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January 2018 Federal Reserve Board's Beige Book



DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on January 17, 2018. It "... was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before January 8, 2018. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials."

The excepts were chosen for their relevancy to the recruitment, staffing, employment services, and IT services sectors. The inclusion or exclusion of any sections or wording, the inclusion of each District's service areas (note that sections of some states are divided and end up in more than Fed District), as well as emphasizing certain sections with special typefaces (e.g. bold-faced) was done solely at the discretion of steinbergemploymentresearch.com. The full report can be found at the Federal Reserve Board.

The next Beige Book is expected to be released on March 7, 2018, at which time we will offer our next summation. If you want to receive notification when it is posted, please fill-in the form above.

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First District -- Boston Fifth District -- Richmond Ninth District -- Minneapolis
Second District -- New York Sixth District -- Atlanta Tenth District -- Kansas City
Third District -- Philadelphia Seventh District -- Chicago Eleventh District -- Dallas
Fourth District -- Cleveland Eight District -- St. Louis Twelfth District -- San Francisco

 


 

First District  --  Boston (CT, MA, ME, NH, RI & VT)  return to District list

Business activity expanded modestly in the First District as 2017 came to a close. Most contacted retailers, manufacturers, and software and information technology (IT) services firms saw revenues increase, although a minority reported flat to slight declines in revenues or sales from a year earlier. Among responding retailers, online sales performed better than in-store sales. Revenue increases among software and IT services firms were strong, ranging from 10 percent to 20 percent year over year. ... Labor markets continued to be tight and difficulty in hiring workers has constrained expansion for some firms. Few contacts mentioned price changes. Most responding firms in the region retained a positive outlook for their business.

Employment and Wages

Contacts in many sectors cited tight labor markets, but only modest wage increases, if any. A local retailer said 2018 merit raises would be on the order of 2.5 to 3.0 percent. A restaurant contact said labor shortages continued to constrain the industry. Only one manufacturing contact reported significant increases in employment and many said labor markets were very tight. One manufacturer was three months behind schedule in trying to hire workers for a new plant. Another industrial firm had 20 unfilled openings in a plant with 100 employees and said they were making up for it with significant overtime. When asked why they didn't increase wages to fill the openings, the contact said they would have to pay all the existing workers more which would be uneconomic. Another industrial-firm contact said that when a worker leaves, they typically end up paying the replacement 10 percent more than the departing worker. Software and IT services contacts have kept headcount close to flat in recent months, though they plan to increase staff by up to 10 percent during 2018. These contacts noted that shortages for technical roles such as engineers were getting worse.

Manufacturing and Related Services

Of nine firms contacted this quarter, five reported higher sales versus the year-earlier period, two reported flat sales and two lower. Of the firms with improved sales, most said it was a continuation of recent trends. A manufacturer of industrial parts said that sales had finally recovered to their 2014 peak; the fall in oil prices that started in 2014 had led to a big slowdown in sales to extractive industries. To date, most of their recent growth comes from replacement parts. ...

In general, manufacturing respondents continued to have a broadly positive outlook. No contacts expected the just-passed tax reform package to have a big effect on investment. Two said that tax reform would mainly benefit shareholders. One suggested that the reduced deductibility of state and local taxes would lead them to increase pay in high-tax states to compensate workers. A firm that provides support to financial services firms expected an increase in demand for tax-related services as firms try to manage the changes in the code.

Software and Information Technology Services

Tech contacts in the First District are doing well on the whole, with strong demand across the board and revenue growth between 10 percent and 21 percent year-over-year, excepting one enterprise software firm which has been struggling of late. Even that firm has a healthy outlook. All respondents identified software and technology as a strong space to be in, and anticipate growth from 5 percent to 20 percent over the foreseeable future. Multiple contacts noted particular strength in recent cloud and browser-based offerings, as companies continued to embrace newer technologies. Multiple contacts also indicated that the new tax legislation would help their business, though only as a one-time boost.

 

Second District  --  New York (CT, NJ & NY)  return to District list

Economic activity in the Second District continued to grow at a moderate pace in the latest reporting period, and the labor market has remained tight. Input prices increased at a slightly faster pace, while selling prices continued to rise modestly. Fairly robust growth was reported in most service and distribution industries. Manufacturers reported that growth has slowed somewhat from its rapid pace during last summer and fall but remains fairly robust. Manufacturers also plan to increase capital spending substantially in 2018. Consumer spending has generally been flat. ...

