Federal Reserve sees stronger economy
April 19, 2017
• Improvements seen coast to coast
• The West continues to have a tight labor market
Economic activity in the West continued to expand at a moderate pace from mid-February through March, the Federal Reserve Bank in San Francisco says Wednesday in the Beige Book report.
The labor market continued to tighten, wage pressures picked up further, and inflation increased modestly. There was record-high demand, as well as wage increases, for engineers with experience in cloud computing.
“Contacts also noted that technology and non-technology sectors are increasingly competing for workers with the same advanced skills,” the bank says.
Labor shortages in the construction industry persisted, driving up wages for skilled workers. Demand for labor in the agriculture industry continued to outpace supply, putting upward pressure on wages. One contact noted that growers continue to automate production where possible.
Not every type of job was “safe,” however. Contacts in the pharmaceutical manufacturing industry reported relocating workers and operations to lower-cost locales outside of the West.
Sales of retail goods improved moderately, and growth in the consumer and business services sectors remained strong.
Manufacturing activity changed little on balance in the West, and conditions in the agriculture sector improved modestly.
There was also continued strong activity in residential real estate markets, while conditions in the commercial sector slowed to a modest pace in some regions, the bank’s report says. Lending activity grew at a moderate pace.
Nationally, economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate, the Fed says in the Beige Book report.
In addition, the pickup was evident to varying degrees across economic sectors. Manufacturing continued to expand at a modest to moderate pace, although growth in freight shipments slowed slightly. Consumer spending varied as reports of stronger light vehicle sales were accompanied by somewhat softer readings in non-auto retail spending.
Tourism and travel activity generally picked up.
On balance, reports suggested that residential construction growth accelerated somewhat even as growth in home sales slowed, in part due to a lack of inventory. Nonresidential construction remained strong, but became more mixed in some regions; leasing activity generally improved at a more modest pace.
More than half of the reports suggested that loan volumes increased, while only one said they were down modestly. Non-financial services generally continued to expand steadily.
Energy-related businesses noted improved conditions while agricultural conditions varied.
Businesses generally expected labor demand to increase moderately in the next six months, and looked for modest wage growth.
Businesses mostly expected mild to moderate price growth to persist in the next several months.