PROVIDENCE – Economic activity in the region continues to expand at a moderate pace, according to the April 2018 Beige Book, released by the Federal Reserve Wednesday.
Regional revenue and sales were moderately higher than a year earlier at almost all retailers, manufacturers, and software and IT services firms, according to the report. The First District information, compiled by the Federal Reserve Bank of Boston, said that most New England commercial real estate markets recorded positive results and that residential markets continued to see inventory shortages and rising median prices.
The report noted that Providence experienced stable, healthy office leasing activity and modest upward pressure on rents.
Residential real estate sales also increased in Rhode Island, as well as in Maine and Vermont. Median single-family homes and condo prices rose since the last Beige Book as well.
Respondents to the Boston Fed’s queries reported a modest to moderate rise in prices in the region. Retailers and restaurant-industry respondents noted the rising price of food.
For manufacturing, four of seven firms the Federal Bank of Boston talked with reported an uptick in sales, while only one reported a decline.
The report also noted that a, “toy and game manufacturer reported lower sales due to the liquidation of a major toy retailer, which they see as a temporary setback.” A toy manufacturer also expressed concerns about tariffs, as 75 percent of its toys were made in China. Another respondent said that tariffs on aluminum had already affected business.
One manufacturer and one retailer in the area reported a rise in shipping costs which they said was the result of a trucker shortage.
The software and IT services sector continued to be “healthy” in the first quarter. Demand was strong for cloud-based solutions, health care and industrial IT software and enterprise software for building apps.
The First District also reported a continuation of selective net hiring. Wages were also reported to be on the rise, but not by too much. The job market was reported to have remained extremely tight with a shortage of skilled labor. Contacts in the area remained optimistic about activity levels in the coming months.
New tariffs and concerns over widening trade disputes cast a shadow over the overall survey of U.S. businesses even as all 12 regions reported continued robust job growth with few signs of overheating.
“Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture and transportation expressed concern about the newly imposed and/or proposed tariffs,” the Fed said. That concern was later echoed by New York Fed President William Dudley, who told an audience in the Bronx that a tariff war would be a “terrible outcome” which the U.S. couldn’t win.
Chris Bergenheim is the PBN web editor. Bloomberg News contributed to this report.
