Economic activity has seen a marginal uptick since late May. Among the surveyed Districts, five reported modest to slight growth, five experienced no significant changes, and two indicated slight or modest declines.
Consumer spending reports showed a mix of results; while consumer services saw overall growth, certain retailers observed a shift away from discretionary spending. The tourism and travel sectors showed strength, with expectations of a busy summer season from hospitality contacts. Auto sales remained stable or saw moderate growth in the majority of Districts. Manufacturing activity experienced a slight increase in half of the surveyed Districts, while the other half reported a decline. Transportation activity either decreased or remained flat in most reporting Districts, attributed to reduced demand due to high inventory levels and ongoing challenges from labor shortages. Banking conditions were mostly restrained, as lending activity continued to weaken.
Even with the rise in mortgage rates, the demand for residential real estate remained stable, although limited inventory hindered sales. Construction activity for both residential and commercial units slightly decreased overall. Agricultural conditions varied across regions but showed a slight overall softening, with some contacts anticipating further softening throughout the remainder of 2023. Energy activity saw a decrease. In general, economic expectations for the upcoming months continued to indicate slow growth.
During this period, there was a moderate increase in employment, with the majority of Districts witnessing some job growth. Labor demand remained robust, but certain contacts mentioned that hiring practices were becoming more focused and discerning.
The challenge of finding workers persisted for employers, especially in health care, transportation, and hospitality, as well as for high-skilled positions overall. However, several Districts noted an improvement in labor availability, and some employers found it comparatively easier to hire compared to previous times.
Employers noted that the abnormally high turnover rates seen in recent years are now trending back toward pre-pandemic levels. While wages continued to increase, the pace was more moderate. Contacts from various Districts reported that wage hikes were either returning to or approaching the levels observed before the pandemic.