According to the Federal Reserve’s most recent Beige Book release, economic activity expanded at a modest to moderate pace across all 12 Federal Reserve districts in July and August.

Consumer spending increased in most districts, with gains reported for non-auto retail sales and tourism, but mixed results for vehicle sales. Capital spending also increased in several districts. Manufacturing activity expanded modestly on balance. That said, reports were mixed regarding auto production, and contacts in many districts expressed concerns about a prolonged slowdown in the auto industry.

Both residential and commercial construction increased slightly overall. Low inventories of homes for sale continued to weigh on residential real estate activity across the country, while commercial real estate activity increased slightly. Activity in the energy and natural resources sector was generally positive prior to shutdowns arising from Hurricane Harvey.

Agricultural conditions were mixed overall, with drought conditions reported in multiple districts. Business and consumer loan demand grew at a modest pace in most districts, with a number of banks reporting rising competition from both other banks and non-bank lenders.

Employment growth slowed some on balance, ranging from a slight to a modest rate in most districts. Labor markets were widely characterized as tight. There were reports of worker shortages in numerous industries, most notably in manufacturing and construction. Firms in the Atlanta, St. Louis and Minneapolis districts said they had turned down business because they could not find the necessary workers. Many districts indicated that businesses were having difficulty filling openings at all skill levels. In spite of the tight labor market, the majority of districts reported limited wage pressures and modest to moderate wage growth. That said, there were reports from firms in the Dallas and San Francisco districts that labor shortages were pushing up wages.

Prices rose modestly overall across the country. Input and materials costs generally increased, most notably for freight, lumber and steel. In contrast, movements in energy and agricultural commodity prices were mixed. A number of districts indicated that pass-through to downstream prices was limited, with increases in input prices exceeding gains in selling prices. Home prices moved up overall, as low inventories put upward pressure on prices in many regions.

Hurricane Harvey created broad disruptions to economic activity along the Gulf Coast in the Dallas and Atlanta districts, although it was too soon to gauge the full extent of the impact. Many firms and organizations in the affected areas closed due to flooding. A fifth of the oil and natural gas production in the Gulf of Mexico was offline, and many onshore producers in the Eagle Ford region temporarily stopped production. Harvey also affected fuel and petrochemical production, forcing 15 refineries in the region to shut down temporarily and several others to operate at reduced capacity. Some areas experienced gasoline shortages, and supply was expected to remain tight in the Southeastern U.S. because of pipeline disruptions. Contacts in the Richmond district indicated that spot freight prices jumped after the storm, as freight was being redirected around the country. The Port of Charleston expected increased volumes in coming weeks as freight traffic is routed away from the Port of Houston.