PROVIDENCE – Economic activity across New England expanded slightly in recent months, but businesses grew more concerned about inflation, energy costs, tariffs and interest rates, according to the Federal Reserve’s latest Beige Book results.
The Boston Fed’s Sept. 2 report, which covers Rhode Island and the rest of the First District, found that bank loan volume increased somewhat, while employment edged higher and manufacturing activity ticked up. The outlook, however, became somewhat more pessimistic.
Banking contacts reported a slight increase in business activity and somewhat higher loan volume, although loan demand ranged from very small declines to moderate increases. Credit standards were mostly unchanged, while loan pricing rose slightly and nonperforming loans were unchanged.
Banks expressed growing uncertainty about inflation, interest rates and tariffs, and how those factors could affect household and business borrowing.
Commercial real estate activity was mostly unchanged, with office leasing showing a slight improvement. Class A office properties saw increased leasing, slightly higher rents and lower vacancy rates, while multifamily leasing softened and construction slowed.
The report also found employment rose slightly overall, with gains among manufacturers, tourism and retail businesses, and non-financial services firms. Hospitals and financial services firms reported flat employment, while higher education saw moderate layoffs.
Inflation remained a concern across industries. Manufacturers cited fuel and energy, raw materials, tariffs and transportation costs, while restaurants reported modest menu-price increases tied to higher food and energy costs.
The Boston Fed said businesses were particularly concerned about elevated energy prices and potential new tariffs, while consumers could face additional pressure from higher energy costs during the coming home-heating season.
Residential real estate activity improved modestly, with closed and pending sales increasing somewhat more than expected for the season. Inventory rose slightly in most New England states, while prices remained stable on average.
The Beige Book, which has been publicly released since 1983, is based on interviews and other anecdotal information collected by the Federal Reserve from businesses, economists, market experts and other sources.
Matthew McNulty is a PBN staff writer. He can be reached at McNulty@PBN.com or on X at @MattMcNultyNYC.