Employment and Wages

The labor market has been steady and tight. Employment agencies generally report that labor market conditions have been strong, though one agency noted that the market is hard to gauge this early in the year--particularly due to the recent snowstorm. Businesses across all industries have had increasing trouble finding qualified workers, with some retailers struggling to find adequate seasonal staff. One large retail chain noted that they hired more holiday season workers than in 2016.

Business contacts generally indicated that they continue to increase staffing levels modestly, though firms in the manufacturing and information sectors have scaled back hiring. However, hiring plans for the months ahead have grown increasingly strong.

Wages have accelerated modestly, and a growing proportion of firms said they expect to hike wages in the months ahead. The minimum wage across New York State rose by 7 to 18 percent, varying by location. An employment agency contact noted that recent New York City legislation restricting employers from asking about job candidates' salary histories may boost salary offers overall.

Manufacturing and Distribution

Both manufacturers and wholesalers reported that activity grew at a fairly strong pace, though not as briskly as in the prior reporting period. Transportation firms, on the other hand, noted that activity picked up noticeably, growing at a robust pace. Looking ahead, manufacturers continued to express widespread optimism about the near-term outlook and plan to substantially ramp up capital spending in 2018. Wholesale distributors have become increasingly sanguine, while transportation firms remained moderately optimistic.

Services

Service-sector firms noted continued modest growth. Contacts in leisure & hospitality and professional & business services continued to report fairly widespread increases in activity, while information industry firms indicated some weakening in activity. Education & health service firms noted that activity picked up modestly after declining for a number of months. Service sector businesses were generally optimistic about the near-term outlook--particularly those in business & professional services and leisure & hospitality. ...

 

Third District  --  Philadelphia (DE, PA & NJ)  return to District list

Aggregate business activity in the Third District continued at a modest pace of growth during the current Beige Book period. Nonauto retail sales, tourist activity, manufacturing, and nonfinancial services grew modestly, while new home construction and existing home sales appeared to grow slightly. ... employment, wages, and prices continued to grow modestly. Most firms anticipated continued growth over the next six months--a somewhat higher percentage than during the prior period.

Employment and Wages

Employment continued to grow at a modest pace during the current Beige Book period, although reports of net additions to staff edged lower for both manufacturing and nonmanufacturing firms. Average hours worked edged lower over the period for manufacturing firms but rose among nonmanufacturers.

On balance, wage growth held steady at a modest pace, although the percentage of nonmanufacturing firms reporting increases slipped below 40 percent. One manufacturing firm noted that significant annual increases in health-care costs precluded the firm's ability to offer wage increases; several other firms cited difficulties with rising benefit costs. A few contacts commented on the recent news that numerous large firms had announced plans to offer bonuses this year and/or to raise their minimum wage rates.

In one of the District's tighter labor markets, a staffing firm reported that wages had risen 4 percent over the year, while various firms from that same market noted that they were very busy, but the lack of qualified labor was constraining their growth. In the Poconos, the tight labor market was impacting firms' ability to fill low-skilled jobs and middle management positions.

Manufacturing

On balance, manufacturing activity continued at a modest pace of growth, with a few signs of slight improvement. The percentage of firms reporting increases in new orders rose slightly compared with the prior period but changed little for shipments.

The makers of paper products, chemicals, primary metal products, industrial machinery, and electronic equipment continued to note gains in new orders and shipments; firms in the lumber and fabricated metal sectors reported declines in activity.

A majority of manufacturing contacts continued to expect general activity to increase over the next six months. The percentage of firms expecting future increases for general activity rose above 60 percent. By comparison, the percentage of firms expecting increases in future capital expenditures and future employment held mostly steady at levels just above 40 percent. However, a somewhat higher percentage of firms expected decreases in future employment compared with the prior period.

Nonfinancial Services

On balance, service-sector firms have continued to report modest growth in general activity since the prior Beige Book period. The percentage of firms reporting a higher level of sales has increased since the last period; however, the percentage reporting greater orders has declined. Expectations about future growth have remained positive, with well over half of the firms anticipating increased activity, marking little change since the prior Beige Book period.

 

Fourth District  --  Cleveland (KY, OH, PA & WV)  return to District list

Business activity in the Fourth District grew at a moderate pace since our last report. Labor markets continued to tighten. Challenges in attracting and retaining qualified workers, especially for low-skills jobs, contributed to wage pressures. Manufacturers and professional services providers experienced pushback when attempting to increase their selling prices. Retailers reported higher-than-expected sales for the early part of the holiday shopping season. Manufacturing output grew, albeit at a slow pace. Freight transport and nonfinancial services firms saw moderate to strong gains in activity. ...

