Overall Economic Activity:
- Overall economic activity experienced a slight increase since late May.
- Five districts reported slight/modest growth, five saw no change, and two noted slight/modest declines.
- Consumer spending patterns were mixed, with growth seen in services but a shift away from discretionary spending in some areas.
- Tourism and travel activities were strong, predicting a busy summer season.
- Auto sales remained constant or showed moderate growth in most districts.
- Manufacturing activity increased in half of the districts, while the other half saw a decline.
- Transportation activity was mostly down or flat, attributed to high inventory levels and labor shortages.
- Banking conditions remained subdued, with a continuing decrease in lending activity.
- Despite higher mortgage rates, demand for residential real estate held steady, but sales were limited by low inventories.
- Both residential and commercial construction activity was slightly down.
- Geographically mixed agricultural conditions softened overall, with an expectation for more softening throughout 2023.
- Energy sector activity decreased.
- The economic forecast for the upcoming months anticipates slow growth.
Conclusion: A lot of mixed in overall economic activity.
Employment:
- Employment increased modestly across most Districts.
- Labor demand remained healthy, with some reports of hiring becoming more targeted and selective.
- Employers continued to face challenges in finding workers, particularly in healthcare, transportation, hospitality, and for high-skilled positions.
- Many Districts noted improved labor availability, with some employers finding it easier to hire than previously.
- High turnover rates experienced in recent years appear to be returning to pre-pandemic norms.
- Wage growth continued but at a more moderate pace, with multiple Districts reporting wage increases returning to or nearing pre-pandemic levels.
Conclusion: Labor remains strong but off the boil
Prices:
- Prices increased overall at a modest pace, with several Districts observing a slowdown in the pace of increase.
- Consumer prices generally increased, although reports varied on the ability of firms to pass along input cost increases.
- Some Districts reported reluctance from firms to raise prices due to heightened consumer price sensitivity.
- Other Districts noted that solid demand enabled firms to maintain margins despite rising costs.
- Input cost pressures remained high for service firms, but notably eased in the manufacturing sector.
- Freight rates and the prices of many construction inputs continued to decrease, while concrete prices increased.
- Over the next several months, price expectations were generally stable or lower.
Conclusion: A tilt to the downside
Looking at the districts:
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Boston: Business activity expanded slightly. Employment gains were small, prices were stable, and consumer spending increased marginally.
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New York: Regional economic activity stabilized after a period of weakness. Labor market conditions were strong, and inflationary pressures eased noticeably.
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Philadelphia: Business activity continued to decline slightly. Employment fell slightly despite improved labor availability.
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Cleveland: The economy was generally stable. High interest rates continued to constrain households’ big-ticket goods purchases and businesses’ project plans.
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Richmond: The regional economy grew slightly. Consumer spending on retail goods, as well as on travel and tourism, picked up modestly.
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Atlanta: Economic activity grew slowly. Labor markets became less tight, and wage pressures eased.
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Chicago: Economic activity was little changed. Employment increased moderately, and consumer spending was flat.
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St. Louis: Economic conditions remained unchanged. Employers continued to struggle finding skilled workers, but turnover slowed and wage pressures lessened.
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Minneapolis: Economic activity in the region grew slightly. Employment rose moderately as labor availability improved.
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Kansas City: Total economic activity changed little during June. Hiring was flat, expected employment levels at most businesses continued to point downward.
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Dallas: Modest expansion continued buoyed by gains in the service sector and single-family housing. Employment rose moderately, and wage growth remained high.
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San Francisco: Economic activity softened modestly. Labor availability improved across sectors. Wage growth slowed notably while price increases persisted.