January 19, 2000
Federal Reserve Districts
|Skip to content
Reports from Twelfth District contacts indicate continued strong performance of the region's economy in recent weeks. District contacts also noted tight labor markets and modest to strong wage pressure, as well as higher raw material costs, though most final sales prices have remained relatively stable. Sales of retail merchandise and services were rapid in most District states during the survey period. District contacts stated that manufacturing output was expanding. Conditions among District agricultural producers were mixed, as prices improved for beef but generally remained relatively low for farm products. District real estate markets were strong overall, however there is evidence of a slight softening in sales volume. District financial conditions remained healthy with strong loan demand.
Wages and Prices
In California and the Pacific Northwest, shortages of skilled high-tech and financial-services employees have increased wage pressure and the use of stock option-based compensation. Skilled pharmaceutical workers also were reported to be in short supply. Contacts in several states had difficulty hiring holiday seasonal retail sales workers; a contact in Idaho, however, stated that part-time retail workers were willing to increase work hours during the holidays.
District contacts noted that raw materials costs have increased. Chemical manufacturers experienced increased raw material costs, as did California apparel manufacturers. Pacific Northwest wood products manufacturers reported an increase in the cost of logs; however, productivity gains have minimized the impact on final sales prices. Telecommunications and Internet-related services prices reportedly continue to decline due to advances in technology.
Retail Trade and Services
While most contacts experienced large increases in e-commerce retail sales, Internet sales did not detract much from strong in-store sales. Internet sales reportedly affected the timing of holiday sales this year, as on-line purchases tended to be early in the season. Additionally, District retailers indicated that the Internet has affected the retail sector by increasing brand awareness, by increasing price competition and comparison shopping for big-ticket items, and by leading traditional retail stores to initiate and expand on-line marketing efforts.
Business activity among District service providers remained strong in recent weeks, despite some declines in tourism during the holidays. Respondents reported robust demand for telecommunications and Internet-related services. In California, demand for shipping and freight services was strong. Visitor arrivals to Hawaii continued to rise as increased domestic travel to the islands more than offset sluggish foreign tourism. In contrast, Utah experienced a decline in holiday travel.
Agriculture and Resource-Related Industries
Real Estate and Construction