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Tag: Beige Book

Fed’s Fifth District economy grows modestly

Map courtesy Federal Reserve Board

Economic activity in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew modestly from early September, according to the latest edition of the Fed’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. The October release is an update from the Fed’s Sept. 4 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District increased slightly in the most recent reporting period. Although many businesses reported improvements in the labor pool and moderate wage growth, some firms reported continued challenges finding specific types of workers; they increased wages more and used outside help to attract those workers.

One example is a charter bus company that reported better driver availability but said it had to “dramatically” increase wages to attract skilled mechanics. A lighting manufacturer said it raised hourly wages by $2 for production workers.

Additionally, Hurricane Helene’s effects led to a spike in initial unemployment insurance claims in North Carolina in the first week of October.

Price growth in the region continued to ease slightly in recent weeks, according to the Fed. Prices grew at a “modest to moderate rate” year-over-year. The prices that manufacturing firms received grew modestly compared to the previous year, while service providers saw moderate annual price growth. Some consumer-facing businesses said they believed customers wouldn’t accept further price increases.

Manufacturing activity ranged from flat to slightly up for some producers. Some producers reported an increase in orders — a fuse panel manufacturer, for example, reported a backlog going into 2025 because of large recent orders. Nevertheless, some respondents reported delays on new orders because of uncertainty, like a textile manufacturer that reported it expected tepid demand as customers were being cautious ahead of elections.

Fifth District ports reported a slight increase in containerized cargo volumes while they allowed for additional trucking traffic to offload ships in advance of the anticipated International Longshoreman’s Association worker strike on Sept. 30. The strike lasted three days and was suspended until Jan. 15, 2025. The 45,000 union workers involved included 6,000 workers at Fifth District ports.

Port respondents said the three-day strike had little impact on operations because of its brevity. They also expected the resulting wage increases to affect future container rates.

Trucking demand remained flat, and companies expected it to stay muted going into winter. Trucking firms reported that profitability was down because freight spot rates fell.

Consumer spending in the region picked up modestly over the most recent reporting period. Retailers reported an increase in sales and shopper traffic. Some respondents said that revenues were up despite flat transaction volumes because prices were higher.

Hotel and tourism contacts said business travel increased, but leisure travel slowed. One hotel representative attributed the slowdown partly to the active hurricane season. Respondents in western North Carolina were still assessing Hurricane Helene’s damage and impacts, but most said they expected to feel the storm’s impacts for several months.

Fifth District residential real estate had a slight downtick in recent weeks, which many real estate agents attributed to a typical fall slowdown and the hold for rate cuts.

A Virginia agent said housing inventory was rising, particularly with fixer-uppers and less-than-ideal homes coming on the market. According to Virginia Realtors data, in September, Virginia had 19,764 active listings and 11,378 new listings, both year-over-year increases.

Contacts across the Fifth District also mentioned lawsuits and continued uncertainty related to the National Association of Realtors policy changes.

Commercial real estate activity leveled off in the past month, according to the Fed. Although vacancy continued to grow in lower-grade markets, vacancies decreased in prime A spaces. A residential and metal buildings construction company in Virginia said it had fewer potential customers and that clients were having more difficulty affording the company’s work.

Also, Hurricane Helene caused severe destruction of commercial and residential properties in western North Carolina and Virginia, but the extent of the damage isn’t yet clear, the Fed said.

Financial institutions saw a modest increase in loan demand, driven mainly by interest rate cuts. Commercial real estate and first mortgage refinancings were the main drivers of the increased demand. Deposit levels remained stable. Loan delinquency rates remained stable, although lenders reported a continued modest decline in borrowers’ credit quality.

Nonfinancial service providers continued to report little change in demand to the Fed, and their revenues remained stable. One law firm said they anticipated a modest increase in merger, acquisition and real estate deals because of decreasing interest rates. Some contacts reported they thought economic activity was constrained because clients were hesitant to make new investments or business decisions until uncertainty about the presidential election and international conflicts was resolved.