Employment and Wages

District labor markets continued to tighten during the survey period. The strongest activity was found in the construction and nonfinancial services sectors. After softening late in the second quarter, hiring by manufacturers has been trending slowly higher. A large majority of contacts reported they are replacing departed workers; the share of firms creating new jobs was stable. The main labor-related challenge reported was attracting and retaining workers for low-skills and, to a lesser extent, middle-skills jobs. In response, firms are raising wages and creating career paths within these job categories. A professional services contact reported boosting wages for select low-skills jobs by up to 20 percent, while a fast food executive said that wages at her restaurants are now up to $11 per hour. Higher labor costs were difficult to pass through to customers because of competitive markets. Turnover is reportedly much less of an issue in high-skills and STEM jobs.

Manufacturing

Manufacturing output continued to strengthen, albeit at a slow pace. Several contacts cited an improving economy as the primary reason for new orders, while others pointed to ongoing strength in the construction and motor vehicle industries and stability in the energy sector. Contacts linked to the petrochemical industry reported a residual boost in activity resulting from hurricane-related damage. Steel producers saw rising activity, which they generally credited to increased manufacturing output. One steel producer noted that some of his customers are concerned that the domestic economy may be reaching the peak of the current business cycle, resulting in a dampening in capital investment. Year-to-date production through November at District auto assembly plants declined about 20 percent when compared to that of the same period a year earlier. The decrease can be attributed to retooling for a next-generation sport utility vehicle and cutbacks in small passenger car production. Contacts reported a pull back on spending for plant expansions and product development after spending rose during most of the second half of 2017. Our contacts' outlook calls for a moderate pickup in the pace of growth in the near term.

Nonfinancial Services

... Professional services firms experienced moderate gains in activity. The strongest gains were reported by firms that assist customers in applying digital technologies to both production and back-office activities.

 

Fifth District  --  Richmond (MD, NC, SC, VA & WV)  return to District list

Since our previous report, the Fifth District economy expanded at a moderate pace. Manufacturing activity picked up modestly, overall. Trucking firms continued to report robust growth compared to the prior period, while district ports experienced a mild seasonal slowdown, but strong year-over-year increases. Retailers saw a moderate increase in sales, with many stores citing better than expected holiday shopping this year. ... Nonfinancial services firms reported moderate revenue growth. Labor demand increased modestly and firms had difficulties finding workers across a broad range of occupations. Wage pressures broadened moderately and many employers planned to raise starting wages. On balance, prices increased at a modest pace.

Employment and Wages

On balance, the demand for labor increased modestly in recent weeks, but several firms indicated that hiring was constrained by the tight labor market. Some of the most hard-to-fill positions were restaurant workers and chefs, construction workers and managers, nurses, retail workers, administrative assistants, software engineers, electricians, and truck drivers. A trucking company said that the labor shortage left many trucks sitting idle and was putting upward pressure on driver wages. In general, wage pressures broadened moderately as more businesses reported increasing starting wages. Many also planned to raise wages for existing employees, particularly for high performers.

Manufacturing

District manufacturing activity increased at a modest pace, overall. A West Virginia rubber manufacturer said that sales picked up in recent weeks after a somewhat weak year, and they were optimistic that growth would continue in the coming months. Packaging and metal manufacturers reported moderate growth while a Virginia food company noted a slight uptick in sales. In contrast, a North Carolina machinery manufacturer reported one of the worst months on record, and a South Carolina paper product manufacturer reported a continued decline in business. According to our survey, vendor lead times increased on average, and many firms reported longer delivery times despite higher delivery costs.

Non-Financial Services

Nonfinancial services firms continued to report moderate growth in revenues. The most upbeat reports came from professional and business services, administrative and support services, and legal services. A law firm in West Virginia said they had the best quarter since the recession. An administrative support firm said that clients were willing to pay higher fees for temporary staff, which was helping to boost their profits. ...

 

Sixth District  --  Atlanta (AL, FL, GA, LA, MS & TN)  return to District list

Sixth District business contacts remained largely positive with most noting that economic conditions were improving at a modest pace over the reporting period. Most contacts expect continued slow and steady growth in the near-term. Business contacts experienced on-going labor market tightness but limited wage growth. Non-labor input costs increased slightly from the previous report. Contacts reported that holiday retail sales exceeded expectations, but auto sales softened. Reports from the hospitality sector were positive, reflecting strong advance bookings. ... Manufacturers indicated that new orders picked up since the previous report.

