Fed says Fifth District economy continues to improve, but activity remains low

The economy of the Fifth District of the Federal Reserve (which includes Virginia, North Carolina, South Carolina, West Virginia and Maryland) has continued to improve in recent weeks, but activity has remained below pre-pandemic levels in most industries, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

The Beige Book is published eight times per year based on anecdotal information gathered from the 12 Federal Reserve Banks about economic conditions in its district.

The Fifth District saw auto sales, existing home sales and trucking shipments perform well, and employment continued to increase. The hiring pace slowed however, and price growth remained modest, according to reports offered by Federal Reserve Bank of Richmond.

Some employers in the Fifth District reported to the Federal Reserve Bank of Richmond that the barriers to finding workers include skill mismatches and availability of generous unemployment insurance benefits, which sources said discouraged workers from applying for available jobs.

“Also, multiple contacts said that some former employees were recalled but did not report back to work,” according to the report. “Many firms said they were trying to figure out how to provide flexibility to workers with children schooling at home. On balance, wages were unchanged.”

The manufacturing industry saw a moderate increase in new orders and shipments, but demand was unreliable and varied across different goods, according to the Federal Reserve Bank of Richmond. While the ports in the district saw a modest rise in exports and imports, volumes remained low.

Residential home sales significantly increased as more potential buyers entered the market, and in turn, financial institutions reported strong demand for home purchase loans and mortgage refinancing. 

And while travel and tourism activity improved slightly, retail sales remained low — especially brick-and-mortar.

The Beige Book is compiled from reports by bank and branch directors and interviews with business contacts, economists, market experts and other sources. The next report will be released on Oct. 21.

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