Overall Economic Activity
Economic activity grew at a modest to moderate rate, according to the majority of Federal Reserve Districts. Several Districts noted, however, that the pace of growth slowed this period, constrained by supply chain disruptions, labor shortages, and uncertainty around the Delta variant of COVID-19. A majority of Districts indicated positive growth in consumer spending; however, auto sales were widely reported as declining due to low inventory levels and rising prices. Travel and tourism activity varied by District with some seeing continued or strengthening leisure travel while others saw declines that coincided with rises in COVID cases and the start of the school year. Manufacturing grew moderately to robustly in most parts of the country, as did trucking and freight. Growth in nonmanufacturing activity ranged from slight to moderate for most Districts. Loan demand was generally reported as flat to modest this period. Residential real estate activity was unchanged or slowed slightly but the market remained healthy, overall. Reports on nonresidential real estate varied across Districts and market segments. Agriculture conditions were mixed and energy markets were little changed, on balance. Outlooks for near-term economic activity remained positive, overall, but some Districts noted increased uncertainty and more cautious optimism than in previous months.
Employment and Wages
Employment increased at a modest to moderate rate in recent weeks, as demand for workers was high, but labor growth was dampened by a low supply of workers. Transportation and technology firms saw particularly low labor supply, while many retail, hospitality, and manufacturing firms cut hours or production because they did not have enough workers. Firms reported high turnover, as workers left for other jobs or retired. Child-care issues and vaccine mandates were widely cited as contributing to the problem, along with COVID-related absences. Many firms offered increased training to expand the candidate pool. In some cases, firms increased automation to help offset labor shortages. The majority of Districts reported robust wage growth. Firms reported increasing starting wages to attract talent and increasing wages for existing workers to retain them. Many also offered signing and retention bonuses, flexible work schedules, or increased vacation time to incentivize workers to remain in their positions.
Most Districts reported significantly elevated prices, fueled by rising demand for goods and raw materials. Reports of input cost increases were widespread across industry sectors, driven by product scarcity resulting from supply chain bottlenecks. Price pressures also arose from increased transportation and labor constraints as well as commodity shortages. Prices of steel, electronic components, and freight costs rose markedly this period. Many firms raised selling prices indicating a greater ability to pass along cost increases to customers amid strong demand. Expectations for future price growth varied with some expecting price to remain high or increase further while others expected prices to moderate over the next 12 months.
Highlights by Federal Reserve District
Business activity in the First District expanded at a modest to moderate pace in August and September 2021. Wages increased moderately as firms competed for scarce workers. Retailers and manufacturers posted moderate to steep price increases amid ongoing supply disruptions. The outlook was cautiously optimistic.
Growth in the regional economy slowed to a modest pace in recent weeks, as supply disruptions and labor shortages have impeded economic activity. Employment and wages increased. Businesses reported ongoing widespread escalation in both input costs and selling prices. Despite the slowdown, contacts continued to express optimism about future business prospects.
Business activity grew modestly during the current Beige Book period – slower than the prior period – but remained below pre-pandemic levels. Fear and uncertainty of the Delta variant continued to constrain growth, but contacts were most worried by ongoing labor shortages and supply chain disruptions. Overall, employment continued to grow modestly, while wages and prices continued to rise at a moderate pace.
Economic activity remained strong in the District. While demand was still solid, supply chain disruptions tempered the pace of sales and output growth. The expiration of supplemental unemployment insurance benefits and a return to school did little to alleviate worker shortages, and wages continued to rise. This and higher nonlabor input costs put further upward pressure on selling prices.
The regional economy increased at a modest rate as growth was constrained by labor shortages and shortages and delays receiving goods and raw materials needed for business. Employers across sectors had difficulties finding and keeping workers, which led to offering higher wages and bonuses to recruit and retain staff. Prices remained elevated compared to year-ago levels.
Economic activity expanded moderately. Labor markets remained tight and wage pressures intensified. Some nonlabor costs stayed elevated. Retail sales increased. Leisure travel was strong, but hotel occupancy levels declined. Residential real estate demand remained robust. Commercial real estate conditions were stable. Manufacturing activity expanded. Banking conditions were steady.
Economic activity increased modestly. Employment, manufacturing, and business spending grew moderately, but consumer spending and construction and real estate were little changed. Wages and prices increased strongly while financial conditions were flat. District corn and soybean harvests were larger than expected and near record levels.
Economic conditions have continued to improve at a moderate pace since our previous report. Labor shortages and supply chain issues continue to be cited as primary issues. Increased input costs have led to cost pressures across industries, and firms with the power to do so report passing on increased costs to consumers.
District economic activity grew moderately since the previous report. Employment increased, though hiring demand continued to outstrip labor availability, and wage pressures were strong. Price pressures remained elevated; certain input prices eased, but firms were passing more of their input costs through to final prices. Manufacturing increased, with one contact noting that passing along higher prices hadn't hampered demand.
Economic activity continued to grow at a moderate pace and was broad-based. Ongoing growth in manufacturing alongside renewed growth in the energy sector supported the regional economy. Consumer spending at restaurants and hotels was resilient through the recent surge in COVID cases. However, business travel did not resume as expected in September, with many large events being postponed.
The District economy expanded at a solid rate, with broad-based growth across sectors. COVID-19 and labor and supply-chain constraints remained headwinds. Employment growth was robust, and wage and price growth remained highly elevated. Outlooks stayed positive, with most contacts expecting stronger business six months from now, though uncertainty rose.
Economic activity in the District strengthened moderately. Labor market tightened further as wages and price levels climbed up. Retail sales expanded moderately while activity in consumer services slowed down somewhat. Conditions in the agriculture and manufacturing sectors strengthened slightly. Lending activity increased further while residential construction expanded notably.