Employment and Wages

Job growth across the District returned to a steady pace in November, following large hurricane-related losses in September. In a survey of business contacts, a little over half indicated that they expect their firms to increase employment over the next 12 months, while about one-third responded that they expect employment to remain unchanged. The remaining respondents expect some staff reductions over the next 12 months. Contacts indicated the most important factor for adding to payrolls was an expectation for high sales growth in their business while the top constraints to hiring were a desire to keep operating costs low and an inability to find workers with requisite skills. A number of contacts continued to describe challenges filling and retaining highly-skilled/specialized and low-skilled/entry-level positions. To find and retain workers, firms continued to broaden their geographical search for candidates and develop or expand training programs.

On balance, contacts noted steady but modest wage growth; however, compensation negotiations were more prevalent among highly-skilled/specialized workers.

Manufacturing

Manufacturing contacts reported increases in overall business activity. New orders continued to rise, while production levels at District firms remained somewhat subdued. Most contacts indicated that hiring activity continued to increase at a healthy pace and suggested that supplier delivery times were getting somewhat longer. ..

 

Seventh District  --  Chicago (IA, IL, IN, MI & WI)  return to District list

Growth in economic activity in the Seventh District picked up to a moderate pace in late November and December and contacts expected growth to continue at that pace over the next 6 to 12 months. Employment, consumer spending, and manufacturing production increased moderately, construction and real estate activity rose slightly, and business spending was unchanged. Wages increased modestly, prices rose slightly, and financial conditions improved some. ...

Employment and Wages

Employment increased at a moderate pace over the reporting period, and contacts expected it to continue at that rate over the next 6 to 12 months. Contacts continued to indicate that the labor market was tight, with difficulties filling positions at all skill levels. Hiring was focused on professional and technical, production, and sales workers. There was a notable increase in the number of firms looking to hire professional and technical workers, and a staffing firm that primarily supplies manufacturers with production workers reported an increase in billable hours for the first time in many months. Wage increases were spread across most occupation categories. Wage growth remained modest overall, though the number of contacts reporting increases for production workers continued to climb and a number of manufacturers reported raising their starting wages. In addition, most firms reported higher benefits costs.

Business Spending

Business spending was little changed in late November and December. Retail contacts indicated that inventories were generally at comfortable levels. ... Manufacturing inventories were also generally at comfortable levels, with the exception of steel service centers, where inventories remained below historical norms. Capital spending was little changed, though contacts expected spending to grow at a moderate pace over the next 6 to 12 months. Outlays were primarily for replacing industrial and IT equipment and for renovating structures. ...

Almost all contacts thought that the Federal tax bill would have a positive impact on their firms. Most respondents expected to spread the tax savings across outlays for capital, labor, debt repayment, and profit distributions to owners.

Manufacturing

Growth in manufacturing production picked up to a moderate rate in late November and December. ...

 

Eighth District  --  St. Louis (AR, KY, IL, IN, MO, MS & TN)  return to District list

Reports from contacts indicate that economic conditions have continued to improve at a modest pace since our previous report. Labor market conditions remain tight, the pace of hiring remains slow, while wage growth has been moderate. Reports on consumer spending were positive. Residential real estate conditions have improved modestly after a few months of sluggish home sales. ...

Employment and Wages

Anecdotal evidence suggests little change in employment since the previous report. Contacts continued to report difficulties finding experienced or qualified employees. Construction contacts in Louisville and Little Rock reported labor shortages, while manufacturing contacts reported difficulties hiring for both skilled and unskilled positions. Labor demand in Missouri was particularly high in healthcare services, leisure and hospitality, retail, and wholesale trade.

Contacts reported moderate growth in wages since the previous report. A contact in Louisville reported increasing starting salaries multiple times a year to attract new hires, as well as increasing wages to retain skilled employees in information technology. Construction and manufacturing contacts across the District reported increasing wages to attract new employees.

Manufacturing

Manufacturing activity has increased modestly since our previous report. Overall manufacturing activity was stronger than one month earlier in both Arkansas and Missouri, although the pace of growth slowed in Missouri. Production increased in both states, but at a slower rate than previously. Several companies in the District reported new capital expenditure and facility expansion plans, including firms that manufacture food and beverage products, chemical products, and transportation equipment. ... Most manufacturing contacts expect conditions in 2018 to be similar to those in 2017, although a contact in the plastic products manufacturing industry expects a decline in business in 2018, citing increased foreign competition.

