Fed's Beige Book: Tight Labor Markets, But Wage Gains Modest
18 January 2018 - 6:30AM
Dow Jones News
By Sharon Nunn and Ben Leubsdorf
WASHINGTON--Economic activity across the U.S. expanded into
2018, with tight labor markets and modest wage and price growth,
according to a Federal Reserve report released Wednesday.
Most of the Fed's 12 regional districts reported modest to
moderate economic gains while the Dallas Fed district saw robust
growth, the Fed said in a roundup of anecdotal information about
regional economic conditions known as the beige book. The latest
report was based on information collected through Jan. 8.
Employment continued to grow at a modest pace, with most
districts reporting labor shortages, which were said to constrain
growth in some cases, the report said.
Wages grew at a modest pace, though a few districts said firms
were raising wages across more industries and positions, the report
said. That could signal that difficulty finding and retaining
employees may be pushing employers to offer more generous pay
packages in response.
Prices grew modestly to moderately in most regions, the report
said. Several districts noted increases in manufacturing,
construction and transportation input costs, while businesses in
some districts said they now have the ability to increase their
selling prices.
Holiday sales were higher than expected for some retailers, and
real-estate activity was constrained by limited housing inventory,
the report said.
Wednesday's beige book report comes after U.S. inflation was
largely subdued in 2017. Key Fed officials think it is poised to
pick up in the new year.
The Labor Department released consumer-price data last week that
showed core prices jumped 0.3% in December from the prior month,
the most in nearly a year. Workers in metro areas with the lowest
unemployment are experiencing some of the strongest wage growth in
the country as the jobless rate hovers at 4.1%, a 17-year low.
Sales at U.S. retailers notched the strongest year for sales growth
since 2014.
Still, December's consumer-price report didn't show prices
rising broadly. Shelter costs accounted for much of last month's
rise in prices, and annual inflation measures remain subdued.
Growth in average hourly earnings has been muted as well.
Fed officials think the strengthening labor market, pay raises
and healthy consumer spending should lead to stronger price
increases. Federal Reserve Bank of New York President William
Dudley said in a recent speech he was more concerned about the
economy overheating than he was about price growth stalling.
Write to Sharon Nunn at sharon.nunn@wsj.com and Ben Leubsdorf at
ben.leubsdorf@wsj.com.
(END) Dow Jones Newswires
January 17, 2018 14:15 ET (19:15 GMT)
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