US consumer spending declines further: Fed Beige Book

Some retailers noted a negative impact on consumer purchases from the government shutdown. Manufacturing activity increased somewhat, according to most revenue districts, though tariffs and tariff uncertainty remained a headwind.

Economic activity was little changed since the previous such report, according to most of the 12 districts, though two districts noted a modest decline and one reported modest growth.

Conditions in the agriculture and energy sectors were largely stable, though some contacts cited challenges from the low-price environment for oil and for some crops.

Outlooks were largely unchanged overall. Some contacts noted an increased risk of slower activity in coming months, while some optimism was noted among manufacturers, a Fed release said.

Employment declined slightly over the current period with around half of the districts noting weaker labour demand. Despite an uptick in layoff announcements, more districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring and attrition than through layoffs.

In addition, several employers adjusted hours worked to accommodate higher or lower than expected business volume instead of adjusting the number of employees.

A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring.

Across most districts, employers had an easier time finding workers, but there were still pockets of difficulty related to certain skilled positions and fewer immigrant workers.

Wages generally grew at a modest pace; however, some sectors like manufacturing saw more moderate wage pressure due to a tighter labour supply.

Prices rose moderately during the reporting period. Input cost pressures were widespread in manufacturing and retail, largely reflecting tariff-induced increases.

Prices declined for certain materials, which firms attributed to sluggish demand, deferred tariff implementation, or reduced tariff rates.

Looking ahead, contacts largely anticipated upward cost pressures to persist, but plans to raise prices in the near term were mixed.

ALCHEMPro News Desk (DS)