Nonfinancial Services

Activity in the service sector has expanded modestly since the previous report. Firms that provide transportation, logistics, and information technology services announced plans to increase employment, open new facilities, and renovate existing facilities. Demand for commercial trucking remains elevated because of Hurricane Harvey relief efforts, exacerbating a shortage of drivers. Reports from healthcare firms remain mixed. One major healthcare employer is cutting employees to improve operational management, while other healthcare providers began capital expansions.

 

Ninth District  --  Minneapolis (MI, MN, MT, ND, SD & WI)  return to District list

Ninth District economic activity increased moderately overall since the last report. Employment declined slightly, but labor demand remained strong. Wage and price pressures were both moderate. The District economy showed growth in consumer spending, services, commercial construction, residential real estate, and manufacturing. ...

Employment and Wages

Employment declined slightly since the last report, as seasonally adjusted November employment fell in Minnesota, Montana, and North Dakota compared with October. However, labor markets nonetheless appeared healthy, with labor demand still quite strong and a notable lack of large layoff announcements. A staffing agency with offices in Minnesota and Wisconsin noted a "continued strong uptick in hiring." Several large Minnesota employers announced expanded seasonal hiring during the holidays. A December poll of South Dakota retailers found that almost half were hiring despite flat sales compared with a year ago; a similar share said the labor market was very tight and getting tighter. According to a state source, Minneapolis-St. Paul had more job openings than at any time since at least 2001. Limited labor supply also continued to hamper hiring. "Every business we talk to, they can't hire enough workers," said a western Wisconsin banker. ...  A manufacturing firm in southeastern Minnesota said it consistently had 40 openings to fill, and was losing out on available work because there were "not [enough] people to take the jobs." A central Minnesota finance company announced layoffs of 130 workers, said a local source, and other "companies were already discussing hiring the potential labor."

Wages rose moderately since the last report. More than half of the respondents to the Minneapolis Fed's annual survey of District manufacturers saw wages rise by more than 3 percent over the past year, and similar growth was expected in the coming year. A transportation union in Minneapolis-St. Paul agreed to a three-year contract with annual 2.5 percent increases. A transportation executive in Montana said wages were rising between 2 percent and 3 percent. Contacts in rural areas of the Dakotas said wage growth was more sluggish. Retailers in South Dakota reported wage increases of about 3 percent in the past year, with slightly lower increases expected in the coming year.

Services

Activity in the professional services industry increased since the last report. Contacts in the accounting and financial services sectors reported a year-end rush for tax planning services in response to new federal tax legislation. Several new retail technology startups have opened or relocated to Minneapolis-St. Paul recently. A commercial bank was expanding its presence in Minneapolis-St. Paul.

Manufacturing

District manufacturing activity increased since the last report. Respondents to the Minneapolis Fed's annual manufacturing survey indicated growth in orders, production, investment, and productivity over the past year, with expectations for more growth in 2018. An index of manufacturing conditions indicated increased activity in December compared with a month earlier in Minnesota and the Dakotas. A producer of wind turbine blades announced that a plant that was scheduled to shut down would instead stay open at least through the end of this year to accommodate new orders. An electronics manufacturer and a producer of aerial lifts announced expansions at facilities in Minnesota.

 

Tenth District  --  Kansas City (CO, NM, MO, NE, OK & WY)  return to District list

Economic activity and employment in the Tenth District increased at a modest pace in late November and December, and most contacts expected growth in the coming months. Labor shortages were reported by the majority of contacts in the services sector, while wages rose modestly across most sectors. Retail sales grew sharply since the previous survey, but auto sales, restaurant sales, and tourism activity declined moderately. Overall activity and capital spending plans within the manufacturing sector rose moderately. Contacts in the transportation and professional and high-tech sectors noted growth in sales, while wholesale trade firms reported a sharp decline in overall activity...

Employment and Wages

Employment across the District rose modestly in late November and December, and employee hours increased slightly. Respondents in the retail trade, wholesale trade, transportation, professional services, real estate, health services, manufacturing, and energy sectors noted an increase in both employment and employee hours compared to the previous survey period, while contacts in the auto sales, restaurant, and tourism sectors reported a decline. Employment was expected to increase over the next six months in all sectors except for retail trade which was projected to be flat. Additionally, respondents anticipated an increase in employee hours in most sectors.

