DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on December 2, 2009. It was "Prepared at the Federal Reserve Bank of New York and based on information collected on or before November 20, 2009. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials."

The excepts were chosen for their relevancy to the recruitment, staffing, employment services and IT services sectors. The inclusion or exclusion of any sections or wording, the inclusion of each District's service areas (note that sections of some states are divided and end up in more than Fed District), as well as emphasizing certain sections with special typefaces (e.g. bold-faced) was done solely at the discretion of brucesteinberg.net. The full report can be found at the Federal Reserve Board.

First District -- Boston (CT, MA, ME, NH, RI & VT)

Software and Information Technology Services

First District contacts in software and information technology services report mixed results. Activity remains slow for some firms, while it has improved considerably for others. One contact notes that increased interest among prospective clients is not translating to revenue growth, with companies still hesitant to finalize deals. By contrast, another contact reports strong demand across multiple product lines and various geographies. While some New England software and IT services firms continue to reduce headcounts, others plan to expand their workforces. Those firms that implemented wage freezes this year anticipate lifting them in 2010, with raises expected to be in the 3-percent to 5-percent range. Despite differences in the level of business, the sentiment among all respondents is at least slightly more optimistic than it was last quarter. Although contacts worry about the sustainability of recent improvements, they generally expect the positive momentum to continue into next year. Expectations range from gradual upticks over the course of 2010 to high levels of growth from the start of the year.

Staffing Services

New England staffing contacts report upticks in activity through the end of the third quarter and into the fourth. While year-over-year revenues are still down--from 10 percent to 60 percent--revenues are improving on a sequential basis, with increases reported in billing hours and number of assignments. Labor demand is strong from the health, biopharmaceutical, telesales, and technology industries. Stimulus funds have led to increased demand from the government sector and improvement is noted in the financial and manufacturing industries as well. Demand remains better for temporary hires, with permanent placements seeing at most marginal increases. Several contacts note that overall labor supply is in abundance, while it remains a challenge to fill specialized positions. An elongation of the hiring cycle continues, with employers reviewing more resumes and requiring multiple interviews before making decisions. One contact also reports that more employers are choosing to search for applicants without the help of staffing firms. While First District staffing respondents are increasingly optimistic and suspect the bottom has been reached, they express uncertainty as to whether recent improvements can be maintained through the holidays and winter season. Their outlook remains cautious for the first half of 2010, with some not anticipating sustained growth until the latter half of the year.

Retail

... Capital spending remains guarded, but some contacts are taking advantage of favorable opportunities to expand or budgeting for renovations and IT spending. ...

Second District -- New York (CT, NJ & NY)

Other Business Activity

A major New York City employment agency, specializing in office jobs, reports that hiring remains very sluggish, though recruitment activity has reportedly picked up marginally in the finance and legal sectors. In general, contacts in both manufacturing and other sectors report that employment at their firms has leveled off; whereas a large and growing proportion of manufacturers plans to ramp up employment in the months ahead, non-manufacturing contacts generally plan to hold their staffing levels steady. Retailers mostly plan on giving existing staff more work hours during the holiday season, as opposed to hiring temporary workers.

Third District -- Philadelphia (DE, PA & NJ)

Services

Service-sector firms generally reported that activity has remained slow since the last Beige Book. Among the region's business services firms contacted for this report, nearly all indicated that demand for their services has been flat in the past few weeks, although a few said they have had slight gains recently. The region's service-sector firms see no signs that business will pick up significantly in the near future. As one contact said, "Our clients are showing no inclination to increase spending."

Fourth District -- Cleveland (KY, OH, PA & WV)

Large scale employment reductions have flattened out across most sectors, with some companies recalling a small number of workers. Staffing firm representatives reported an uptick in job openings across a wide spectrum of industries. Given the weak labor market, wage pressures are contained.

