Daily News: December 4, 2014

Beige Book: Economic Activity Continues to Expand

The Federal Reserve reported in its Beige Book that national economic activity continued to expand in October and November. A number of districts also noted that contacts remained optimistic about the outlook for future economic activity.

The Fed said employment gains were widespread across districts, and districts reporting on business spending generally noted some improvement. Demand for nonfinancial services generally increased.

Manufacturing activity strengthened in most districts. Construction and real estate activity expanded overall, but at a pace that varied by sector and by district. Lending typically held steady or increased.

Energy and mining activity was higher on net, though lower oil prices were a concern for the oil industry in the Atlanta and Dallas Districts. Overall price and wage inflation remained subdued.

The following on hiring and business spending was excerpted from the report:

Employment gains were widespread across districts in October and November. Boston reported increased employment in the software and IT sectors, and New York noted that financial firms were hiring more workers. Cleveland indicated that manufacturing, construction, and freight transportation payrolls were increasing, and Richmond cited stronger hiring by service-sector firms. Atlanta reported sizable gains in leisure and hospitality employment. Several districts noted an increase in temporary staffing as well as an increase in temporary-to-permanent job transitions. Hiring plans increased in New York, Chicago, and St. Louis. With labor market conditions strengthening, contacts in the Kansas City and Dallas districts noted that firms were having increased difficulty retaining key workers. Various districts continued to report that firms had difficulties filling positions in IT and engineering, legal and health-care services, management, skilled manufacturing and building trades, and transportation and warehousing. Most districts reported little change in holiday-related hiring relative to last year, though there were some reports of slightly higher rates of seasonal hiring in New York and Chicago.

Districts reporting on business spending noted some improvement overall. Inventories were generally reported to be in line with sales. Richmond and Chicago noted some precautionary inventory building by retailers and manufacturers as insurance against another harsh winter. Reports on capital expenditures, both current and planned, were generally positive. Boston and Cleveland reported that retailers were investing in IT equipment and software to support e-commerce. Manufacturers in several districts were expanding capital budgets both to replace existing equipment and to expand capacity. Freight companies in the Cleveland district were holding to plans to gradually replace an aging fleet and expand capacity. St. Louis and Minneapolis noted an increase in planned capital spending by service-sector firms. Cleveland, Richmond, Chicago, and Dallas cited an increase in mergers and acquisitions.

To read the full report, click here.