The majority of respondents in the services sector reported labor shortages, including shortages for commercial drivers, skilled technicians, and service workers. Wages rose modestly in most sectors, and strong wage growth was anticipated in the coming months.

Manufacturing and Other Business Activity

Manufacturing activity expanded at a moderate pace in late November and December, while other business activity was mixed. Manufacturers reported sustained growth in production, particularly for food, aircraft, and electronics products. Shipments, new orders, and order backlogs grew at a modest pace since the previous survey period, and overall activity was higher than a year ago. Manufacturers' capital spending plans rose moderately, and firms' expectations for future activity remained favorable.

Outside of manufacturing, transportation firms reported strong sales increases and professional and high-tech contacts noted moderate sales growth. In contrast, activity among wholesale trade firms declined sharply. However, all firms expected a strong improvement in sales in the next six months. Professional, high-tech, and transportation firms reported moderate growth in capital spending plans, while wholesale trade firms anticipated spending to be relatively flat heading forward.

 

Eleventh District  --  Dallas (LA, NM & TX)  return to District list

The Eleventh District economy expanded at a robust pace over the past six weeks. A broad-based acceleration in growth was seen across the manufacturing, retail, nonfinancial services and energy sectors. ... Hiring picked up, and wage and price pressures remained elevated. Outlooks improved, although some uncertainty remained ... .

Employment and Wages

Overall employment growth picked up from six weeks ago, and upward wage pressure persisted at slightly elevated levels. Hiring rose at a markedly faster pace in manufacturing and retail, and at a somewhat faster pace in the service sector, led by health, transportation, and hospitality firms. In the energy sector, hiring slowed among exploration and production firms in the fourth quarter 2017 but ramped up notably among services firms. Labor market tightness continued in most industries and across a wide range of positions, with several contacts saying difficulty finding workers was constraining growth to some extent. Numerous contacts cited rising labor costs, with some noting acceleration over the past couple of months.

Manufacturing

Expansion in the manufacturing sector accelerated further at yearend 2017. Contacts reported stronger growth in both demand and output, particularly among high tech and transportation equipment manufacturing. Chemical production has also been very robust, and contacts along the border continued to see strong maquiladora activity. ...  Optimism in firms' outlooks picked up notably, with some manufacturers indicating the tax bill may be a tailwind for manufacturing going forward. However, difficulty hiring remains a headwind, and uncertainty about NAFTA remains.

Nonfinancial Services

Nonfinancial services activity picked up pace over the reporting period, ending 2017 with fairly robust growth. A sharp rise in revenue growth among leisure and hospitality firms was a boon to the service sector, while relatively slow growth among administrative and support services firms was a drag. However, staffing services companies reported broad-based demand growth, particularly in the manufacturing and health sectors. ... Overall, outlooks were more optimistic, although uncertainty remained--particularly surrounding trade negotiations and government regulations. A number of contacts expect the new tax bill to boost activity in 2018.

 

Twelfth District  --  San Francisco (AK, AZ, CA, HI, ID, NV, OR, UT, & WA)  return to District list

Economic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-November through early January. Overall price inflation edged down. Conditions in the labor market continued to tighten, and upward wage pressures increased. Sales of retail goods picked up noticeably during the holiday season, and growth in consumer and business services remained strong. Conditions in the manufacturing sector remained solid, and activity in the agriculture sector improved modestly. ...

Employment and Wages

Conditions in the labor market continued to tighten, with wage pressures increasing as contacts noted shortages of qualified labor in various sectors. Widespread reports of continued shortages of skilled trade and construction workers resulted in a notable increase in wage pressures for those occupations. In Eastern Oregon, shortages of workers in both agriculture and manufacturing sectors pushed up wages significantly. Businesses in the banking sector reported an increase in the duration of job vacancies and continued difficulty finding qualified applicants. Rising labor costs in the District prompted some businesses to open new operations in cheaper locales. Contacts across the District noted that planned minimum wage increases to go into effect in 2018 are likely to affect their labor costs at all compensation levels.

Manufacturing

Conditions in the manufacturing sector remained solid. Contacts in Eastern Washington reported energy usage by major manufacturers in metals production and aerospace was consistent with a modest growth in output. Production of steel and manufactured metals picked up further due in part to a reduction in overseas competition. However, capacity utilization rates in the steel sector ended the year below long-run levels. Semiconductor production moderated as contacts cited uncertainty over government policy.

 

2017, Bruce Steinberg.  All rights reserved.

last updated January 17, 2018