Fed’s Fifth District shows modest economic growth

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew modestly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released May 29.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. The May release is an update from the Fed’s April 17 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew moderately over the last reporting period. The availability of labor varied between industries. One seasonal outdoor recreational company reported it hadn’t been able to recruit some candidates because of the area’s lack of affordable housing. Many respondents listed a need for “quality” workers, and companies continued to increase wages and offer bonuses as part of their recruitment and retention efforts.

Price growth increased slightly this period, although the year-over-year rate remained moderate, according to the Fed. The growth in prices received by service providers remained high at around 4%, while manufacturers had a roughly 2.5% increase in prices received. Input and labor costs continued to rise for businesses in both sectors. In some cases, customers pushed back on additional price increases, so input costs increased faster than prices businesses received. Companies expected growth in prices received to moderate over the next six months.

Fifth District manufacturing activity was unchanged in recent weeks. Several firms cited increased pressure on margins because of global competition, and future market uncertainty has made several businesses uneasy. One textile company’s clients said they were not making long-term strategic decisions, which makes it difficult for the company to plan for the rest of the year.

Virginia and South Carolina ports reported to the Fed moderate to strong — up to double-digit — increases in imports, beyond the volume they picked up from diverted Baltimore cargo. Exports of commodities like textiles and apparel rose, while exports of agricultural goods flattened or decreased. Freight rates increased, and ocean carriers continued to add surcharges and fees for distance and hazards to compensate.

Inland ports had strong demand for rail transport, continuing the record levels seen this year. Auto, auto part, and agricultural equipment and tools manufacturers have preferred rail because of its lower carbon emissions and supply chain reliability, according to the Fed. Trucking volume in the Fifth District was up slightly, but spot rates continued to “spiral downward” because of oversaturation.

Consumer spending on retail and travel increased moderately this reporting period. Although sales were up, some retailers reported tighter profit margins caused by rising input costs that they weren’t able to completely pass along to customers. New vehicle sales declined slightly.

Restaurant and leisure travel picked up, largely from customers with discretionary income, while low- to moderate-income consumers pulled back on spending or trading down in the goods they bought.

Fifth District residential real estate activity picked up modestly in the past few weeks. Total closed sales increased. The total supply of homes for sale increased as more came onto the market, but supply remained below pre-pandemic levels. Average sales prices rose modestly, and homes sold at a slightly faster rate — particularly low- and mid-priced homes. New construction grew in areas with population growth.

Commercial real estate activity increased slightly. Retail leasing picked up; vacancy rates stayed low, and new inventory was absorbed quickly. Leasing for Class A office buildings increased slightly, but leasing for Class B and C properties declined. Leasing and absorption in new multifamily buildings were strong. Construction of existing projects continued, but developers said few new projects were greenlit because high interest rates and the continued high prices of material and labor made it difficult for deals to be financially viable.

Fifth District financial institutions continued to see a “modest softening” of loan demand, mainly in their commercial real estate and business loan portfolios. Most cited higher interest rates as the reason for softening demand. Deposit levels declined modestly, and competition continued for available balances. Loan delinquency rates remained stable.

Nonfinancial service providers reported that demand for their services and their revenues continued to be stable. Firms noted higher interest rates as a limiting factor for new capital expenditures, and some noted inflation and election-year politics as limiting factors for business expansion and for confidence in the economy. Wages and workforce issues continued to be less of a challenge and to modestly stabilize.

Fed’s Fifth District economy grows slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew slightly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released April 17.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. The April release is an update from the Fed’s March 6 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew at a moderate pace in the most recent reporting period, according to the Fed. Contacts continued to report difficulty finding workers but noted improvement. Finding skilled trades workers remained difficult. Wage growth remained moderate.

Fifth District prices continued to grow at a moderate annual rate in recent weeks. Prices received by service providers continued to grow at a rate of about 4%, according to survey respondents, and prices received by manufacturers continued to grow at a rate between 2% and 3%. Respondents most cited increased labor costs as the reason price growth remained elevated. Some firms reported that higher borrowing and energy costs have raised operating costs.

Manufacturing activity in the region declined modestly in this reporting period. Several respondents said interest rates negatively affected their businesses. A cabinet manufacturer, for example, reported that clients were canceling projects because they couldn’t wait any longer for interest rates to drop. Manufacturers also mentioned increased cost pressure from nonproduction services, like legal, medical and other insurance services.

