U.S. businesses added jobs across the country and sectors in October and November, though wage gains were muted outside a handful of fields facing a shortage of skilled workers, according to a Federal Reserve survey of regional economic conditions.
The Fed’s latest “beige book” for the period through Nov. 24 was broadly upbeat, marked by expanding economic activity across most of the country and optimism about growth prospects. The collection of anecdotal reports from the 12 Fed districts on hiring, spending and other aspects of the economy comes as central bankers get set for a Dec. 16-17 monetary-policy meeting where they will confront a mix of economic cross-currents, including steady hiring alongside meager wage gains and low inflation.
“The tone of the Beige Book report was cautiously optimistic, suggesting that the Fed continues to see expansion continuing across much of the U.S.,” said Gennadiy Goldberg, U.S. strategist at TD Securities.
A government report due Friday is expected to show nonfarm payrolls grew by a seasonally adjusted 230,000 in November and the unemployment rate held steady at 5.8%, according to economists surveyed by The Wall Street Journal. U.S. employers are on pace to post the best yearly gain in employment since 1999, though many of the new jobs are on lower-paying industries. But economists are forecasting average hourly wages will rise only 0.2% in November from the prior month. In October, hourly earnings for private-sector workers rose 2% compared with a year earlier, not much above the inflation rate.
Wednesday’s Fed report showed varied hiring trends across districts, though employers were widely increasing payrolls. New England firms added software and information-technology jobs; the New York district said financial firms were hiring more workers; Ohio and surrounding areas boosted manufacturing, construction and transportation payrolls; the mid-Atlantic region added to service-sector payrolls; and the Southeast saw “sizable” gains in leisure and hospitality employment.
High demand has led to difficulty finding workers in some fields, including engineering, legal, health-care, management, skilled manufacturing, construction and transportation. Still, overall wage inflation “remained subdued in October and November,” the Fed said.
In one sign that labor markets may be tightening, the Fed’s Atlanta district “noted nascent signs of wage pressures for lower-skilled jobs, whose wages have been flat for several years.”
Alongside hiring, consumer spending appears to be a bright spot, with personal outlays trending higher in most districts, the Fed said. “Some contacts viewed lower gasoline prices as a contributing factor to higher consumer spending, and an early cold spell helped spur sales of winter apparel in several districts,” the Fed said.
The national average retail price of regular gasoline fell to $2.778 a gallon in the week ended Monday, according to the Energy Information Administration, down 49.4 cents from a year earlier and the lowest price since late October 2010.
Those lower gasoline prices also boosted sales of light trucks and SUVs in the Philadelphia, Cleveland and Chicago districts, the Fed said.
To be sure, falling oil prices aren’t good news for everyone. New England chemical manufacturers, which use natural gas to fuel their operations, complained they were losing their competitive edge to foreign companies that rely more heavily on oil for production.
In Texas, demand for oil-field services continued to grow. “Outlooks for next year, though still positive, were less optimistic than in the prior report, and contacts said that budgets were being revised and capital expenditures are expected to decline in response to lower oil prices,” the Fed report said.
Officials in North Dakota said they “expect oil production to continue increasing over the next two years,” despite recent declines in oil prices.