The latest edition of the Federal Reserve’s Beige Book has been released. The Book describes economic conditions in each district. Note the highlighted sentence in the following summary: (emphasis is mine)
Employment, Wages, and Prices
Labor market conditions generally improved, although several Districts reported restrained hiring. Many Districts reported a rise in temporary employees, while staffing contacts in the Boston District noted an increase in the placement of permanent and temporary-to-permanent workers. Auto dealers in the Cleveland and Kansas City Districts mentioned plans to hire more workers, and Dallas noted robust hiring activity for experienced corporate, energy, and intellectual property lawyers. Positions in the manufacturing industry increased in the New York, Richmond, and Chicago Districts, although several Chicago manufacturers expressed plans to either invest in more productive capital or adjust the hours of existing employees prior to hiring new workers. St. Louis noted weakness in healthcare services and information technology positions, and Cleveland reported reduced hiring plans from commercial builders and coal operators. Employers in several Districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff. Wage pressures were minimal in most Districts, but contacts reported some upward pressure for several skilled positions as a result of higher demand. Some Districts indicated a shortage of skilled workers such as engineers, truck drivers, software developers, and technical jobs, and Atlanta noted a lack of compliance specialists due to heavier regulations in the healthcare industry.
The majority of Districts reported that price pressures remained modest, but some input costs continued to rise. Cleveland and San Francisco noted an increase in prices for petroleum-based products such as gasoline, fertilizer and certain plastics, and contacts in the Chicago, Minneapolis, and Dallas Districts commented on increased transportation and fuel costs. Builders in the Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts cited an increase in construction material costs, particularly for lumber, drywall, and steel. Retail prices were steady or slightly rising in most Districts, although Richmond noted some slowing since the last report. Chicago retailers reported modest wholesale price increases for a number of products, with larger increases for meat, fresh produce, and leather. Retail grocers in the San Francisco District reported relatively stable prices overall, but weather-related factors boosted fresh produce prices. Increased food costs pushed up restaurant menu prices in the Kansas City District, and restaurant owners expect these costs to remain elevated. Atlanta service industry contacts noted that stronger sales were likely to put upward pressure on prices over the next year. Plans to increase selling prices were limited among most District contacts.
