PROVIDENCE – In the Federal Reserve’s January 2017 Beige Book, the First District, overseen by the Federal Reserve Bank of Boston, reported a modest expansion of business activity in the region while most responding firms retained a positive outlook for their business.
Only the Dallas Federal Reserve district reported robust growth in the Beige Book report, while all 11 other Federal Reserve Bank districts reported “moderate growth.”
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The Boston region reported a tight labor market for most sectors included in the survey, though only modest wage increases, if any. Respondents saw the tight labor market as a major obstacle to expansion in the area.
Retailers in the region reported that prices remained steady in January, while manufacturers reported that input prices increased.
Retail stores reported low to middle single-digit increases in year-over-year sales. Respondents said online sales increased faster than brick-and-mortar sales, and many see online augmentation as an important area of investment going forward.
Restaurant contacts in the area said that business expansion is expected to be subdued in 2018.
Manufacturing respondents said that they did not expect the new tax bill savings would increase investments, but that the savings would mostly benefit shareholders.
Of the nine firms the Boston Fed reached out to in the region, five reported higher year-over-year sales, while two reported flat sales, and two reported declining sales.
A toy manufacturer reported lackluster holiday demand.
No contacts reported major revisions to their capital spending plans.
Commercial real estate ended the calendar year on a high note, according to the Federal Reserve, noting that office rent in Providence started to increase in recent weeks due to a increasingly tight vacancy environment.
Construction costs also were reported to be very high, attributed to a tight market for construction labor. In addition, a Boston-area contact said some apartment construction projects have been delayed due to the labor shortage.
Residential real estate contacts reported moderate growth in sales year over year as well as a growing inventory shortage. The Federal Reserve reported that single-family sales increased in every New England state except Connecticut from November 2016 to November 2017 and that condo sales increased in all six New England states in that time.
Prices for residential real estate also increased in the area as the inventory shortage grows.
Tech companies in the region reported a strong market, with 10-20 percent growth year over year. Companies cited strength in cloud and browser-based offerings. All respondents reported a healthy outlook for 2018.
Chris Bergenheim is the PBN web editor.
