Fed Reports Improved Labor Market Conditions With Moderate Employment Growth


Economic activity continued to expand in all 12 districts during the reporting period spanning late May, June, and early July, according to the Federal Reserve Board’s latest report on regional economies (known as the “beige book”). Overall consumer spending increased in every district. Manufacturing activity also expanded in all 12 districts. Labor market conditions improved, with all districts reporting slight to moderate employment growth. Conditions in the staffing services industry across the districts were unchanged or improved modestly compared with the previous survey period. Several districts continue to report difficulty finding skilled workers, causing upward wage pressure for those positions.


Recent business performance in the district varied both across and within sectors, but data point to slow economic growth overall. The retail sector reported slight declines in sales or modest increases. Consulting contacts reported moderate to strong growth. Output prices were mostly stable in the manufacturing sector, although some firms raised their prices. While manufacturers report no commodity price pressures, some retail contacts noted price increases for some inputs. Some firms in the district are engaged in significant hiring, and others are doing little to no hiring, largely in line with business performance. Wages at business services firms are up 2% to 5% over last year, while benefits increased at a slightly higher pace.

New York

Economic growth in the district continued at a moderate pace since the previous report. Labor market conditions continued to improve: manufacturers indicated that they have stepped up hiring activity, and service-sector firms continued to expand staff at a moderate pace. A growing proportion of manufacturers added workers in recent weeks, and, as had been the case for a number of months, somewhat more service firms expanded rather than reduced employment. Moreover, considerably more contacts in both sectors plan to expand rather than shrink their workforces in the second half of the year. A major New York City staffing firm reported that hiring activity continued to advance gradually-hiring in the financial sector slowed slightly, but there continued to be strong demand for information technology workers and growing demand for human resource professionals.


Aggregate business activity in the district grew at a modest pace during the reporting period, with few changes from the prior period. Nonauto retail sales and staffing services continued to rise at a modest pace, and there are signs that momentum is building for stronger growth in the remainder of the year. Staffing contacts were more upbeat, as their activity included many new hires for permanent placements. About one-third of all firms reported plans to increase employment and to make additional capital expenditures over the next six months. Overall, contacts reported that hiring occurs when it’s necessary for replacement and for some incremental growth, but firms are much more cautious about hiring to expand capacity.


The district’s economy expanded at a modest pace during the reporting period. Demand for construction services increased slightly compared to earlier in the second quarter. Most builders are fairly optimistic in their outlook, but they remain concerned about labor issues and tight margins. Builders reported that a movement of trade workers among competing firms has picked up. They attributed the job changes to offers of higher wages, especially from oil and gas companies. A need for automobile service technicians is growing, but dealers are having difficulty finding qualified workers. Staffing firms provided mixed reports. Job openings were found mainly in energy, healthcare, and IT. Hiring of production workers continued to pick up, but the net gain in payrolls was small.


The district’s economy grew modestly since the previous report. District employment also increased modestly, with strong demand for skilled and semiskilled labor and limited wage pressures. Contacts noted growth in jobs across many sectors in the Asheville region and in the Research Triangle of North Carolina. In Virginia, skilled manufacturing and construction workers, welders, truck drivers, and engineers were in short supply. In contrast, a contact at a staffing firm in Maryland said that demand weakened slightly. Manufacturing employment rose at a slightly slower pace while average wage growth eased and the workweek lengthened. Employment in the service sector increased at a faster pace, and wages rose more quickly at nonretail service firms. Wage growth slowed at retail establishments.


Reports from district business contacts suggest that economic activity expanded modestly during the reporting period. The outlook among businesses remained positive; most anticipate higher growth in the near term. Payrolls across the district continued to expand, but at a slow pace. Aggregate payroll growth was dragged down by notable payroll losses in Florida, but manufacturing employment increased across the district. Contacts reported continued difficulty filling positions in trucking, construction, and for specific IT positions. Staffing firms noted that job placements were up modestly and the flow from temporary to permanent employment rose slightly.


Growth in economic activity remained moderate during the reporting period. Contacts maintained their optimistic outlook for the rest of the year. Hiring picked up, and hiring expectations continued to increase; the gains were more pronounced in the service sector than in manufacturing. Demand remained strong for skilled workers, particularly for professional and technical occupations and for skilled manufacturing and building trades. A number of manufacturing contacts reported investing in labor-saving equipment or employee training because of the challenge in finding skilled workers. In contrast, a construction contact noted that builders are unwilling to invest in training workers until demand is stronger. Wage pressures increased, primarily for skilled workers.

St. Louis

Economic activity in the district increased modestly since the previous report. Recent reports of planned activity in manufacturing and services have been positive on net. Business contacts in the district indicated that wage and employment growth has been modest and prices have increased slightly. Contacts in the manufacturing sector throughout the district cited lack of skilled blue-collar and technical workers as a concern, in some cases saying it is limiting business expansion. Several contacts noted that wages are rising moderately for positions where the employment supply is limited. Certain new hiring reports were positive, noting that a mall that will employ more than 1,000 employees is set to open and that an ecommerce retailer is filling more than 500 full-time jobs at its distribution center to meet growing demand.


The district’s economy grew moderately since the previous report. Increased activity was noted in several sectors, including commercial construction, professional services, manufacturing, and energy and mining. Decreased activity was noted in residential construction. Hiring outpaced layoffs in most areas of the district. A number of business contacts noted increased difficulty finding qualified employees for open positions. Wage increases were generally modest.

Kansas City

The district’s economy expanded modestly during the reporting period, and most contacts anticipated stronger growth in the months ahead. District manufacturing activity continued to expand. Growth in new manufacturing orders and employment moderated, while order backlogs rose. Expectations for future factory activity remained steady at generally solid levels. Wage pressures were modest in most industries, with the exception of manufacturing. Almost half of manufacturing contacts reported raising wages more than normal to attract or retain some workers. Some contacts continued to report a short supply of workers, particularly for driving, construction, high tech, and skilled positions.


The economy in the district grew at a moderate pace over the six-week reporting period. Employment levels held steady or increased modestly, and some contacts noted continued difficulty in finding skilled workers. Staffing firms noted a slight increase in headcount. Energy contacts continued to report a very tight labor market, and respondents in the food manufacturing and retail industries reported difficulty finding workers in oil-producing regions. Shortages of labor in the housing sector continued, although one contact noted slight easing. Reports of upward wage pressures persisted. Wage pressures remained strongest for skilled workers in the energy and construction sectors, but there were reports of modest upward pressures in some other industries, including airlines, high tech, fabricated metals, primary metals and transportation equipment manufacturing.

San Francisco

Economic activity in the district continued to improve moderately during the reporting period. Most contacts observed continued wage increases of 2% to 3% per year, but there were much stronger wage gains reported in fast-growing regions for certain specialized positions for which the supply of qualified workers is scarce. In addition, some businesses felt pressure to offer slightly higher starting salaries in an effort to attract talent from competitors. Several business contacts pointed to rising minimum wages as a source of upward wage pressure. Residential construction activity picked up, although various contacts reported that activity has been constrained due to shortages of available lots, construction materials, and workers.


About the American Staffing Association

The American Staffing Association is the voice of the U.S. staffing, recruiting, and workforce solutions industry. ASA and its state affiliates advance the interests of the industry across all sectors through advocacy, research, education, and the promotion of high standards of legal, ethical, and professional practices. For more information about ASA, visit americanstaffing.net.


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