Beige Book: Tourism Better Than Expected
Spring brought a lift to home sales, according to the latest Federal Reserve Beige Book report of economic conditions. Economic activity expanded reasonably from mid-May to June, and most business contacts have a positive outlook for growth in the second half of the year. Tariffs continue to cause concern for some sectors.
Residential home sales were lower compared with the previous year but rose during the spring selling season, aided by falling mortgage rates, the report noted. Affordable homes, which are in limited supply, attracted the strongest demand. "Affordability remained a concern as higher construction costs continued to make it difficult for homebuilders to deliver reasonably priced products," the report stated.
Meanwhile, businesses across the Sixth District, which includes the states of Alabama, Georgia, Florida, and parts of Louisiana, Mississippi, and Tennessee, continue to feel the effects of the constricted U.S. labor market. In the latest report, some employers said they have eased policies or standards to be able to hire and keep workers. Contacts noted that companies are continuing to broaden strategies to tap new sources of workers by, for example, reaching out to recent veterans and partnering with other organizations to develop or improve vocational centers. Pay increases ranged from 3 percent to 4 percent, on par with rises reported for the April to early May period, and several employers raised wages to $15 an hour, the report stated.
Here is a look at other sectors highlighted in the Beige Book report:
Tourism: The number of visitors to Georgia, Florida, and Louisiana was greater than expected at the start of the summer season. Business contacts expressed concerns over the potential effects of geopolitical uncertainties on travel to the United States.
Prices: Input costs continued to increase, and many business contacts said they expect this trend to endure. Respondents to the Atlanta Fed’s Business Inflation Expectations survey indicated they expect unit costs to rise 2 percent during the next year.
Manufacturing: Business contacts said orders and production levels rose in the latest period, although the pace slowed slightly from April to early May. The outlook for production levels fell—just over one-third of contacts expect higher output over the next six months, the report noted.