The Fed also reports modest or moderate economic growth in the majority of its 12 districts
Federal Reserve officials see the job market tightening across most regions of the U.S., pushing up wages for many workers.
The central bank’s latest report on regional economic conditions, known as the beige book, said Wednesday that “tight labor markets were widely noted in most districts.” Employment and wage growth were described as modest, with pay raises “concentrated in areas of labor tightness.”
In the Atlanta and Richmond districts, firms reported that “high-skill workers in high-demand fields continued to be hard to find, and low-skill jobs were also becoming harder to fill,” according to the report. The Cleveland district saw “higher construction prices to cover rising worker costs resulting from tight labor markets.”
An exception was the oil patch, with “soft labor markets” reported across energy sectors in the Atlanta, Cleveland, Dallas, Kansas City and Minneapolis districts.
More generally, the Fed reported modest or moderate economic growth in the majority of its 12 districts.
“Several districts noted that contacts had generally optimistic outlooks, with firms expecting growth either to continue at its current pace or to increase,” the report said.
The survey collected anecdotal information on economic conditions before May 23, and was released two weeks before the U.S. central bank’s next policy meeting. Officials have signaled that if they see the economy in good shape, they may raise short-term interest rates at the June 14-15 gathering or at their next meeting on July 26-27.
Fed Chairwoman Janet Yellen said last week that “probably in the coming months such a move would be appropriate,” depending on incoming data on the economy.
The Fed kept its benchmark federal-funds rate near zero for seven years, then raised it to a range of 0.25% to 0.5% in December. As of March, a majority of Fed officials anticipated an additional two quarter-percentage-point rate increases by the end of 2016.
The wide-ranging report released Wednesday said consumer spending was “up modestly on balance” in many regions. Reports on the factory economy were mixed, and banks generally saw higher demand for loans. Crop conditions were described as “promising in many districts,” though “low commodity prices continued to put pressure on agricultural incomes.”
The energy sector “remained weak,” but “contacts in Cleveland and Dallas expressed optimism that prices for natural gas and oil, respectively, may have bottomed out,” the report said.
Long-sluggish U.S. inflation remained subdued, with price pressures rising “slightly” across most regions, according to the report.