Eight years into a gradual post-recession economic expansion, the Federal Reserve's new Beige Book report on economic conditions in the Southeast sounds familiar. Economic activity continued to expand modestly from mid-May through June, according to reports gathered from businesspeople across the Sixth Federal Reserve District.
Companies still report serious challenges in finding and keeping quality workers. That is particularly true for high-skill jobs, but increasingly even lower-skill positions are difficult to fill, contacts reported.
Firms are trying various tactics to develop and retain talent. For example, some are crafting partnerships with schools, military bases, and workforce development agencies. Some are expanding training and apprenticeship programs, enticing retirees to return to work, and enhancing compensation and benefits packages. Reports of these sorts of staffing difficulties have surfaced in the past several Beige Books.
Still, contacts reported that, on the whole, wage pressures remained "mostly stable."
The Beige Book noted some concerns. Retail contacts reported softer-than-expected sales in May. Automobile dealers likewise said sales momentum had slowed over the past year. Tourism and hospitality operators also reported that business in the early summer was not as strong as anticipated. Meanwhile, gaming revenues at Mississippi casinos declined compared to the same time last year.
Even though tourism contacts registered some worries, hotel occupancy and revenue per available room were better than they were a year ago except in South Florida.
From other sectors:
- Housing industry contacts reported modest but steady growth. Most residential real estate brokers and home builders figure sales will hold steady or increase a bit over the next three months compared to the same time a year ago.
- Many commercial real estate contacts cited better demand that has produced rent growth and increased absorption of empty space. But they continued to caution that improvement varied by metropolitan area, submarket, and property type.
- Improving energy efficiency blunted sales growth of gas to residential and commercial customers. Reports indicated that natural gas demand was below normal and inventories remained above average levels. Contacts reported that Gulf Coast oil refineries were busier than ever and crude oil inventories remained higher than average.
- Manufacturing contacts continued to report growth. However, just under half of firms said they expect higher production over the next six months.
- On the farm, conditions were mixed depending on location. Drought-stricken areas got needed rainfall, while Tropical Storm Cindy dumped considerable rain on Gulf Coast areas where crops were already too wet. The June forecast for Florida oranges was up slightly from May yet remained considerably lower than last season's production.
The Federal Reserve publishes the Beige Book before each meeting of the policy-setting Federal Open Market Committee. The committee meets next on July 25 and 26.
Read the Beige Book to learn more about current economic conditions in the Southeast and the nation.
Charles Davidson
Staff writer for Economy Matters