Fifth District port activity declined slightly, and the Francis Scott Key Bridge’s March 26 collapse shut down traffic into and out of the Baltimore harbor and the city’s main port terminal. Shipments were diverted to other East Coast ports, including the Port of Virginia.

Overall, loaded container volumes at ports were slightly down. Import volumes increased largely because of retailers restocking consumer goods. Imports and exports of rolling stock, or railway vehicles, were down this reporting cycle. Air freight volumes remained flat, and shipping rates remained low because of overcapacity.

Trucking demand continued to slightly increase as retailers restocked but reflected a seasonal drop in volume. Rates in the truckload segment dropped because the industry is oversaturated, but companies in the less-than-truckload segment said they were able to negotiate flat to slight increases in contract rates due to decreased capacity.

Trucking firms reported no significant backlogs on new equipment, and parts availability improved. Driver turnover remained at the industry average, but some specialized positions, like mechanics, remained difficult to fill.

Retail spending was little changed in this reporting period, according to the Fed. Several retail and restaurant respondents reported unseasonably low customer traffic, although a furniture store and a hardware store saw increased sales and foot traffic, which they attributed to the seasonal pickup in the housing market and yard work. Hotel contacts said occupancy had only slightly increased but noted they had strong future bookings for the next few months.

Residential real estate firms noted it hadn’t been a robust spring market but that the housing sector continued to have pent up demand. Total closed sales dropped month-over-month. Average days on the market increased slightly but stayed below the historic average, while housing inventory remained tight. Although listing prices remained flat, many homes sold above asking price. Increases in construction costs moderated.

Commercial real estate market activity in the Fifth District improved slightly from the last report. Retail and industrial/flex space leasing continued to have higher rental rates and low vacancy rates. The office sector saw greater leasing activity from firms looking for more efficient space and moving to suburban locations.

A growing number of commercial office buildings, however, were unable to qualify for refinancing. Commercial real estate values declined due to slowing sales and negligible capital markets activity. Commercial contractors noted a lack of qualified candidates and rising material and labor costs.

Most Fifth District financial institutions observed a slight increase in loan demand in their business and commercial real estate loan portfolios. Deposit levels continued to modestly decline, and competition for any available deposits remained high. Loan delinquency rates remained stable from the March Beige Book report.

Nonfinancial service providers reported that demand for their services and revenues continued to remain stable. Wages and workforce issues were less of a challenge as they continued to modestly stabilize.

Fed’s Fifth District economy stays the course

Economic activity in the Federal Reserve’s Fifth District was little changed in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released March 6.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. The March release is an update from the Fed’s Jan. 17 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew at a moderate pace in the most recent reporting period, according to the Fed. Firms reported that skilled and trades workers, like engravers and aluminum welders, were more difficult to find than other workers, like advertising firm employees.

Price growth was largely unchanged from the January Beige Book report; year-over-year price growth remained moderately elevated. Prices received by nonmanufacturers grew about 4%, while the growth in prices received by manufacturers remained about 2.5%. Sources in both sectors expected price growth to moderate over the next six months.

Manufacturing activity in the Fifth District softened in recent weeks because of uncertain business conditions. One coffee manufacturer reported that difficulties getting freight through the Red Sea was increasing its production times and future costs. Several firms reported difficulty securing financing, and most contacts cited a shortage of qualified labor as a major issue.

Fifth District ports reported good underlying demand despite disruptions in the Panama and Suez canals that affected shipping schedules. Ports saw a slightly lower volume of loaded imports but an increase in consumer goods imports. Loaded export volumes were unchanged. Spot rates increased sharply as carriers tried to offset the higher costs resulting from longer transit times. The ports reported no stack congestion.

Some trucking freight volumes in the region declined because of winter weather, but underlying trucking demand was good, according to the Fed. In the less-than-truckload segment, companies reported increased demand in the consumer segment resulting from retailers restocking inventory. In the truckload segment, customers pushed to decrease their shipping costs, and rates fell. Although truck drivers were easier to find this period, mechanic and some office positions remained hard to fill.

