Economic activity in the South grew at a modest rate in recent weeks, according to the Federal Reserve’s latest Beige Book report. While consumer spending has seen an uptick, businesses are navigating challenges from hurricane impacts and labor shortages.
Consumer spending in the Fifth District picked up at a modest pace, with retailers reporting increased sales and higher shopper traffic. Some retailers observed that while transaction volumes were flat compared to last year, revenues increased due to higher prices. This trend reflects a broader pattern of consumers paying more for goods and services despite unchanged sales volumes.
- Spending at restaurants rebounded after a dip during late summer, contributing to the overall boost in consumer activity.
- Hotel and tourism contacts noted an increase in business travel, though leisure travel slowed down. One hotel representative cited the active hurricane season as a factor behind the dip in leisure trips.
Labor Market: Employment in the Fifth District rose slightly, with many firms reporting a better pool of job candidates and moderate wage growth. However, challenges remain, particularly in hiring specialized workers.
- A chartered bus company reported better availability of drivers but had to “dramatically” increase wages to attract skilled mechanics. Similarly, a lighting manufacturer raised wages by $2 per hour for production workers.
- Conversely, a chemical manufacturer struggled with a lack of qualified applicants and turned to outside agencies for recruitment.
Price Growth: The report highlighted that price growth has continued to ease in recent weeks, although year-over-year increases remained in the modest to moderate range. This cooling of price pressures may provide some relief to businesses and consumers adjusting to higher costs over the past year.
Real Estate: The residential real estate market experienced a slight downtick in recent weeks, which agents largely attributed to the typical fall slowdown and anticipation of potential interest rate cuts. Despite this, online buyer interest remained high, though fewer potential buyers visited properties in person. An agent in Virginia noted an increase in housing inventory, particularly among fixer-uppers and less-than-ideal properties.
- The report also mentioned ongoing uncertainties related to recent policy changes by the National Association of Realtors, which continue to impact market dynamics across the District.
Bottom Line: Despite the setbacks from Hurricane Helene and ongoing labor market challenges, the Fifth District’s economic activity remains resilient heading into the fourth quarter. Business conditions are solid, with modest growth across key sectors, even as some areas focus on disaster recovery and wait for broader economic relief.
