Beige Book: Full Text

Energy and mining activity were strong and expanding in all of the Districts that reported on these sectors. Cleveland noted increases in oil, gas, and coal extraction since the last report. Minneapolis also reported an increase in energy activity and indicated that almost all mines in the District were operating at full capacity. Drilling activity has increased in the Kansas City District since the last report and was well above the year-ago level. Dallas reported a continued rise in the rig count, to levels above last year, with much of the increase due to drilling for natural gas. San Francisco noted an increase in petroleum production.

Prices and Wages
All Districts reported continuing upward price pressure from elevated input costs, although several noted recent retreats in some commodity and energy prices. Philadelphia reported rising prices for food products, industrial materials, and metals. Cleveland reported continuing increases in raw material costs, and business contacts in San Francisco said upward price pressure remained significant. Chicago, Minneapolis, and Dallas business contacts noted recent declines in commodity and energy prices but said price levels remained high. In Philadelphia, retailers reported rising wholesale costs. Retail price inflation edged up in Richmond. New York and Chicago reported little change in retail prices. Business contacts in Philadelphia, Atlanta, and Dallas indicated that high prices for their inputs were leading them to step up the pass-through of higher costs to their selling prices. Similar reports of the pass-through of costs to prices came from manufacturers in the Boston and New York Districts as well as from shippers in the Cleveland District. Chicago and San Francisco reported that the pass-through of costs to prices was more limited.

Labor market conditions were unchanged or somewhat softer in most Districts compared with the last report. Wage increases were typically characterized as moderate. Boston reported mostly modest wage increases except for greater hikes in salaries at information technology companies. Philadelphia reported moderate wage gains and limited hiring. Cleveland noted wage pressures in the energy sector but not in manufacturing or construction. Atlanta received scattered reports of wage increases, mainly in the professional services and the energy sectors, and more generally in coastal areas undergoing rebuilding after storm damage. Chicago indicated that labor markets have weakened and there was little wage pressure other than for a few skilled trades. Kansas City reported steady wage pressure but noted that there were shortages of qualified workers in the energy sector. Dallas also noted shortages of workers in the energy sector but indicated that wage pressure was mild overall. San Francisco reported some easing in upward wage pressure as firms in that District have been reducing staff counts, although demand remained strong for skilled workers in the resource extraction and information technology industries.

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