Retailers in the Fifth District saw a slight decline in sales and customer foot traffic in the most recent cycle. Some firms attributed the decline to bad weather conditions, while a few home improvement and building supply retailers cited a slow real estate market and higher borrowing costs to finance home improvements. Hotel and restaurant respondents also reported a slight slowdown, although hotel revenues in the Northern Virginia market were up as hotels had steady occupancy rates and were able to increase room rates.

Residential real estate activity improved slightly, as pent-up demand remained. Firms reported an increase in listings and buyer activity, but said buyers were tentative because of high mortgage rates. Days on the market increased slightly but were still below historic averages. Construction costs started to moderate, although the market was constrained by difficulty finding land and receiving permitting.

The commercial real estate market activity improved slightly in the most recent reporting period. Firms upgraded their office space and moved away from central business districts, and landlords offered concessions or incentives to potential tenants instead of raising rents. Suburban retail space remained limited, with low vacancy rates and increased rental rates. New construction, especially for office and multifamily projects, was constrained by rising building costs and a lack of available financing.

Loan demand softened modestly, reported Fifth District financial institutions, because of higher interest rates and continued economic uncertainty. Deposit balances began to decline modestly, and competition for deposits remained high. Loan delinquency rates have started showing modest increases, mainly in unsecured personal and auto portfolios.

Overall, nonfinancial service providers in the region saw stable demand and revenues. Wages and the labor market stabilized some, becoming less challenging for nonfinancial firms.

Fed’s Fifth District economy sees mild expansion

Economic activity in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) expanded mildly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. Wednesday’s release is an update from the Fed’s Nov. 29, 2023 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew moderately in the past few weeks, although the tight labor market continued to put upward pressure on wages. Some respondents reported operational changes as a result, like a specialized software company that expects to cut investment plans this year because salaries increased by 15% of the firm’s total revenue and the company needs to continue hiring workers to meet customer demand.

Price growth continued to slow slightly, according to the Fed, but year-over-year inflation remained “somewhat elevated.” Service providers saw a 3.8% increase in prices received, down half a percentage point from the previous reporting period. Manufacturers reported a 2.8% increase in prices received, up slightly from the previous report.

Manufacturing activity in the region slowed in recent weeks. While contacts in some industries tied to consumers’ discretionary spending reported declines, like a wine producer who reported a 30% drop in sales, some contacts saw unexpected increases in demand. An automobile fabric manufacturer reported an uptick in new orders, notable because its customers historically have pulled back on spending each December.

Fifth District ports’ trade volumes were down in recent weeks. Imports were lower year-over-year as wholesalers continued to work on reducing high inventory levels. Loaded exports, though, were up. Spot shipping rates to the East Coast increased because carriers had issues at the Panama Canal and the Red Sea. Container dwell times fluctuated.

Freight volumes for trucking firms were slightly lower than in the prior report, and firms did not see a seasonal uptick. In the full truckload segment, food, medical, automotive and retail shipments provided the greatest demand. Trucking companies did not experience significant backlogs on new equipment orders but occasionally had issues receiving some parts.

Retailers in the Fifth District reported steady to slightly increasing demand and revenues. Travel and tourism respondents reported steady to increasing sales, hotel occupancy rates and passenger air travel.

Residential real estate activity declined modestly due to an expected seasonal slowdown. Home prices increased moderately, while days on the market increased slightly but remained below historic averages. Construction costs had moderated, builders reported, but shortages of some building materials and specialty subcontractor labor continued.

Commercial real estate market activity was flat in the previous few weeks. The retail segment remained strong, particularly among fast casual restaurant chains. Class A office space tightened as firms upgraded their space and moved away from central business districts. Construction projects were largely limited to the industrial and multifamily sectors.

In the financial sector, loan demand continued to soften modestly. The biggest slowdown in demand was in residential mortgage lending. Deposit balances remained flat, and institutions continued to see competition for available funds.

Overall revenues and demand for services for nonfinancial service providers in the Fifth District remained stable. Competition put pressure on pricing and maintaining current clients. Firms reported wages and workforce availability were continuing challenges.

