Beige Book: Economy expanding, but at ‘somewhat slower pace’

BOSTON – The economy is expanding, but at a “somewhat slower pace” than just six weeks ago, according to the Federal Reserve’s latest Beige Book report on economic activity.

The report said software and information technology services firms cite mostly flat revenue year over year, while staffing firms are continuing robust growth, with year-over-year increases between 10 and 25 percent.

“Labor demand remains very strong, and contacts note that an increased number of companies are relying on staffing firms for recruitment. Labor supply is reportedly tighter than in August, with shortages of skilled ambulatory nurses, medical assistants, administrative assistants, skilled trades workers, IT programmers, legal professionals and executive assistants,” the report said.

It also said that commercial real estate contacts are reporting that the market is steady, while residential real estate contacts say prices continue to increase in the region.
According to First District contacts, office leasing tapered off in Providence “somewhat” in recent weeks from the robust pace observed in late summer and early fall, while it remained strong in Boston and light in Hartford, Conn.
In Providence, outside investors show interest in the city’s commercial real estate assets, but that interest has not translated into sales, according to the report, which said investor demand for commercial property in greater Boston is still considered “very strong.”
The outlook remains “modestly optimistic” for Providence, and a contact in that city reiterated his forecast that the city could begin to see increases in office rents late next year.
As for residential real estate, Rhode Island single-family home sales experienced the 10th consecutive month of increases, the longest period of growth in three years. In Boston, single-family sales reached the second-highest volume ever recorded during September. Condominiums sales were strong throughout the district, with sales increasing year-over-year in every state except Connecticut, the report said.
Other report highlights:

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  • The strong dollar is muting sales performance, according to retail contacts with international operations.
  • Some firms say they are providing larger wage increases than in the past few years to most, or to specific employees, to retain existing workers.
  • Half of respondents said they are holding employment steady, while others plan to do modest hiring. A few are cutting jobs.
  • Boston-area business travel remains strong, but leisure travel dipped slightly.
  • Boston-area hotels performed a “bit under forecast” between July and September, as hotel occupancy rates between August and September hovered around 90 percent – a rate strong by historical standards, but not as strong as the same period last year.
  • Out of 11 responding manufacturing firms, only two, a maker of semiconductors and a manufacturer of motors and other items for industrial uses, saw falling sales.

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