Economic activity rose slightly in November after little change in previous months, and U.S. businesses showed signs of more optimistic about demand prospects, the Federal Reserve said in its latest Beige Book survey.
“Although growth in economic activity was generally small, growth expectations increased moderately in most geographies and sectors,” according to the report published Wednesday in Washington. “Business contacts expressed optimism that demand will increase in the coming months. “Consumer spending remained broadly stable.”
The Federal Reserve’s report had recently painted a bleaker picture of the economy than official government statistics.showing stagnant growth, lower hiring rates, and only small price increases. In many cases, that contradicts broad economic figures that show still-strong activity, fueled by ample consumer spending and a relatively low unemployment rate.
Federal Reserve districts reported that inflation was rising only modestly and that businesses were having more trouble passing on costs mhigher as consumers became more demanding about prices.
Hiring was considered moderate and turnover was low, while layoffs were also limited. Business contacts said they expected moderate or sustained job growth.
“Wage growth slowed to a modest pace in most districts, as did expectations for wage growth in the coming months,” indicated the survey.
The Beige Book, along with government data, will help shape the debate among Federal Reserve policymakers at their Dec. 17-18 meeting, as they consider whether to lower interest rates a third time.
District Highlights
Boston: “A clothing chain experienced a sharp decline in sales, attributed in part to the especially hot and dry fall in New England, as sales of cold-weather clothing fell far short of expectations. “Snowmobile sales were down sharply compared to the same period last year, with recent weather patterns again cited as a contributing factor.”
New York: “Doubts surrounding the presidential elections had caused a pause in decision-making, although contacts anticipated that hiring would resume.”
Philadelphia: “Manufacturers’ expectations for growth over the next six months became more generalized in terms of future activity, new orders and shipments; however, plans for future capital expenditures did not move.”
Cleveland: “Selling prices have also increased modestly in recent weeks, although most contacts continued to keep prices stable. Some retailers and consumer goods manufacturers that indicated they had not raised prices said they had offered promotions due to lower demand and greater consumer price sensitivity.”
Richmond: “The damage caused by Hurricane Helene was beginning to be seen in both the residential and commercial real estate markets. A North Carolina agent noted that residential sales were down 25 percent in the Boone area and 30 to 35 percent in the Asheville market. “Long-term impacts on commercial real estate were more uncertain, as many buildings were destroyed and businesses continued to close in recent weeks.”
Atlanta: “Rising mortgage rates and the lagged effects of recent weather events led to a moderate decline in housing demand during the reporting period. While sales were flat or up slightly in most of the District, in Florida they were down sharply in October compared to a year earlier. Existing housing inventory also increased in many Florida markets, and some, particularly in Southwest Florida, are now considered oversupplied.”
Chicago: “Retailers were planning to increase their inventories in anticipation of higher tariffs and a construction input supplier was actively doing so. Additionally, a computer retailer noted an increase in sales in recent weeks as business customers brought forward their replacement plans to avoid the expected higher prices for imported electronics.”
St.Louis: “In Kentucky, auto manufacturing has increased shifts to catch up with production following disruptions caused by previous hurricanes. However, electric vehicle manufacturing has had preventive layoffs, in anticipation that sales will continue to be weak.”
Minneapolis: “Agricultural conditions in the district remained precarious. In the most recent survey on agricultural credit conditions, 85 percent of respondents reported that farm income decreased in the third quarter compared to a year earlier, as productive harvests were not enough to offset low agricultural prices. basic products and high operating costs.”
Kansas City: “Renewable industry contacts reported that growing demand for commercial electricity from large data centers will be a key driver for generation capacity expansions in the coming years. However, utilities and developers face challenges in quickly building new generation to meet growing demand. Contacts pointed to limitations in obtaining permits and building new electrical infrastructure (particularly interregional transmission), high equipment costs, and persistent shortages of skilled labor as key obstacles to new renewable energy projects.”
Dallas: “Contacts flagged a heightened risk that oil prices in 2025 will be weaker than previously expected, and that prospects for lower prices and rising productivity could lead to lower capital expenditures next year. Contacts expressed optimism that the pause on liquefied natural gas (LNG) export permits that has been in place for most of the year will be lifted soon and will allow for greater natural gas infrastructure and greater investment in LNG exports during the next few years.”
San Francisco: “Labor turnover has remained stable overall in recent weeks, but remained notably below pandemic highs. However, contacts in business services, community support services, retail and finance continued to face persistent challenges to retention. Applicant pools for posted positions increased overall, but reports highlighted some disparity in quality between applications and job requirements.”
The Kansas City Federal Reserve compiled the latest edition of the Beige Book using information collected on or before Nov. 22. The report includes anecdotes and comments about economic conditions from businesses and other contacts in each of the 12 Federal Reserve districts.
