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Beige Book Highlights: Modest Growth and Expectations

The Federal Reserve's latest Beige Book  reported that "Economic activity expanded at a measured pace in recent weeks, according to reports from contacts in the twelve Federal Reserve Districts."

The Beige Book is published eight times per year and contains individual Reserve Bank reports as well as a national summary. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.

Regarding labor markets, the national summary noted:

Modest improvements in hiring activity were reported by most Districts.

It also contained this passage from the Atlanta Fed's portion of the Beige Book:

Atlanta indicated that employment agencies were seeing a pickup in orders for temporary help. Some large employers, however, announced plans to move toward hiring more part-time, rather than full-time, employees.

On wages and prices, the national report stated that:

As with wages, price pressures changed little from the modest pace that was reported in the last assessment. Almost every District described price growth as modest, although examples of higher price growth were occasionally cited. For example, Atlanta noted that, even though overall input price increases had eased, firms were being challenged by higher energy and crop-related input prices and by rising health-care costs.

Here are more highlights of the Atlanta Fed's contribution to the Beige Book:

  • Most businesses across the Sixth District described economic activity as increasing marginally in October, and most contacts expect little change in the near term.
  • Employment conditions across the District continued to improve, albeit at a modest pace, in October. Auto- and energy-related firms reported additional hiring, as did some firms tied to residential construction. On the services side, accounting, and healthcare firms were the most positive. Employment agencies reported a pickup in orders for temporary help. Along those lines, some large employers announced plans to move towards hiring more part-time versus full-time employees. Firms also reported that they continued to receive a large number of applications for most newly posted positions, causing wages to remain flat. That said, we continued to hear reports of some higher skilled positions going unfilled because of a lack of qualified applicants.
  • Controlling costs remained a central theme for businesses in the District as they were challenged by higher energy and crop-related input prices along with rising healthcare costs. However, most firms throughout the region noted that the pressure from overall input prices had eased over the last several months. Contacts also noted that the relative weakness in natural gas prices had helped to keep costs in check, particularly for more electricity-intensive firms.
  • Retailers cited mild sales growth, while automobile dealers continued to experience strong results. Overall, tourism activity remained robust. Most retailers felt that consumer confidence is improving as they head into the holiday season, which led to expectations that sales would improve over last year's results. Retailers anticipate a healthy holiday season and most shared plans to hire the same amount of seasonal staff compared with last year, although there were some contacts that anticipate hiring a bit more help over the holidays than they did in 2011.
  • Residential brokers indicated an increase in existing home sales and prices, while homebuilders signaled sales were flat to slightly up. The outlook for sales among brokers remained positive. Most expect sales growth to be flat to slightly positive on a year-over-year basis in the short term. In spite of reports of challenges to obtaining development and construction financing, the outlook for construction activity remained strong and most builders were looking forward to additional increases in new home sales in 2013. Multifamily development continued to dominate the commercial real estate market.
  • Manufacturing activity in the Southeast softened in October. Contacts in the region reported that new orders, production, and employment levels decelerated. Finished inventory levels were flat. Auto and auto parts producers experienced slightly softer orders, resulting in somewhat lower output after several months of very strong demand. Other durable goods contacts experienced modest growth, especially those tied to the improving housing market. Energy-related manufacturers continued to report robust activity.
  • Rail contacts reported that domestic coal shipments were down because of softening global demand for metallurgical coal and less demand for coal to fire domestic utility plants as electricity producers shifted to natural gas. However, there have been increased movements of crude oil via rail. Ports experienced weaker container volumes, but slight increases in the level of break-bulk volumes. Truck freight activity was described as similar to year-ago levels. Reports indicated that there appears to have been a shift in the holiday shipping timeframe, representing a―just-in-time approach to ordering as retailers maintain tight inventories as the shopping season approaches.
  • Much of Georgia continued to experience varying degrees of drought conditions, while the rest of the region enjoyed normal conditions. Some agriculture contacts reported labor shortages.
  • Hurricane Sandy's damage to refineries and infrastructure in the Northeast caused southeastern regional refiners to increase production and transportation of oil products to affected areas.

Photo of Michael ChrisztBy Mike Chriszt, a vice president in the research department of the Atlanta Fed,


Photo of Shalini PatelShalini Patel, a senior economic research analyst in the Atlanta Fed's research department

November 28, 2012 in Beige Book | Permalink


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