Economic Activity Summary

The Tenth District’s economy grew at a moderate pace, but expectations for future growth have softened somewhat due to rising costs, worsening supply chain disruptions and heightened uncertainty. . Several contacts reported changes in consumer spending. Demand for goods has slowed while demand for services has steadily increased, especially in leisure and hospitality. Businesses also reported lower planned spending on more expensive discretionary items as prices continued to rise. Although expected growth has generally slowed, construction activity has grown at a healthy pace and backlogs for future projects have lengthened further. Labor force activity increased moderately with solid job growth and increases in average hours worked. Above-average wage gains aimed at retaining workers have been widely reported. Prices rose at a steady pace. Contacts in the food industry have indicated that consumer food prices are expected to rise further in the coming months. Large retailers and grocers would accept anticipated cost increases from food distributors that will be passed on to consumers through the summer and fall. Restaurant owners also reported raising prices frequently, but with limited ability to fully offset rising costs.

Labor markets

Employment growth continued at a moderate pace, driven by hiring in service sectors. Employment in leisure and hospitality businesses has expanded to near pre-pandemic levels across the district. Hiring in manufacturing and other goods-producing sectors increased slightly, although contacts reported that labor demand and the number of open jobs in these sectors remain high. Employers noted that the average number of hours worked by employees each week has increased moderately and is above pre-pandemic norms. The higher average number of hours worked would be due both to the strong demand for labor and to the lower number of workers employed part-time.

Most contacts reported solid salary growth. Companies have reported that wage increases have been used more frequently to retain workers in recent weeks, compared to those that previously offered bonuses, improved benefits or more flexible hours to attract and retain workers. Additionally, the majority of contacts characterized the size of salary gains aimed at retention as larger than typical increases in recent years.


Prices rose at a steady pace. Recent increases in commodity prices are causing food price pressures that have not been fully passed on to consumers. Large retailers and grocers would accept price increases from food manufacturers with 90-day lags, so further increases in consumer food prices are likely. Some restaurants said they took advantage of digital menus to implement “real-time pricing” on most items, but noted customers were unwilling to fully accept higher prices when dining out. . Contacts at craft breweries have noted that higher wheat costs can lead to losses as consumers turn to lower-cost options.

consumer spending

Consumer spending has continued to grow at a moderate pace over the past few weeks, but several contacts noted shifts in spending habits. Food sales at grocery stores grew faster than at restaurants, but contacts were unsure if this was due to labor shortages at restaurants that continue to restrict opening hours or because rising food prices have led consumers to limit how often they visit restaurants. Other contacts noted that spending on clothing and household appliances was down slightly. Although demand for some goods weakened, spending on leisure travel and other services continued to grow at a healthy pace.

Manufacturing and other business activities

Manufacturing output rose modestly and new product orders continued to rise. Overall trucking and transportation demand remained strong, even as logistics companies reported increased shipping rates in recent weeks. Parts and transportation service companies faced constant difficulties in sourcing needed parts, challenges that were compounded after Russia invaded Ukraine. Contacts said the shutdowns in China would raise input prices and exacerbate supply chain issues, leading some consumer products importers to slightly reduce orders for products for delivery later in the year. Companies have said they expect parts and material supply difficulties to persist for the next 6 to 12 months or more. In the face of labor shortages and shortages of raw materials, most contacts in the manufacturing sector have indicated that they expect production levels to remain at their current high levels over the next few years. next six months.

Several companies reported slower growth in planned capital expenditures for equipment and less inventory accumulation. Retailers have pointed to changing consumer habits as one of the main reasons they will undertake less inventory hoarding over the summer. Prices for transport vehicles and other production equipment on secondary markets have risen rapidly in recent months. Several contacts have indicated that while overall demand remains high, they see an increased risk that demand could fall and their businesses could incur losses on equipment purchases given their current high prices. These headwinds to business investment have emerged recently alongside lingering concerns about rising material costs and rising interest rates. On average, businesses in the district expected no change in inventory building investments over the next six months.

Real estate and construction

Non-residential construction activity has increased at a steady pace in recent months. Expectations for future growth in non-residential construction remained elevated as backlogs were widespread and longer than in recent history. Contacts noted that strong demand conditions are likely to keep wage pressures up in the medium term, as companies are more willing to pay premiums to retain workers despite long backlogs. Additionally, several contacts noted that their customers were more willing to accept price increases due to salary pressures than material costs or overhead, leading some companies to be more likely to raise prices. salaries recently.

Community and regional banking services

Loan demand has remained stable over the past month, although customer appetite for residential mortgages has waned as interest rates have risen. The contacts noted that the demand for commercial and industrial loans remained stable, despite a reported increase in interest rates. Credit quality remained healthy and problem loan levels were low amid stable cash flows. Deposit growth moderated this month as customers sought higher rates and used up excess liquidity. Despite sound credit conditions, a moderate share of contacts’ outlook for loan quality over the next 6 months has deteriorated slightly due to inflationary concerns and supply chain pressures in the consumer lending segments. consumers and small businesses.


Energy activity in the Tenth District has grown at a moderate pace in recent weeks. The number of active rigs increased in the District States in April and early May. Drilled but incomplete wells decreased in the Anadarko and Niobrara areas as additional wells came online. With more active rigs, regional oil production rose slightly over the past month, although productivity from new wells fell slightly. Oil prices are slightly higher than a month ago and drilling remains profitable for most businesses in the district, despite rising costs. Natural gas prices have continued to rise rapidly over the past month. District energy companies reported higher revenues at the start of 2022, as well as higher material and labor costs. Mining jobs, including the oil and gas sector, have picked up in most states in the district in recent months, but have continued to lag behind pre-pandemic levels. Expectations for future production, employment and capital spending remained positive.


Agricultural commodity prices remained at multi-year highs, providing continued tailwinds to the Tenth District’s agricultural economy. Market conditions remained favorable for prices of all major commodities in the region and prices for wheat, corn, soybeans, cotton and livestock increased slightly from the previous month. Farm income and credit conditions also improved further during the last survey period. However, contacts expected conditions to soften slightly in the coming months and many raised concerns about rising input costs, widespread inflationary pressures and severe drought. The western and southern parts of the region have been most exposed to drought, affecting wheat, hay and pasture conditions that could reduce profit opportunities for crop and livestock producers in these regions.


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