Fifth District -- Richmond (MD, NC, SC, VA & WV)

Services

Contacts at services firms reported that revenue contraction was less widespread in recent weeks. An executive at a freight trucking establishment said, "We're seeing some green sprigs out there; we just don't know yet if it's grass or weeds." … Contacts in the professional, scientific, and technical services sector gave mixed reports on revenues, while sources at administrative and support services firms indicated that revenues were either unchanged or down. Employment, average wage growth, and price change were virtually flat, according to contacts.

Temporary Employment

Fifth District employment agents reported generally stronger demand for temporary workers in recent weeks. Much of the improvement was based on the anticipation of increased sales over the holidays. In contrast, one contact stated that diminishing company and local government budgets and slower retail demand for merchandise for the upcoming holidays were expected to cause weaker demand for temporary workers. Skills in greatest demand were IT, distribution center workers, sales and office support, and nurses aides/assistants.

Sixth District -- Atlanta (AL, FL, GA, LA, MS & TN)

Employment and Prices

Layoffs continued throughout the District in October through mid-November, although at a slower pace than in previous months. Firms continued to hire temporary workers in response to increases in business activity, but they remained reluctant to expand their permanent workforce. A few firms noted taking advantage of the increase in talented individuals looking for work to increase the quality of their workforce. Many businesses reported that they are requiring more skills of new hires.

Seventh District -- Chicago (IA, IL, IN, MI & WI)

Business spending was little changed from the previous reporting period. Contacts again indicated that they were holding the line on costs, adding inventory solely to replace depleted stocks and limiting capital expenditures and hiring. Labor market conditions remained weak with hiring limited outside of healthcare and education. Unemployment in the District increased. A contact noted that the duration of unemployment spells continued to rise, citing as a factor the growing mismatch between the mostly entry level jobs available and the experience level of unemployed workers in many local areas. In the manufacturing sector, the recent increase in activity resulted in longer hours and temporary hires, but most contacts indicated that permanent labor force additions were not expected. Contacts in retail trade indicated some seasonal hiring was taking place, but at reduced hours. However, a recruitment firm indicated that expectations had improved and some clients had begun planning for future hiring. In addition, a large staffing firm reported that billable hours had increased in recent weeks; most of this was in entry level industrial jobs, but some modest improvement in professional services was also noted.

Eighth District -- St. Louis (AR, KY, IL, IN, MO, MS & TN)

Manufacturing and Other Business Activity

Manufacturing activity has continued to decline since our previous report but at a slower pace. Some contacts expressed optimism that activity would begin to increase in the months ahead. Firms in the rubber tire, packaging product, food and beverage, auto manufacturing, furniture, and plastic product manufacturing industries increased production. Firms in the electrical equipment and component manufacturing and glass/aluminum product manufacturing industries announced plans to open new facilities in the District and hire new workers. In contrast, several firms announced job losses. Contacts in the copper tube, appliance, lumber, and heating, ventilation, and air conditioning manufacturing industries all cited weak demand as a driver of layoffs. Firms in the auto parts and transportation industries closed facilities in the District and announced job losses. A major firm in pharmaceutical products manufacturing announced job layoffs because of a recent merger.

The District's service sector has begun to expand in many areas since our previous report. Contacts in business support services announced plans for several new facilities and new hires in the District. In contrast, some workers in education services experienced pay cuts because of budget deficits.

Ninth District -- Minneapolis (MI, MN, MT, ND, SD & WI)

Services

Overall activity was up in the professional business services sector. Based on results from the business outlook poll, respondents from the services sector expect increased sales in 2010 but decreased investment in equipment. Contacts from information technology and accounting industries noted an upturn in activity over the past three months.