Fed’s Fifth District economy grows slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew slightly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. Wednesday’s release is an update from the Fed’s Oct. 18 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District rose moderately in the previous few weeks, although the labor market remained tight. To retain workers, one general contractor reported wage increases as large as 15% for its highest performers. Trucking firms reported that drivers were more readily available but that it remained difficult to hire skilled mechanics.

Year-over-year price growth remained elevated in the latest Beige Book reporting period but moderated slightly. Prices received by service providers increased a little more than 4% compared with last year, down from the peak of about 7%, according to Fed surveys. Prices received by manufacturers increased by just over 2% compared with last year.

Fifth District manufacturers’ reports were mixed. A textile manufacturer reported an increase in demand from clients who had worked through excess inventories that built up during the COVID-19 pandemic. A furniture manufacturer, however, reported the home furniture industry had been in an 18-month recession, and the manufacturer did not expect demand to increase soon. Several respondents reported they had invested in automation to increase productivity and manage costs.

Ports in the Fifth District reported that trade volumes were down in this reporting period. Imports were flat year-over-year but slightly up month-over-month, mainly from increased consumer goods coming in. Exports were down for the most part. Ports did not have issues with container congestion.

Trucking firms saw low underlying demand, particularly on the industrial side, as freight volumes for construction materials were down. Companies reported they had not had issues maintaining their fleets of trucks and trailers and that new equipment orders had no significant backlogs.

Consumer spending increased modestly in recent weeks, according to the Fed. Clothing and grocery stores reported increasing or steady sales and demand, but furniture and appliance stores reported decreases in purchases. Travel and tourism respondents reported steady to increasing activity.

Residential real estate sales volumes and buyer traffic decreased due to low inventory and higher mortgage rates. New listings were down, and days on the market increased slightly but stayed below historic averages. Although sellers often dropped sales prices or provided concessions for homes that had been on the market for more than 30 days, upward pressure on home prices, especially in more desirable neighborhoods, continued. Builders reported a high cost of materials, labor, trades and financing.

Commercial real estate sources reported slow market activity. The industrial and retail markets were fairly stable, reporting low vacancy rates and rising rental rates. Office building owners offered concessions, incentives or tenant improvement allowances to secure new leases, effectively lowering rental rates. Thanks to new construction coming to market, multifamily rents were flat or down.

In the financial sector, loan demand continued to slow, particularly in the commercial and consumer real estate segments. Sources attributed the softening to high interest rates and global and domestic political concerns. Many institutions increased deposit interest rates, focusing on money market accounts and certificates of deposit, to support deposit retention and growth.

Demand for services and revenues for nonfinancial service providers in the Fifth District remained stable. Wage and expense pressures began to moderate. One respondent expressed concern that demand could soften as student loan repayments restarted and consumers saw decreased discretionary income.

Fed’s Fifth District economy shrinks slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) contracted slightly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. Wednesday’s release is an update from the Fed’s Sept. 6 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment and wages in the Fifth District grew modestly over the previous few weeks. Companies reported continued trouble finding skilled workers, such as CDL drivers and motorcoach drivers. However, a staffing firm that specializes in executive-level marketers had too many candidates for the number of available jobs.

Prices continued to increase at an elevated rate, but growth was lower than this time last year. Manufacturers reported an unchanged growth in prices received and a slight increase in prices paid for nonlabor inputs. Services firms saw a marginal slowdown in prices received and a decline in nonlabor input prices. Labor costs for both continued to grow.

Manufacturers in the Fifth District reported mixed results, and several cited macroeconomic factors, like fears of a potential recession, as reasons for slowdowns. A gaskets manufacturer reported it was halting hiring, citing fears of a potential economic downturn. A fabric manufacturer said consumer demand declined because retailers had too much inventory, while a steel manufacturer reported strong demand during the same period.

Fifth District ports reported weak demand. Imports were lower both year-over-year and month-over-month, mainly because fewer consumer goods were coming into port. Export volume remained flat, however. Container dwell times returned to normal.

Trucking firm respondents said demand was flat this reporting period, but several trucking companies shut down, allowing carriers to slightly raise freight rates as they exited and reduced market capacity. Companies did not see the normal seasonal uptick this period.

Consumer spending in the district grew slightly, but spending growth varied by category. Food service, grocery stores and office supply stores reported steady or increased sales, while furniture, appliance and home remodeling and repair stores reported declining sales.

