Seventh District Update, April 2017

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

  • Overall conditions: Growth in economic activity in the Seventh District continued at a moderate pace in late February and March, and contacts expected activity to continue rising at a moderate pace over the next six to twelve months.
  • Employment and Wages: Employment growth continued at a moderate pace. Wage growth was also moderate, and contacts indicated that the labor market is tight.
  • Prices: Retail prices rose modestly. Input costs were up slightly on balance. Metals prices were little changed, while freight costs increased.
  • Consumer spending: Consumer spending was flat overall, though e-commerce activity grew strongly. District auto sales were slightly higher.
  • Business Spending: Growth in business spending slowed to a modest pace. Retail and manufacturing inventories were generally at desired levels. Current capital expenditures grew at a modest pace.
  • Construction and Real Estate: Residential construction rose moderately, though home sales increased only slightly. Nonresidential construction and commercial real estate activity were up slightly.
  • Manufacturing: Manufacturing production again grew at a moderate pace. Growth was widespread across sectors, and conditions in some long-struggling sectors improved again.
  • Banking and finance: Conditions were little changed. Market participants reported high equity prices and low volatility. Business and consumer loan demand increased slightly.
  • Agriculture: Lower crop prices put further stress on the agricultural sector. Milk and hog prices were lower, while egg and cattle prices moved up.

The Chicago Fed Survey of Business Conditions (CFSBC) Activity Index increased to +13 from +6, suggesting that growth in economic activity stayed at a moderate pace in late February and March. The CFSBC Manufacturing Activity Index rose to +50 from +30 (its highest level since late 2014), while the CFSBC Nonmanufacturing Activity Index remained at –8.

The Midwest Economy Index (MEI) increased to +0.27 in February from +0.01 in January. The relative MEI increased to +0.08 in February from –0.09 in January. February’s value for the relative MEI indicates that Midwest economic growth was slightly higher than what would typically be suggested by the growth rate of the national economy.