Beige Book bullet points

Here are important bullet points from the just released Fed Beige Book and I underlined some key parts:

• “Reports from all 12 Federal Reserve Districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate.”

• “Employment growth was modest on balance, with most Districts reporting flat to moderate increases. Labor markets were widely described as tight. Many Districts noted that employers were having difficulty finding qualified workers, particularly in construction, transportation, skilled manufacturing, and some health care and service positions. These shortages were also restraining business growth. Firms in several Districts reported that scarcity of labor, particularly related to construction, would be exacerbated by hurricane recovery efforts.”

• “Despite widespread labor tightness, the majority of Districts reported only modest to moderate wage pressures. However, some Districts reported stronger wage pressures in certain sectors, including transportation and construction. Growing use of sign-on bonuses, overtime, and other nonwage efforts to attract and retain workers were also reported.”

• “Price pressures remained modest since the previous report. Several Districts noted increased manufacturing input costs, but in most cases these weren’t passed through to selling prices. Retail prices generally increased slightly. Transportation, energy, and construction materials prices increased more rapidly, with some Districts citing effects from hurricanes.”

• “Retailers indicated that prices for goods remained steady, though one contact in the hardware industry said that paint prices had recently gone up 5 percent. Several manufacturing contacts reported price increases. A packaging firm recently raised prices 10 percent; they also reported an 8 percent to 10 percent increase in material costs over the year, although they said that materials prices remained well below levels from a few years ago. A chemical manufacturer said customers accepted a price increase more easily than expected. A manufacturer of frozen fish said it had reduced discounts.”

• “Retail spending rose slowly, while vehicle sales and tourism increased in most Districts.”

• “Manufacturing activity and nonfinancial services expanded modestly to moderately in most Districts.”

• “Residential construction continued to increase, and growth in commercial construction was up slightly on balance. Low home inventory levels continued to constrain residential sales in many areas, while nonresidential real estate activity increased slightly overall.”

• “Loan demand was generally stable to modestly higher.”

Bottom line, the commentary on the labor market is really the most noteworthy in terms of the continued tightness. With respect to overall economic activity, it still sounds like a 2% type economy to me as the same “modest” and “moderate” descriptions are being given for many areas.