DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on July 27, 2011. It was "Prepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before July 15, 2011. 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)

... Headcounts remain largely unchanged or up only slightly, except for advertising and consulting firms, which continue to hire. Outlooks are generally positive, but most contacts express concern about current and future negative effects of increased uncertainty, attributable in part to failure to resolve the U.S. debt ceiling dispute promptly and the associated unclear future course of federal expenditures and taxes.

Manufacturing and Related Services

... Hiring and investment at contacted firms continues to be limited because of uncertainty about demand and a desire to keep costs low. Manufacturers investing domestically say they are mainly spending to upgrade IT and related systems, although a couple of firms report relatively modest expenditures to slightly increase plant capacity. Employment at the vast majority of contacted firms is stagnant. Much of the ongoing hiring is to keep up with worker attrition, although a few firms are increasing their headcount slightly, with one company "finally" converting some of its temporary help to permanent employees.

Selected Business Services
... All advertising and consulting respondents have increased employment recently and plan to continue to do so in the near future, with most planned increases close to 5 percent. Several contacts note difficulty in finding qualified employees, which some firms say is constraining their sales growth.

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

The pace of activity in the Second District's economy slowed somewhat since the last report. Business contacts across a variety of sectors indicate that activity has flattened out in recent weeks and that hiring has tapered off.

Other Business Activity
Reports from business contacts point to some leveling off in the labor market. A major New York City employment agency reports that recruitment activity has been steady but lackluster since Memorial Day. Hiring in the legal industry has continued to improve from very depressed levels, with large firms hiring once again. Financial sector hiring has been spotty. Still, the flow of applicants for office jobs has declined somewhat. More broadly, contacts in both the manufacturing sector and other industries report some tapering off in hiring activity since the last report, though employment levels are still expected to increase moderately over the second half of 2011.

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

Since the last Beige Book, Third District economic activity has continued to grow at a very slow rate. Overall, manufacturing growth has leveled off at a low rate since the last Beige Book. ... Slight increases in activity were reported by service-sector firms, dampened somewhat by a hiring slump among customers. ... Manufacturers forecast a modest rise in shipments and orders during the next six months. ... Service-sector companies also expect continued slow growth.

Services
Reports from Third District service-sector firms were slightly positive overall, but firms described various challenges. A recurring theme was a recent slowdown in hiring, especially from small and medium-sized businesses. One staffing agency described "almost a stop to new [excludes replacement] hiring orders in the last three weeks." Other firms cited projects delayed due to ongoing economic uncertainties, including government-related projects contingent on budget negotiations. The most positive firms recognized that the "easy year-over-year comps are over" in this recovery and that continued growth will be slow. Despite these challenges, most service-sector firms expect growth to be somewhat better over the next six months.

Prices and Wages
Since the previous Beige Book, the percent of manufacturers reporting increases in prices paid for inputs dropped from more than one-half to one-third. ...Rising commodity prices continue to pressure retailers, service-sector firms, and home builders to pass through costs when they can and to lower the price-point of their offerings. There are a few reports of a little upward pressure on rents in selected local markets for apartments and some retail space. Meanwhile, there is little evidence of pressure on wages.

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

Business activity in the Fourth District continued to expand at a modest pace, albeit at a slower rate since our last report. Manufacturers reported a slight rise in production and new orders, while freight transport volume continued to grow. ...

Rising payrolls were mainly limited to the manufacturing and energy sectors. Staffing-firm representatives noted moderate growth in the number of new job openings, with vacancies concentrated in manufacturing and professional business services. Wage pressures are largely contained.

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

Business activity in the Fifth District was unchanged or slightly improved in most sectors since our last assessment. In the service sector, retail activity on balance remained soft during the last month, while non-retail services firms reported flat or slightly increasing demand. ... The manufacturing sector slowed over the last month, with several contacts citing softer demand. Finally, employment agencies specializing in temporary workers noted modest improvements in demand, with several adding that recent uncertainty about the direction of sales was causing their clients to postpone hiring full-time employees.

Services
Service sector activity was flat to slightly stronger in recent weeks. Revenues strengthened moderately, according to polled contacts, particularly in telecommunications. A number of builders and construction-related firms in the D.C. area also reported a pickup in business during the past month. Most contacts we surveyed at restaurants and hotels said revenues accelerated since the start of summer. However, advertising agencies indicated that business was flat, and healthcare services providers reported little change. Non-retail services providers' prices rose at a slightly quicker pace over the last month, according to our recent survey.

