The economy is improving in most districts, and some signs are emerging that the U.S. labor market at long last may be firming, according to the latest report on economic conditions across the country released Wednesday by the Federal Reserve Board.
Reports from the twelve Federal Reserve Districts suggest that economic activity continued to expand “at a modest to moderate pace in January and early February” the central bank’s Beige Book summary said.
Retail sales increased in all Districts, except Richmond and Atlanta, although Boston, New York, Philadelphia, Atlanta, and Kansas City noted that severe snowstorms had a negative impact on merchant activity. Retail inventory levels were described as desirable in New York, Cleveland, Dallas, and San Francisco.
All Districts, except St. Louis, experienced solid growth in manufacturing production, and new orders improved for Philadelphia, Atlanta, Chicago, Kansas City, and San Francisco.
Manufacturing and retail contacts across Districts reported rising input costs. Manufacturers in many Districts conveyed that they were passing through higher input costs to customers or planned to do so in the near future…There is little evidence of wage pressures across Districts. Wages remained steady in the Boston, Philadelphia, Cleveland, Kansas City, and Dallas Districts, while moderate wage pressures were reported in the Chicago, Minneapolis and San Francisco Districts. Philadelphia, Dallas, and San Francisco noted that most wage increases were for workers with specialized skills.
Labor market conditions continued to strengthen modestly, with all Districts reporting some degree of improvement. The Boston, Cleveland, Minneapolis, and Dallas Districts cited noticeable improvements in the manufacturing sector, and the Boston and Cleveland Districts also observed increased labor demand in the healthcare and medical sectors.
[Real Estate and Construction remained a soft spot]
Recent activity in residential real estate varied, but overall sales and construction remained at low levels across all Districts. [emphasis added]
In some areas including Boston, Richmond, Kansas City, Dallas and San Francisco there was a pickup in CRE sales and leasing activity, the Beige Book said.