A view from the region
The Atlanta Fed constructs regular reports on economic conditions in the Southeast. The most widely known is the Beige Book, which was released on October 19 through the Federal Reserve Board of Governors. This report includes input from all 12 Reserve Banks.
But we update our Bank's regional economic perspectives on a continuous basis. We do this through our Regional Economic Information Network (REIN), which helps us coordinate the inflow of economic intelligence about the region's economy into the Atlanta Fed's overall view of the economy. The input provided by our boards of directors from Atlanta and our branches plays an essential part in developing our assessment.
In surveys conducted since the release of the last Beige Book, the majority of our directors and business contacts described economic activity as expanding at a slow pace, and their outlooks remained subdued. Retail and transportation contacts noted that consumer activity was tepid and expectations for holiday sales are restrained. Tourism-related spending remained positive, although there are some indications of a deceleration in cruise line bookings. Auto sales remained strong. Homebuilders and Realtors indicated that the housing sector remains depressed, although multifamily sales and construction were bright spots. Manufacturers reported a slowdown in new orders and production.
Since one of the Federal Reserve's mandates is to maximize employment, we consistently ask our contacts about labor conditions. Over the past month we specifically asked them about their workforce plans. Overall, our business contacts and directors indicated that job growth was minimal place across much of the District. Forty-three percent of contacts said they were likely to add to their workforce, but these expectations were in many cases tied to filling vacancies or adding seasonal hires. Importantly, we did not detect much in the way of plans to reduce staffing levels, either. Just over 80 percent of business contacts said it was unlikely that they plan to eliminate any current employees. The accompanying charts highlight these findings.
We heard more reports of businesses still seeking to maximize productivity gains from current employees. Several contacts also remarked that efficiency gains continued to be achieved as firms invested more in technology. In addition, several contacts noted the ongoing trend of reducing their permanent, full-time workforce in favor of part-time help.
Concerning the Fed's other mandate—to maintain stable prices—we routinely ask businesses to tell us about any cost pressures they may be experiencing. Most contacts this period were less concerned about input cost increases, and several noted some moderation. However, they continue to feel the effects of the earlier run-up in many commodity prices. Where possible, companies are trying to pass along some of the increased costs by increasing their prices, but they have to balance that with the potential to lose business. Spotty reports continue of wages pressures that are primarily a result of a short supply of specialized skills such as IT, some professional services and trade skills, and long-haul truck drivers. Overall, wage increases appear to be modest.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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