Many US Fed districts' outlook markedly worsens: Beige Book

Non-auto consumer spending was lower overall and commercial real estate activity expanded slightly. Loan demand was flat to modestly higher, on net.

Transportation activity expanded modestly, on balance. Manufacturing was mixed, but two-thirds of districts said activity was little changed or had declined, a Fed press release noted.

The Beige Book is published eight times per year gathering anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key business contacts, economists, market experts and other sources.

The energy sector experienced modest growth. Agricultural conditions were fairly stable across multiple districts.

The outlook in several districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.

Employment was little changed to up slightly in most districts, with one district reporting a modest increase, four reporting a slight increase, four reporting no change and three reporting a slight decline. This is a slight deterioration from the previous report with a few more districts reporting declines.

Hiring was generally slower for consumer-facing firms than for business-to-business firms. Several districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions.

In addition, there were scattered reports of firms preparing for layoffs. Most districts and markets reported an improvement in overall labor availability, although there were some reports of constraints on labour supply resulting from shifting immigration policies in certain sectors and regions.

Wages generally grew at a modest pace, as wage growth slowed from the previous report in multiple districts.

Prices increased across aistricts, with six characterising price growth as modest and six characterising it as moderate, similar to the previous report.

Most districts noted that firms expected elevated input cost growth resulting from tariffs. Many firms have already received notices from suppliers that costs would be increasing.

Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers.

However, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.

ALCHEMPro News Desk (DS)