Fed Beige Book: Economic activity increased modestly since early July. Employment rose very slightly overall. Prices increased moderately in eight Districts

Economic Activity Economic activity increased modestly since early July. Ten of the twelve Federal Reserve Districts reported growth in the slight to moderate range; two Districts reported no change. Consumer spending grew slightly on balance; reports reflected both heightened price sensitivity on the one hand and solid high-end purchases on the other. Auto sales were mostly subdued, dampened by downbeat consumer confidence, high fuel prices, and rising financing costs. Tourism activity increased. Notably, airlines reported strong demand despite higher airfares. Manufacturing activity picked up across most Districts, with some highlighting ongoing strength in demand for defense and data center-related orders. Services firms reported slight to modest increases in activity. Financial conditions improved slightly as loan volumes remained solid or increased across most Districts. Residential construction declined while nonresidential construction increased on balance, with some Districts noting a high concentration of activity related to data center projects. Agriculture conditions saw slight improvement but generally remained strained; the livestock sector was strong while conditions were stressed among crop producers. The general outlook for the coming months was positive, but sentiment was mixed across sectors, with contacts reporting heightened uncertainty surrounding the effects of higher energy prices, policy, and international conflict. Prices Prices increased moderately in eight Districts, with two Districts reporting modest increases, one slight increases, and one robust increases. Compared with the previous reporting period, the pace of price increases was the same in eight Districts, decreased in three, and increased in one. Input price pressures were notably elevated in manufacturing and construction across multiple Districts, with widespread reports of price increases for energy, transportation, and raw materials, particularly metals and petrochemicals. Retail and manufacturing contacts continued to note tariff-related impacts in multiple Districts. Firms also broadly reported significant health care and insurance cost pressures. Consumer-facing contacts in a few Districts noted that heightened price sensitivity among customers was putting a limit on their ability to pass through input price increases. Labour Market Employment rose very slightly overall, with three Districts showing modest gains in employment, four reporting slight gains, and five Districts experiencing no change. Eight Districts saw a change in their pace of growth from the previous report, but there was less overall dispersion among Districts. Healthy labor demand was seen most frequently in manufacturing, construction, and some service sectors, while retail and hospitality sectors saw falling labor demand. Labor availability was mixed. Skilled trades and technical workers were difficult to find. Districts also reported both positive and negative effects of artificial intelligence on labor demand. Wage growth was modest to moderate in most Districts. Significant wage increases were most often connected to demand for skilled workers in construction and manufacturing.