The Federal Reserve’s Beige Book noted some improvements in economic activity since its last report. With that said, manufacturing activity was mostly mixed. The report said that “more Districts reported that conditions had improved than worsened.” Where production had picked up, the gains were mostly modest. This included data from the Boston, Richmond, Atlanta, St. Louis, Kansas City, and San Francisco regions. Elsewhere, manufacturers experienced weaker levels of activity, including in Dallas, New York, Chicago, and Minneapolis.
In general, the news was generally so-so. As shown in other news surrounding manufacturing, there remains a tremendous level of uncertainty right now, with concerns about the global and domestic economies. This was hinted somewhat in the Beige Book summary. It stated, “Manufacturing contacts in the St. Louis District were tentative about the outlook for 2013, and contacts in the Dallas District noted some uncertainty about the outlook due to the upcoming election.”
These sentiments were also pointed out in the section on consumer spending, which said, “A number of reports noted various factors affecting sales, such as rising gasoline prices, political uncertainty, concerns about the `fiscal cliff’ and weather.” Such comments are woven throughout the District-by-District summaries, as well.
On the jobs front, employment growth remains weak. While some District indicated that “employment levels were flat or up slightly,” other regions have observed some sluggishness in light of overall weaknesses in the marketplace. As with previous reports, the skills gap – something that remains a top concern for manufacturers – was mentioned. The Beige Book added, “Several Districts continued to report that employers were having difficulty filing skilled positions. In response, a few Districts noted that firms were starting to increase training programs to meet their staffing needs.”
Other key points made in the report include modest gains in consumer spending, continued improvements in the residential housing market, and modest inflationary pressures. Some prices were higher, though, most notably for petroleum and feed prices. Some of the latter was related to the drought. Natural gas prices, on the other hand, have drifted lower.
Chad Moutray is chief economist, National Association of Manufacturers.
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