Employment, Wages, and Prices

Labor markets remained lackluster, but signs of improvement were noted. A Minnesota shoe manufacturer recently announced plans to lay off 60 workers after operating at reduced capacity for a number of months. A Minnesota-based staffing services company noted that recent temporary placements in manufacturing firms were down 15 percent compared with a year ago, but demand has recently stabilized. October initial claims for unemployment insurance were 24 percent higher than a year ago in Minnesota. According to the business outlook poll, 17 percent of respondents expect to increase staffing levels next year while 25 percent expect to decrease staff; a year ago 34 percent expected increases while 21 percent expected decreases.

In contrast, a cleaning products manufacturer was adding 200 sales positions in Minnesota, while another company will create 160 customer service and management jobs over the next six months in South Dakota. Meanwhile, another staffing services firm reported increased requests for workers in the Minneapolis-St. Paul area.

Tenth District -- Kansas City (CO, NM, MO, NE, OK & WY)

Wages and Prices

District contacts reported moderately lower prices for finished goods and services and few wage pressures since the last survey period. Purchasing managers said that input prices generally rose, driven by higher commodity prices, and they expected input prices to increase further going forward. Output prices were reported as modestly lower but were expected to stabilize over the next six months. Consumer prices largely decreased as a result of the use of heavy discounting to bolster sales. Hotel rates were down significantly in light of weak demand, but restaurant menu prices were stable. District contacts generally did not report any wage pressures or plans to raise wages in the near term.

Eleventh District -- Dallas (LA, NM & TX)

Economic conditions in the Eleventh District firmed over the past six weeks. Activity improved in several industries--including high-tech manufacturing, paper, petrochemicals, staffing services, housing and energy. Notable exceptions were financial services and commercial real estate, where contacts noted deteriorating conditions. Outlooks are generally more positive in tone, although most respondents do not expect a significant pickup in economic activity in the near term.

Labor Market

Most contacts reported stable employment levels noting that they have made the necessary cuts. Still, there were scattered reports of payroll declines from energy and construction-related contacts. Retailers said holiday hiring was lighter-than-normal because of uncertainty surrounding this year's holiday season, and some retail respondents have increased hours of current employees rather than hiring new workers. On a positive note, staffing firms reported improved demand for contract workers, and a few contacts in the transportation service industry noted some hiring. Wage pressures were mostly nonexistent and cuts to 401(k) contributions instituted earlier remained in place.

Services

Staffing firms say demand continues to tick up and orders are streaming in at a consistent pace. Demand is still largely for contract work, and orders for direct hires are flat at low levels. Although contacts are more upbeat this time around than the last Beige Book, the short-term outlook remains cautiously optimistic.

Twelfth District -- San Francisco (AK, AZ, CA, HI, ID, NV, OR, UT, & WA)

Economic activity in the Twelfth District appeared to pick up modestly during the reporting period of late October through late November. Upward pressures on prices and wages were largely absent. Consumer demand remained weak but showed signs of improvement in some retail categories, and demand for services appeared to be little changed on net. Manufacturing activity was mixed but appeared to firm a bit further overall. Agricultural producers reported largely stable sales, while demand remained somewhat weak for providers of energy resources. Demand for housing exhibited further modest improvement, but conditions continued to erode in commercial real estate markets. Banking contacts reported largely stable loan demand and lending standards but further declines in credit quality.

Wages and Prices

Upward price pressures were largely absent during the reporting period. Outside of increases in oil and natural gas, commodity prices in general were stable. Final prices for various retail goods were held down by substantial discounting and promotional activity, and sustained weak demand further reduced the prices for some services, such as professional services and hotel rooms. In contrast, prices for computer memory chips continued to firm, a trend that is expected to persist through the holiday season.

Contacts reported little or no upward wage pressures. High levels of unemployment held down wage pressures throughout the District, and contacts expect this to continue for an extended period as labor demand and hiring remain subdued. Employers in various sectors also have been implementing cost-saving measures such as suspending their 401(k) match and increasing employee contributions for health benefits. Nonetheless, many businesses expect significant increases in the costs of health insurance benefits in the coming year, based on contracted or anticipated rate increases.