing activity than in the previous reporting period, suggesting moderate growth overall. According to most businesses, employment, wages, and prices continued to grow at a modest pace. Wage pressures continued to be modest, with little reported shift in wage levels or labor market tightness. Staffing firms described themselves as busy. In some cases, activity picked up immediately following the holiday lull and continued at a steady pace. Staffing contacts noted little change in overall wage pressures. Expectations for firm growth rose, but predictions about the anticipated pace of growth over the next six months remained moderate on average.


Economic activity grew moderately across the district, and factory output picked up slightly since the previous beige book report. Activity for suppliers to the aerospace, construction, and motor vehicle industries remains elevated. Factors tempering output growth for other manufacturing industries include ongoing weakness in the oil and gas industry and the strong dollar. Nonfinancial services firms experienced slight revenue growth overall, but demand was strong for IT and data analytics services. Labor markets continued to show signs of tightening, with moderate wage gains. Average wage increases during 2017 were generally expected to be in the 2% to 3% range, but there were a few reports of 3% to 5% increases.


Economic activity in the district grew moderately. Manufacturing strengthened, and producers anticipated continued improvement during 2017. Manufacturers reported modest growth in prices received and a slight slowdown in average input price growth. At nonfinancial services firms, revenues continued to rise at a modest pace. Prices rose somewhat more rapidly at services firms. Labor demand continued to increase. District businesses reported modest increases in wages in recent weeks. Recruiters continued to report tight labor markets and strong demand, particularly for higher-skilled workers. Staffing firms reported that the volume of worker conversion from temporary to permanent positions increased modestly.


Business contacts indicated that economic activity in the district continued to expand modestly. Manufacturers noted increases in new orders and production. The labor market remained tight, though wage pressures were mostly subdued as firms continued to struggle with finding workers across various fields and skill levels. Firms continued to note growing partnerships with area workforce development organizations, community colleges, and universities to develop customized training programs to help develop larger pipelines of talent. Additionally, many firms continued to increase investment in internal training programs to develop existing personnel. The outlook for the next three to six months remained positive.


Economic activity in the district picked up to a moderate pace. Growth was widespread across sectors, including manufacturing, and even picked up for some long-struggling sectors. Employment growth picked up to a moderate rate. Companies continued to indicate that the labor market was tight and that they experienced difficulty filling positions at all skill levels. A staffing firm reported little change in billable hours and ongoing difficulty filling orders at the wages employers were willing to pay. Wage growth remained moderate. Business contacts expected activity to continue rising at a modest pace over the next six to 12 months.

St. Louis

Economic conditions in the district continued to expand at a modest pace. Manufacturing activity showed signs of strengthening. Most business contacts reported that production, new orders, and capacity utilization increased in the first quarter relative to one year ago. Reports from the professional business services sector were mixed. Employment increased modestly, and the labor market remained tight. A majority of contacts expected district economic conditions in 2017 to be better or somewhat better than last year, a slight increase in such responses since mid-November. Despite the optimistic outlook, some manufacturing contacts expressed concerns about labor shortages and possible trade restrictions.


The district economy grew modestly overall since the previous report, and district manufacturing activity increased moderately. Employment grew moderately, and initial unemployment insurance claims in January were lower than a year earlier. However, January online job openings in North Dakota continued to decline compared with previous-month and previous-year levels. Wage pressure was moderate to strong. A Minnesota state official noted that wages grew 4% in 2016, and manufacturing paychecks rose by even more. A staffing firm in southern Minnesota said that client calls and overall business were increasing; another in Minneapolis-St. Paul said job orders were flat in January, but clients expected activity to pick up.

Kansas City

District economic activity continued to expand modestly, and the manufacturing sector continued to expand moderately. Manufacturers’ capital spending plans also expanded moderately, and firms’ expectations for future activity were at their highest levels in more than 12 years. Contacts in the professional, technology, transportation, and wholesale trade sectors reported increased sales. Average employee hours picked up in the manufacturing and service sectors since the previous beige book report. Respondents noted a shortage of commercial drivers, salespeople, and service workers. Contacts in most sectors reported that the pace of wage growth slowed compared with the previous report, but wages still rose slightly. Firms expected additional growth in economic activity, employment, and wages in the months ahead.


Economic activity in the district expanded moderately, including in the manufacturing sector, where demand strengthened. Demand for nonfinancial services generally continued to increase, with numerous reports of rising business activity. Overall employment rose, with hiring relatively strong in manufacturing. Reports of skilled labor shortages continued, particularly in manufacturing and construction. Staffing demand remained particularly strong in Dallas, with a surge in IT, and rose slightly in Houston, including in the oil and gas sector. Upward wage pressures were similar to the previous beige book report. Overall, outlooks remained positive. One contact remarked that increases in health care costs are more than they can pass on to employees. A few manufacturing contacts said their clients held a “wait and see” approach and that there is considerable uncertainty about potential policy changes.

San Francisco

Economic activity in the district continued to expand at a moderate pace during the reporting period of mid-January through February. Conditions in the manufacturing sector remained mixed, and activity in the business services sector slowed slightly to a moderate pace. Wage pressures intensified in general as labor market conditions remained tight throughout much of the district. Talent shortages in technology have increased the time required to fill positions and the cost per hire. In the financial services industry, shortages of skilled bankers and credit analysts have boosted wages for those occupations.



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