The Federal Reserve’s report on Wednesday said that “overall economic activity continued to expand at a modest to moderate pace in June and early July.”
Retail sales rose slightly in all reporting districts, except Boston and Cleveland, where they were flat, and New York, where sales softened, the Fed said. Where there was an increase in activity, most of that strength was from auto sales.
The majority of the districts said they saw modest increases in retail spending on a year-over-year basis, but many reported slower growth in recent months when compared with earlier in the year.
While sales of big-ticket household goods were strong in the Richmond, Chicago, Kansas City and Dallas districts, they were flat for home furnishings and major appliances in the San Francisco district. Regarding luxury retailers, firms in the Philadelphia, Atlanta and Chicago districts said sales remained strong, but those in the Kansas City and San Francisco districts reported that demand had softened. Those in the Cleveland district noted that luxury goods sales had slowed.
Manufacturing activity continued to expand slowly in most districts. Cleveland, Atlanta, Chicago and Kansas City saw “slight increases in production levels.” In contrast, Philadelphia and Richmond reported declines in shipments and orders.
As for the jobs front, the Fed said employment levels “grew at a tepid pace for most districts” since the last report. In the Boston, Cleveland, Atlanta, Chicago and Dallas districts, employment levels were flat to up slightly, while Kansas City said employers were reluctant to increase wages or hire full-time staff until economic uncertainty diminishes. At least two districts had decent reports: a Richmond employment agency contact noted an “increase in temporary employment turning into permanent positions” since the Fed’s June report, while Atlanta said some smaller chain stores with low price points were expanding and hiring at a significant pace.
Price inflation seemed modest across most areas of the country, the Fed said. Retailers and manufacturers in the Richmond, Chicago and Dallas districts saw a decline in cotton prices. The decrease in energy prices was mentioned in the Atlanta, Chicago and Dallas reports as contributing to lower cost expectations.