PROVIDENCE – In the Federal Reserve Beige Book released Wednesday, economic activity in the First District, presented by the Federal Reserve Bank of Boston, was reported to have continued to expand at a moderate pace since the previous Beige Book in April.
Respondents in the district reported that many firms are hiring and that the labor market remained tight. There was also reports of modest wage growth in the region.
Prices in the area were said to have experienced modest increases, and thus far seem unaffected by tariffs, despite concerns from Federal Reserve contacts.
The report noted that, in Providence, office leasing activity was steady amid falling vacancy rates and rising rents. Industrial leasing was noted to have been hampered by a low vacancy rate.
The median price of residential properties continued to increase in the area. Some contacts in the region expressed concerns about the area’s rapid price appreciation of real estate. A contact in the report also said of the Rhode Island residential-real-estate market, “Competition is fierce and buyers are finding themselves in a race to the finish line. Inventory is so tight that properties are being sold as soon as they go on the market, often in multiple bid situations.”
Manufacturers in the area reported higher sales, except one, a toy manufacturer, which said it had been impacted by the closure of a major toy retailer (Hasbro is the likely manufacturer, while Toys R Us is likely the retailer in question). Manufacturers expressed concerns of a trade war but had not seen tariffs impact sales as of yet. Manufacturers also reported rising costs attributed to a rise in raw material prices and a shortage of trucking capacity. Respondents said that they were only able to pass through a portion of costs to the consumer, resulting in reduced margins.
The retail outlook in the area was positive. The tourism industry in the area reported labor shortages, and increased competition from short-term rentals and online platforms. Despite this, the outlook for the industry remained positive following a strong June performance. Contacts were worried that trade tensions could lead to less international tourism to the United States.
Software and information technology services in the region reported steady expansion as well, with rising revenues. The report noted that area firms were concerned about the effects of acquiring and retaining talent in the tech industry and “broader shocks” to the economy due to change related to trade, tariffs, immigration, war and the stock market.
Nationally, 10 of 12 districts reported economic expansion in the July Beige Book, with rising employment. Strained trucking capacity was reported to be a concern in at least six districts.
The Beige Book measured economic activity up to July 9.
Chris Bergenheim is the PBN web editor.