Travel and tourism activity slowed slightly this period, partly because of a typical seasonal shutdown and partly because of the threat of hurricanes in coastal destinations, according to respondents. Business travel picked up, helping to offset the reduced leisure travel.

Elevated prices, a lack of inventory and high mortgage rates constrained home sales in recent weeks, and the number of new listings in the Fifth District was down year-over-year. Days on the market increased slightly. Home prices held steady, although some were reduced for homes that had been on the market for more than 30 days.

Commercial real estate development and construction reduced significantly. The availability of credit and cost of capital were the main barriers to projects moving forward, as credit underwriting requirements tightened. Industrial and retail leasing demand continued to outstrip supply, escalating rents.

In the financial sector, loan demand continued to slow, primarily in consumer and commercial real estate portfolios. Banks struggled to maintain deposits.

Nonfinancial services providers reported stable demand and revenues. In terms of labor, applicant pools grew but remained under historical norms, and wage pressure continued.

Fed Fifth District economy grows slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew slightly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. Wednesday’s release is an update from the Fed’s July 12 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District increased slightly over the most recent reporting period but not as quickly as it did in prior reports, according to the Fed, and some firms reported that the labor market continued to be tight. Service providers noted that the labor pool improved, though, helping to slow wage growth.

Price growth eased in recent weeks but remained high. Price growth for manufacturers dropped to an annual rate slightly over 3%, according to Fed surveys. For service providers, annual price growth remained at about 5%.

Manufacturing slowed, and hiring for the sector remained difficult, according to respondents.

Import volume in Fifth District ports dropped back to pre-pandemic levels, largely because of a decrease in consumer goods. Imports were lower year-over-year but flat month-over-month, ports reported. Exports rose slightly, mainly for agricultural products, wood pulp, resins and vehicles. Container dwell times dropped to normal levels, according to the Fed.

Trucking firms reported steady demand and moderate increases in contract rates. Labor, parts and new equipment costs were high, however.

Consumer spending grew modestly, according to respondents. Auto sales remained steady, and retail and food service companies saw steady or modest sales growth. Furniture stores reported declining sales, likely because of slower real estate markets.

Travel and tourism rose because of summer travel. In the Fifth District, revenue grew because of room nights sold, but average room rates were down compared to last year. That wasn’t the case for Virginia from January through July — hotel revenues rose compared with 2019 because of high room rates, but hotel rooms sold dropped.

The residential real estate market remained tight across the district and saw a seasonal slowdown. Respondents reported increased sales prices because of low inventory. Virginia has reflected the larger trend, with home sales slowing because of the low inventory and increased prices.

Fifth District commercial real estate activity slowed, although retail and industrial leasing saw rising rents. Companies continued to downsize offices. Office rental rates were flat, but landlords offered additional incentives to tenants. Multifamily rents began to soften as more units came onto the market.

In the financial sector, consumer and commercial loan demand remained stable at pre-pandemic levels. For banks, deposit levels continued to shrink.

Fed Fifth District economy shrinks slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) has contracted slightly since March, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources.

Here’s what the April 19 Beige Book edition revealed about the direction the economy is taking:

Manufacturing activity softened as manufacturers had fewer new orders, and customers began pushing back on price increases as supply chain pressures eased. Employers continued to struggle to find skilled workers.

Travel and tourism spending increased moderately in the region. The sector saw strong revenue growth, with hotels reporting increases in the number of rooms sold and higher room rates compared with last year. In February, Virginia hotel revenues were 14.9% higher than those recorded in February 2019.

Ports and trucking companies in the Fifth District reported declining freight volumes, especially in imports of retail goods and household items. Exports of loaded containers were stronger, though, particularly in auto and machine parts. Empty containers remained at ports slightly longer.

Because shipping carriers had excess availability, their spot rates fell to pre-pandemic levels or below, significantly under contract rates. Airfreight rates stabilized as airlines pulled back on freight capacity, according to the Fed.

Trucking companies saw a moderate decline in freight volumes and received some customer pushback on continued rate increases. Firms continued to add drivers but scaled back recruiting because of the lowered freight volumes. The supply of new tractors and trailers improved.

