Fed says Fifth District economy growing moderately
Companies see increased demand but continuing labor shortages
, the Federal Reserve’s Fifth District (including Virginia, North Carolina, South Carolina, West Virginia and Maryland) has been seeing moderate economic growth in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, which was released Wednesday.
The Beige Book is published eight times per year and is based on anecdotal information gathered from the 12 Federal Reserve Banks about economic conditions in their districts.
The Fifth District saw growth in manufacturing, district ports, trucking companies and retailers, especially of home goods and clothing, according to the report.
Employment rose modestly, but firms continued to struggle to fill open positions. Some employers told the Fed that they had been investing in automation or using more part-time workers as a result of staffing shortages. Wages rose modestly, with entry-level wage increases creating pressure to raise existing workers’ wages. Employers also are using nonwage incentives such as referral bonuses.
Price growth increased slightly from an elevated rate. On average, service sector firms saw a 4% increase in prices received compared to a year ago, according to the Federal Reserve Bank of Richmond. Firms across sectors reported increases in input costs but said they were only passing a portion of those to customers.
Manufacturers reported increased demand, but many were unable to meet it because of shortages in labor, raw materials and equipment, according to the Fed. Additionally, transportation issues delayed orders.
Fifth District ports handled record volumes of imports — mainly of retail goods — and exports — largely of agriculture products. Ports began storing imports because of trucking and rail disruptions. Trucking companies experienced a high volume of retail and industrial goods but were unable to meet demand because of labor and equipment shortages.
Travel and tourism showed growth, but labor shortages continued to cause hotels and restaurants to limit capacity or services. Some beach-area hotels had record-breaking occupancy, however.
The average selling prices of listings in residential real estate increased as the average days homes stayed on the market decreased. Commercial real estate leasing picked up and office vacancies declined as more companies returned to onsite work, according to the report.
Banks reported modest loan growth, solid credit quality and historically low default rates. Temporary labor and supply shortages contributed to soft business loan demand and low utilization rates on commercial lines of credit, the Fed reported. Commercial real estate and mortgage lending continued to grow modestly.
bank and branch directors, as well as interviews with and online questionnaires completed by business contacts, economists, market experts and other sources. The next report will be released on Sept. 8.