LAST UPDATE: 21:28
The economy in most U.S. regions expanded at a moderate pace from mid-May to June, with several regions still pointing to growing signs of slowing demand and five of them expressing concerns about an increased risk of a recession, the Federal Reserve said in latest Beige Book report, on current economic conditions in the United States, released on Wednesday.
In particular, the report said, most US regions reported that consumer spending has moderated as higher food and gasoline prices cut into household incomes.
On a business-by-business basis, new car sales remained sluggish in most regions due to continued low inventories. The hospitality and travel industry, however, is seeing healthy activity, with some regions seeing an increase in business and group travel.
Manufacturing activity, however, showed a mixed picture, with many US regions reporting that supply chain problems and labor shortages continued to hamper output. Non-financial services companies showed steady to slightly higher demand, and some companies reported revenue that beat expectations.
Housing demand weakened markedly as growing affordability concerns contributed to unseasonal declines in sales, resulting in slightly higher inventories and more moderate appreciation. The commercial real estate sector also registered a slowdown.
Also, although demand for energy products remained strong and oil and gas activity strengthened, production remained limited due to available labor and supply chain issues for critical components.
Finally, as in the previous report, the outlook for future economic growth was mostly negative, with several regions predicting further weakening of demand over the next six to twelve months.
Labor market
On the labor market, most US regions continued to report modest employment growth, with conditions generally remaining tight. However, almost all regions recorded a modest improvement in the available labor force amid weaker demand for workers, particularly in the manufacturing and construction sectors.
At the same time, most districts indicated that they continue to see wage growth. In particular, 1/3 of regions indicated that employers are considering or have given bonuses to their workers to offset the increased costs brought about by inflation, with 1/4 of regions expecting further wage increases in the next six months.
Inflation
Meanwhile, significant price increases were recorded across US regions, although the majority reported a hold in prices of construction inputs such as lumber and steel.
Increases in the cost of food, commodities and energy (especially fuel) remained significant, although there were several reports that price inflation for these categories had slowed compared to recent months, but remained at historically high levels.
Most regions even expect inflationary pressures to continue at least until the end of the year.
Source: Capital
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