The Fifth District’s employment increased slightly compared with its March report, although respondents reported a continued lack of qualified workers. Wages increased modestly, partly because Virginia, Maryland and Washington, D.C., increased minimum wages.

Prices in the region continued to grow at a strong rate, the Fed reported. Manufacturers reported average price increases of about 5.5%, down from the 2022 peak, and service sector firms reported prices increases of about 6.5%, a near-peak rate.

Retail activity remained strong, although firms reported slightly lower sales and demand. Some retailers said they expected business to pick up soon, as their busy seasons started in April.

The typical spring housing market did not appear. Sales and pending sales in the Fifth District residential real estate market declined, and sales prices remained flat, although respondents began seeing new contracts at less than list price. Housing inventory has decreased year-over-year, and new listings have dramatically decreased. Although construction costs were down, builders did not buy new lots because of economic uncertainty.

Commercial real estate activity declined overall last month, particularly in the office market. Retail and industrial/flex space leasing, however, remained strong, and the industrial sector had higher rental rates. Sales slowed due to rising interest rates, and some banks stopped lending for new commercial construction projects or tightened underwriting standards.

Demand for all types of loans slowed modestly, but the commercial loan portfolio was the weakest. The region saw mixed demand from consumers, but demand for home equity and used auto loans increased some.

Deposit levels declined slightly, although some banks had an inflow of deposits following Silicon Valley Bank’s collapse. Financial institutions expected loan and deposit levels to decline moderately for the rest of the year, according to the Fed.

Fed’s Fifth District economy expands slightly

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) has expanded slightly since October, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources.

Here’s what the Nov. 30 Beige Book edition revealed about the direction the economy is taking:

Manufacturing activity in the Fifth District slowed mildly as new orders and backlogs declined but shipments stayed flat. Vendor lead times declined, indicating supply chain backlogs were easing.

Travel and tourism increased moderately, and air travel is expected to increase over the holidays. Retail spending increased modestly from October’s report. Residential and commercial real estate market activity slowed.

Respondents in the ports and transportation sector indicated that volumes were beginning to decline, with overall loaded freight shipments down at Fifth District ports. Loaded exports continued down while import volumes were flat or up slightly, led by furniture, sporting goods and heavy equipment.

Dwell times at the ports declined, reducing congestion and lowering storage fees. Spot rates from Asia to East Coast ports decreased 33% from last period but remained above the pre-pandemic rates, according to the Fed.

Trucking firms reported a slight decrease in freight volumes, in line with the normal seasonal slowdown. Industrial customers’ demand remained strong while retail volumes declined. Trucking respondents reported that they weren’t hiring drivers because their existing workforce could manage current volumes.

The cost of new equipment increased substantially, firms reported, and new truck tractors and trailers were still backordered by about a year.

Employment in the Fifth District increased modestly, and many firms reported unfilled positions. The majority said they were increasing wages for new and existing staff by more than they had in previous years. Companies reported difficulty finding skilled workers.

Prices grew robustly, with manufacturers and service sector companies reporting strong year-over-year price growth in both input and customer prices.

Retailers reported modest sales and revenue growth and increasing inventory. Used vehicle sales increased moderately as prices began to drop, but new vehicle sales stayed low due to low inventory levels, rising prices and higher borrowing costs.

Housing demand slowed as buyer traffic and listings declined. Days on the market and inventory increased but remained below normal levels. High interest rates and low inventory led to fewer pending and closed sales, according to respondents. Prices stayed consistent, but sellers reported offering concessions such as temporary rate buydowns or paying closing costs.

New home construction slowed and builders stopped buying new lots because of high building costs and economic uncertainty. New commercial real estate projects slowed due to rising interest rates and higher construction costs, as well as supply chain disruptions and labor shortages.

In the commercial real estate market, the retail, office and industrial sectors had higher vacancy rates this period, although Class A office space activity remained strong as companies sought to entice employees to return to the office.

Demand for commercial and residential loans decreased moderately in the face of rising interest rates. Higher input costs also weakened commercial loan demand. Deposit growth slowed as customers searched elsewhere for higher yields.