Seventh District Update, March 2017

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

  • Overall conditions: Growth in economic activity in the Seventh District picked up to a moderate pace in January and early February, and contacts expected activity to continue rising at a moderate pace over the next six to twelve months.
  • Employment and Wages: Employment growth picked up to a moderate pace, and contacts continued to indicate that the labor market is tight. Wage growth was also moderate.
  • Prices: Prices again rose modestly. Retail prices increased slightly, and contacts reported moderate increases in materials prices.
  • Consumer spending: Growth in consumer spending remained modest. Light vehicle sales slowed somewhat, but the pace was still strong.
  • Business Spending: Growth in business spending remained moderate. Retail and manufacturing inventories were generally at desired levels. Current capital expenditures grew at a moderate pace.
  • Construction and Real Estate: Construction and real estate activity increased slightly. Residential and nonresidential building increased slightly, and homes sales increased modestly. The pace of commercial real estate activity picked up some and remained robust.
  • Manufacturing: Manufacturing production again grew at a moderate pace. Growth was widespread across sectors, and even picked up for some long-struggling sectors.
  • Banking and finance: Conditions were little changed. Market participants reported steady growth in equity prices and low volatility. Loan demand from middle-market businesses increased slightly and consumer loan demand was little changed.
  • Agriculture: Prospects for farm incomes improved slightly. Futures prices moved up enough so that – given expected costs – some corn and most soybean operations could lock in small profits for 2017.

The Chicago Fed Survey of Business Conditions (CFSBC) Activity Index increased to +4 from –13, suggesting that growth in economic activity picked up to a moderate pace in January and early February. The CFSBC Manufacturing Activity Index rose to +31 from +12, and the CFSBC Nonmanufacturing Activity Index moved up to –11 from –27.