Labor Markets
Fifth District labor market activity, especially among temporary employment agencies, improved slightly in recent weeks. Most contacts at temp agencies characterized demand as at least somewhat better in recent weeks, although a few agents cited weakness in demand for workers. However, virtually all agents indicated that demand was still stronger than a year ago. Several employment agents cited uncertainty about the economy as the primary factor behind hiring temporary help rather than full-time employees. For example, a Hagerstown agent said that many of his clients were still very uncertain about their future orders. As a result, they were using contingent labor more than they might if they felt that business volume would continue to increase. Increased demand for temporary workers was reported for a diverse set of skills, including light manufacturing assemblers, machine operators, forklift operators and quality inspectors. Respondents to our latest manufacturing survey indicated that employment demand, while fairly robust in June, was little changed in July. Retail hiring rose slightly, according to our recent survey, and hiring was little changed at non-retail services providers. A slight majority of both retail and non-retail respondents indicated that they were increasing wages.

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

Sixth District business contacts described economic activity as little-changed in June through mid-July. ... Manufacturing contacts indicated that production and new orders increased but at a slower pace than experienced earlier in the year. Credit availability for entrepreneurs and real estate developers remained tight, although loan availability for some commercial projects increased. Most business contacts indicated that their hiring plans remained modest.

Manufacturing and Transportation
Manufacturing contacts indicated that production and new orders increased, but at a slower pace than reported earlier in the year. Producers of healthcare equipment and electrical components in particular noted stronger orders, and a producer of freight trucks is significantly increasing output. Many manufacturers reported increased investment in technology equipment in efforts to increase efficiency.

Employment and Prices
Most business contacts indicated that their hiring plans remained modest. Uncertainty regarding future demand and the regulatory environment were the most commonly cited reasons for the muted hiring outlook. Of those that reported plans to increase employment, many pointed to having reached maximum productivity with existing staff. Staffing agency contacts continued to experience high demand for temporary or contract workers. According to reports, demand for qualified, higher skilled candidates is robust, especially in the technology sector. Most contacts said that they did not experience significant upward wage pressure, and characterized annual increases and bonuses as modest.

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

Economic activity in the Seventh District continued to expand slowly in June and early July. Contacts expressed heightened uncertainty about the economic outlook given recent weaker-than-expected demand as well as the ongoing fiscal issues in the U.S. and Europe. ...Manufacturing production continued to expand at a steady pace while construction remained flat.

Business Spending
Business spending also edged up from the previous reporting period. Inventory investment decreased, but expenditures for equipment and structures increased. Several manufacturers reported plans to expand capacity, with a number of projects set to break ground in the District this fall. Renovation of retail facilities picked up further. In addition, contacts reported an increase in spending on research and development. Hiring continued at a slow pace, with many manufacturers reiterating the difficulty in finding appropriately skilled workers. On balance, however, labor market conditions weakened, as a number of private and public sector layoffs were reported and unemployment ticked up in the District. Furthermore, a large staffing firm reported a decline in billable hours.

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

Economic activity in the Eighth District has continued to increase at a modest pace since our previous report. Manufacturing activity has continued to increase since the previous report. Activity in the services sector also has increased.

Manufacturing and Other Business Activity
Manufacturing activity has continued to increase since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or reduce operations. Firms in the wood, organic dye, automobile parts, lime, and hygiene product manufacturing industries reported plans to expand operations and hire new workers. Furthermore, a major firm in the automobile manufacturing industry announced plans to hire a significant number of new workers. In contrast, firms in the ice cream, air conditioner, and wrapping paper manufacturing industries announced plans to close plants and lay off employees.

Activity in the District's services sector has increased since our previous report. Firms in the business support, human resources administration, entertainment, hotel, and tire wholesale industries announced plans to expand operations and hire new workers. In contrast, contacts in the government, newspaper publishing, restaurant, and education industries reported plans to decrease operations in the District and lay off employees. General retailers report that sales have slowed in recent weeks. Auto dealers report inventory shortages of quality used cars as well as new car models that contain parts supplied by Japan.

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

The Ninth District economy grew modestly, but activity was disrupted by widespread flooding and a temporary Minnesota state government shutdown that started on July 1. Increased activity was noted in consumer spending, residential construction, commercial and residential real estate, services, manufacturing, energy and mining. Mixed activity was noted in tourism and agriculture, while commercial construction was steady. Private sector hiring grew modestly, and wage increases continued to be moderate. Overall price increases were moderate, although pressure remains on a number of input prices.

Services
Professional business services firms reported increased activity over the past three months. Results of a mid-July Minneapolis Fed ad hoc survey of 55 professional services firms indicated that 47 percent of the respondents saw increased sales, while 29 percent saw decreased sales. Respondents noted that profits and employment also increased. The respondents expected this trend to continue over the next three months. However, a few contacts commented that the Minnesota state government shutdown negatively affected their business.

Employment, Wages, and Prices
While private sector hiring grew modestly, the Minnesota government shutdown resulted in 22,000 temporary layoffs of state government employees. In Minnesota, a company recently announced plans to build a data center that is expected to provide more than 100 jobs, and a steel producer will add 60 jobs this year. According to a survey by an employment services firm, 20 percent of respondents in Minneapolis-St. Paul expect to increase staffing levels during the third quarter, while 3 percent expect to decrease staff. Businesses in eastern Montana and western North Dakota continued to have difficulty finding workers due to strong oil drilling activity in the region.

