Fed's Beige Book: Overall economic activity was little changed in recent weeks. Nine Districts reported either no change or only a slight change in activity this period while three indicated modest growth.

Economic Activity

• Overall economic activity was little changed in recent weeks.


• Nine Districts reported either no change or only a slight change in activity this period while three indicated modest growth.


• Expectations for future growth were mostly unchanged as well; however, two Districts saw outlooks deteriorate.


• Consumer spending was generally seen as flat to down slightly amid continued reports of moderate price growth.


• Auto sales remained steady overall, with only a couple of Districts reporting improved sales and inventory levels.


• Travel and tourism picked up across much of the country this period. Manufacturing activity was widely reported as flat or down even as supply chains continued to improve.


• Transportation and freight volumes were also flat to down, according to several Districts.


• On balance, residential real estate sales and new construction activity softened modestly.


• Nonresidential construction was little changed while sales and leasing activity was generally flat to down.


• Lending volumes and loan demand generally declined across consumer and business loan types. 


• Several Districts noted that banks tightened lending standards amid increased uncertainty and concerns about liquidity. 


• The majority of Districts reported steady to increasing demand and sales for nonfinancial services.


• Agriculture conditions were mostly unchanged in recent weeks while some softening was reported in energy markets.

Labor Markets

• Employment growth moderated somewhat this period as several Districts reported a slower pace of growth than in recent Beige Book reports.


• A small number of firms reported mass layoffs, and those were centered at a subset of the largest companies.


• Some other firms opted to allow for natural attrition to occur, and to hire only for critically important roles.


• Contacts reported the labor market becoming less tight as several Districts noted increases to the labor supply.


• Additionally, firms benefited from better employee retention, which allowed them to hire for open roles while not constantly trying to back-fill positions.


• Wages have shown some moderation but remain elevated.


• Several Districts reported declining needs for off-cycle wage increases compared to last year.

Prices

• Overall price levels rose moderately during this reporting period, though the rate of price increases appeared to be slowing.


• Contacts noted modest-to-sharp declines in the prices of nonlabour inputs and significantly lower freight costs in recent weeks.


• Nevertheless, producer prices for finished goods rose modestly this period, albeit at a slightly slower pace.


• Selling price pressures eased broadly in manufacturing and services sectors.


• Consumer prices generally increased due to still-elevated demand as well as higher inventory and labor costs.


• Prices for homes and rents leveled out in most Districts but remained at near record highs.


• Contacts expected further relief from input cost pressures but anticipated changing their prices more frequently compared to previous years.

Reaction details (19:07)

• T-Note (M3) futures rose modestly from 114-02+ to highs of 114-06 over the space of a few minutes, before paring the move just over five minutes later; the five minute window after saw 25k+ traded, the largest 5m window of the day.


• E-mini S&P (M3) futures rose from 4182 to 4187.50 in an immediate reaction before reversing to 4179 within five minutes.

19 Apr 2023 - 19:01- Fixed IncomeData- Source: Fed