The economy expanded at a modest pace in the Federal Reserve System’s 11th District in recent months, but activity in most industries remained below normal levels. That’s one of the key findings reported in the Fed’s latest edition of the Beige Book, published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors, and interviews with key business contacts, economists, market experts and other sources. The Beige Book summarizes this information by district and sector. An overall summary of the 12 district reports is prepared by a designated Federal Reserve Bank on a rotating basis. The latest report was prepared at the Federal Reserve Bank of Philadelphia based on information collected on or before November 20, 2020.

Here are some of the other key findings for the 11th district in the latest edition of the Beige Book:

• Eleventh district recovery in the manufacturing, retail and services sectors slowed.
• The housing market continued to outperform expectations, but office leasing remained weak. Overall loan volume fell, though residential real estate lending continued to be robust.
• Energy activity remained depressed, but showed some signs of improvement.
• Employment rose modestly and several firms said weak demand and uncertainty about the course of the pandemic and/or related regulations were a drag on hiring.
• Input costs rose moderately, while selling prices were flat to up slightly.
• Outlooks were generally positive, but uncertain, with political uncertainty and the trajectory of the pandemic weighing heavily on growth expectations for 2021.

Nationally, most Federal Reserve districts have characterized economic expansion as modest or moderate since the prior Beige Book period. However, four districts described little or no growth, and five narratives noted that activity remained below pre-pandemic levels for at least some sectors. Moreover, Philadelphia and three of the four Midwestern districts observed that activity began to slow in early November as COVID-19 cases surged. Reports tended to indicate higher-than-average growth of manufacturing, distribution and logistics, homebuilding and existing home sales, although not without disruptions. Banking contacts in numerous districts reported some deterioration of loan portfolios, particularly for commercial lending into the retail and leisure and hospitality sectors. An increase in delinquencies in 2021 is more widely anticipated. Most districts reported that firms’ outlooks remained positive; however, optimism has waned—many contacts cited concerns over the recent pandemic wave, mandated restrictions (recent and prospective) and the looming expiration dates for unemployment benefits and for moratoriums on evictions and foreclosures.

Nearly all districts reported that employment rose, but for most, the pace was slow, at best, and the recovery remained incomplete. Firms that were hiring continued to report difficulties in attracting and retaining workers. Many contacts noted that the sharp rise in COVID-19 cases had precipitated more school and plant closings and renewed fears of infection, which have further aggravated labor supply problems, including absenteeism and attrition. Providing for child care and virtual schooling needs was widely cited as a significant and growing issue for the workforce, especially for women—prompting some firms to extend greater accommodations for flexible work schedules. In several districts, firms feared that employment levels would fall over the winter before recovering further. Despite hiring difficulties, firms in most districts reported that wages grew at a slight or modest pace overall. However, many noted greater pressure to raise rates for low-skilled workers, especially in outlying areas. Staffing firms described greater placement success with competitive rates and one firm instituted a minimum wage rate for its industrial clients.

In most districts, firms reported modest to moderate increases of input prices, while the selling prices of final goods rose at a slight to modest pace. Contacts noted that COVID-19 cases have caused ongoing disruptions and delays among short-staffed producers and shippers, raising transportation costs, which are then passed through to buyers.

Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors, plus phone and in-person interviews with and online questionnaires completed by businesses, community contacts, economists, market experts and other sources. The anecdotal information collected in the Beige Book supplements the data and analysis used by Federal Reserve economists and staff to assess economic conditions in the Federal Reserve Districts. This information enables a comparison of economic conditions in different parts of the country, which can be helpful for assessing the outlook for the national economy. The Beige Book also serves as a regular summary of the Federal Reserve System’s efforts to listen to businesses and community organizations.

Click here to access all of this year’s Beige Book editions from the Federal Reserve System.