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

The Tenth District economy expanded at a moderate pace in the June and early July survey period.

Manufacturing and Other Business Activity
Tenth District manufacturing activity rebounded from weakness in the prior survey period, while high-tech and transportation activity expanded further. Factory operators reported that both production and shipments bounced back following weakness in May. The outlook among manufacturers remained positive as new orders and backlogs similarly rebounded. Inventories of finished goods were stable. Factory employment increased in June for the eighth consecutive month and the average workweek expanded slightly. ... Several trucking contacts cited continued difficulty attracting qualified over-the-road drivers. Sales growth was strong at high-tech firms despite some downward price pressure. High-tech firms remained optimistic about future sales gains and planned to increase capital spending in coming months.

Wages and Prices
District contacts reported only limited wage pressures but noted additional upward pressure on input prices. Labor shortages and wage pressures were reported in the retail sector and for select occupations in the high-tech, energy, and transportation sectors. In addition, several contacts expected future non-wage employment costs to rise as a result of increased state unemployment insurance premiums. Manufacturers reported continued upward pressure on input costs; slightly fewer manufacturers reported increased finished product prices. Builders reported higher overall prices for construction materials, and transportation contacts remained concerned about the impact of high fuel costs on profit margins.

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

The Eleventh District economy expanded at a moderate pace over the past six weeks. ...Reports from manufacturers were mixed but mostly positive, although some construction-related producers were less optimistic than they were six weeks ago. Nonfinancial services activity rose, with strong demand for staffing services. The single-family housing sector remained weak, but the commercial real estate sector continued to improve. Financial services respondents said overall loan demand was flat during the reporting period, and contacts in the agricultural sector noted drought conditions worsened.

Labor Market
Employment levels held steady at most responding firms, although there were several reports of hiring. Staffing firms reported continued strong demand for their services. In addition, there were some mentions of moderate employment increases from automobile dealers, transportation service firms and manufacturers of primary and fabricated metals, transportation equipment, lumber and food. Legal firms noted solid demand for talented attorneys, and added that start dates for some new hires had been moved up from January 2012 to fall 2011. In contrast, one construction-related manufacturer reported a new round of layoffs, and one retail firm was considering reducing staff levels next year. Wage pressures remained minimal, although some contacts noted that they were giving modest pay raises.

Manufacturing
... Respondents in high-tech manufacturing reported that growth in orders remained at a moderate pace since the last Beige Book. One respondent with greater-exposure-than-average to Japanese production said second-quarter sales were well below pre-earthquake expectations, but that growth in June was strong enough to finish the quarter slightly above their expectations.

Non-financial Services
Staffing firms reported continued strong demand for their services. Temp-to-hire activity has been a bright spot, with long assignment lengths and several conversions to permanent hires. Outlooks are cautiously optimistic, with most respondents expecting continued strength in demand through year-end. Accounting firms noted a seasonal slowdown in demand for their services. Legal firms reported mostly steady demand, with continued growth in transactional services.

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

Economic activity in the Twelfth District grew modestly during the reporting period of June through mid-July. ...District manufacturing activity strengthened slightly.

Wages and Prices
Upward price pressures were limited during the reporting period. ...

Contacts reported that upward wage pressures were very modest overall, although some pointed to notable increases in the costs of employee benefits. Compensation gains in most regions and sectors of the District continued to be held down by high unemployment and limited hiring activity. However, upward wage pressures remained pronounced in various sectors for workers with specialized skills in the application of information technology.

Retail Trade and Services
...Demand for business and consumer services increased on balance. Sales continued to expand for providers of technology services, in particular for digital media services used for Internet-capable mobile devices. By contrast, demand for transportation services remained largely flat, as did demand for professional services. Suppliers of energy services reported further growth in deliveries to households and businesses, although the pace of growth slowed. Providers of health-care services reported that demand for their services remained weak. Restaurants and other food-service providers saw demand soften slightly. However, conditions continued to improve in the travel and tourism industry, with further demand growth reported in both the business and tourism segments of the market.

Manufacturing
District manufacturing activity strengthened a bit further during the reporting period of June through mid-July. Production rates remained near capacity for makers of commercial aircraft and parts. Demand improved modestly for manufacturers of semiconductors and other technology products, with reports pointing to high levels of capacity utilization, continued growth in sales, and inventories that were at or near desired levels given the pace of sales. Production activity and sales improved somewhat for metal fabricators, with gains in foreign demand more than offsetting weak domestic demand. Similarly, capacity utilization rates remained largely stable for petroleum refiners, as export growth for gasoline and distillate products helped to reduce inventories. Demand continued to be especially weak for wood product manufacturers, with the exception of the pulp and paper sector, which has seen sustained increases in orders.