PROVIDENCE – Economic activity in New England expanded at a modest to moderate pace in August and September, according to the Federal Reserve’s Beige Book survey report released Wednesday.
The report, which surveys business contacts around the country, said that wages in New England increased moderately as firms competed over scarce workers. Business contacts reported a tight labor market across all sectors, which in part drove up starting wages, signing bonuses and an increase in the willingness to train new workers.
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Despite this, contacts in the region were said to be cautiously optimistic about economic activity in the region going forward.
Some manufacturing contacts in the region also reported higher labor turnover, with some attributing it to vaccine mandates, while others attributed it to the lagged effects of the pandemic.
Businesses in the manufacturing sector reported mixed revenue performance, but most said sales were higher than one year prior. The outlook in the sector was said to have remained positive despite some contacts reporting ongoing risks due to supply-chain issues.
Prices in the region were said to have remained flat for software and information technology firms, but rose for manufacturer and retail contacts. Manufacturers reported input prices rising as much as 10-30% year over year. A majority of those contacts also reported increased output prices as a result.
Retailers in the region reported a continued strength in sales in the third quarter.
Software and IT companies in New England reported higher sales, with many seeing a continued boost from firms’ increased reliance on virtual business formats due to the pandemic.
The commercial real estate market activity in New England was said to have been mixed but relatively unchanged in recent weeks. The industrial and life science market in the region continued to be strong, while office leasing was flat at a “sluggish pace.” In addition, contacts expected companies to consider downsizing their office footprint as they pursue hybrid work models. Office rents in the region were said to be mostly flat and vacancy rates were either flat or increased slightly.
Retail leasing in Rhode Island was said to have been comparatively strong for the region, along with Maine. Connecticut and Boston retail leasing activity was said to have been week in the two-month window.
The residential real estate market continued to be tight in the region, with low inventories. In addition, single-family home sales were down year over year in Rhode Island and Massachusetts. Contacts said that the slowdown in sales was noteworthy, and the decline was attributed to a combination of homebuyers’ frustration over high prices and low inventory.
