Fed Beige Book: Economic activity slows in many districts

Written by Becca Moczygemba

In its Beige Book report released on Nov. 29, the Federal Reserve noted slower economic activity since October’s report.

The Beige Book is a compilation of information on current economic conditions gathered by each district Federal Reserve Bank and published eight times per year.

The latest report by the Fed on the state of the economy said that only four districts reported growth. Two other districts were flat to down, and the remaining six districts saw declines in business activity.

District highlights from the November 2023 Beige Book

Boston – Activity among businesses was flat to slightly down for the Boston district. Manufacturers reported revenue declines and reduced demand compared to the previous year. Residential home sales were flat and commercial real estate slowed. Employment has stabilized for the first district.

New York – Employment inched up in the second district with improvements in worker availability. However, the district weakened overall. And while manufacturing activity grew modestly, the number of orders declined. Delivery times shortened and supply availability improved. Both the commercial and residential real estate markets slowed. Construction has dropped across the whole district, but industrial construction is on the rise.

Philadelphia – The Philadelphia district saw a decline overall, but an increase in employment. Manufacturing activity declined, though the index for new orders increased. Manufacturers in this district expect growth to be weak in the next six months compared to historical averages. Demand for homes in the third district remains strong, but high interest rates continue to dampen the commercial real estate market.

Cleveland – Economic activity softened, and contacts in the fourth district expect conditions to persist in coming months. Employment levels overall were flat. The manufacturing sector was also flat, with metals producers having mixed sentiment. One steel producer noted an increase in orders while others said orders were down.

Richmond – Consumer spending gave the fifth district a boost in recent weeks. The labor market picked up and companies are filling vacancies. Sales volumes for residential and commercial real estate slowed.

Atlanta – Labor availability improved in Atlanta’s district and businesses saw better employee availability and retention. The cost of steel decreased as overall construction input costs softened. Residential and commercial real estate remain weak.

Chicago – Businesses in the seventh district anticipate a decline in overall demand in the next year. Currently, employment is on the rise and companies have increased their capital expenditures. Real estate in general is slower compared to the previous report. “Steel and fabricated metals orders ticked down, with contacts highlighting lower sales to the construction, automotive, and medical sectors,” said the report.

St. Louis – Business activity was soft as labor markets remain compressed. Manufacturing activity is down with firms reporting declines in employment. Commercial and residential real estate are impacted by high interest rates.

Minneapolis – The ninth district was flat to down since the previous report. Growth was seen in some areas of construction but residential construction and manufacturing were down. There is currently a large undersupply of workers in the manufacturing sector for this northern district.

Kansas City – Companies saw less activity in the Kansas City district in this reporting period. Renewable energy is gaining more traction and expanding at a moderate pace. The outlook for wind and solar projects is positive, but general manufacturing is flat.

Dallas – Dallas’ district grew moderately. However, the outlook remains negative due to the global economy and geopolitical instability. Manufacturing expanded in Texas, specifically for fabricated metals and machinery manufacturing. Real estate overall softened.

San Francisco – The twelfth district saw less activity, though there was an improvement in employee retention and availability. Manufacturing activity is strong but demand for manufactured goods went unchanged. Financing costs and economic uncertainty continue to affect the real estate markets.

Becca Moczygemba

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