DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on October 8, 2010. This reports was prepared by the Federal Reserve Bank of Dallas based on information collected from September to early October. Important caveat: "This document summarizes comments received from business 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) were 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)

Manufacturing and Related Services
Nearly all contacted manufacturing firms report continued sales growth in the second half of the year after very strong first-half results. One semiconductor firm reports record sales and profitability in the third quarter and other firms selling into semiconductor-related markets also report robust growth. Some of this growth is fueled by strong demand overseas, but some is also coming domestically from the auto industry. Business also remains very strong at a technology services firm.

Hiring continues to be limited amongst contacted manufacturing firms; the few companies noticeably increasing headcount are doing so overseas. Several companies are hiring to replace workers lost to attrition or retirement, but nearly all respondents are maintaining their existing U.S. headcounts. These firms say they do not plan to do any substantial hiring until the demand environment noticeably improves and current levels of economic and fiscal uncertainty subside.

Selected Business Services
Consulting contacts in the First District all agree that demand improved significantly in the third quarter compared to a year ago. Most saw a slight decline in demand during July and August due to seasonality and a modest increase in demand during September. By exception, a healthcare consulting firm saw revenues rise 10 percent in the third quarter and 25 percent year-over-year; this contact explains that businesses are still responding to regulatory changes following healthcare reform, which keeps demand for healthcare consulting services strong. Another contact cites increased activity from IT companies and the private equity sector, but notes demand from the construction industry is still lagging.

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

The labor market has been mixed recently: manufacturers continue to add jobs and firms in a wide variety of industries plan to increase employment in the months ahead; however, contacts in New York City report that the financial industry continues to shed jobs and that hiring for office and administrative jobs generally remains sluggish.

Other Business Activity
A major New York City employment agency, specializing in office and administrative jobs, reports that hiring activity was disappointingly sluggish in September--particularly from financial firms. Similarly, a contact in the financial industry notes that employment continues to drift down, as the pace of layoffs appears to have picked up a bit lately; some financial firms are reported to be in the market for lawyers and accountants but are not hiring much in other areas.

Manufacturing firms in the District report a pickup in activity in September, following a pause in July and August, and a growing proportion of manufacturing contacts indicate that they are increasing employment and plan to add more workers in the months ahead. Non-manufacturing contacts also report some pickup in business activity and have grown substantially more optimistic about the general business outlook.

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

Manufacturing
Third District manufacturers reported slight decreases in shipments and new orders from August to September, on balance, as well as a decrease in order backlogs.

Price and Wages
Reports on input costs and output prices indicate little change since the last Beige Book. ...

Business firms in the region reported no major changes in wages, although many continued to report current or prospective increases in costs for employee health care benefits. Employers generally reported that they were not having difficulty finding workers with requisite skills at current compensation levels. Employment agencies reported that client companies are filling positions as workloads increase, but do not appear to be adding employees in anticipation of increased activity.

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

On balance, economic activity in the Fourth District held steady during the past six weeks. ... New hiring continues at a slower pace than seen earlier in the year. There were scattered reports of increased payrolls in manufacturing, energy, and banking. Overall, staffing-firm representatives noted that the number of new job openings declined slightly, with available openings concentrated in healthcare and professional business services.

Manufacturing
Reports from District factories showed that new orders and production rose modestly during the past six weeks. ... Capacity utilization is slowly rising for several manufacturers and steel producers, but it continues below pre-recession levels across the board. ... We heard only scattered reports of companies hiring new workers, although several firms have extended work hours.

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

Feedback on economic activity in the Fifth District continued to be mixed since our last report. ... Reports on labor markets varied, with permanent hiring flat to down and temporary employment picking up slightly.

Services
Business activity at services firms weakened overall, although several services providers reported rising revenues. Demand for construction-related services was particularly soft, according to recent survey returns. ... According to contacts at healthcare systems that we recently polled, consumer demand was steady, while changes required by healthcare reform had mixed effects on their budgets. In contrast, several high-tech firms reported stronger demand; executives expressed concern about the stability of the economy, however.

Manufacturing
District manufacturing edged down in September after expanding for the last seven months, with reports of sharp declines that were partially offset by pockets of strength. ... a furniture manufacturer reported an increase in orders and noted that his customers said that Labor Day sales were better than anticipated and held up throughout September. In addition, an auto parts supplier stated that orders remained strong and had increased slightly over the last month.

Labor Markets
Assessments of Fifth District labor market activity were varied. In the service sector, survey respondents reported moderate hiring at their firms. A contact at a central North Carolina healthcare system cited plans to hire a significant number of nurses and high-tech workers. Employment agencies reported somewhat stronger demand for temporary help in recent weeks, particularly in automotive and other manufacturing sectors. A branch manager of a temp agency in Raleigh, N.C., stated that manufacturing companies had openings for skilled positions, but the employee pools for those positions were weak enough to limit hiring.

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

District labor markets continued to recover slowly, although many businesses relied on increased hours for existing staff and expanded their use of temporary hires rather than adding permanent employees.

Employment and Prices
District labor markets continued to recover in September, albeit slowly. Contacts reported that they remain reluctant to hire additional full-time, permanent employees because of the uncertain outlook regarding future sales and orders. Many firms continued to note a strong preference for increasing existing staff hours and using part-time or temporary staff rather than hiring full-time staff. Firms that were hiring noted they were being very deliberate in order to get the best possible candidate from a large applicant pool.

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

Business Spending
Business spending increased in September. ... The pace of hiring continued to be slow, but engineering, information technology, and healthcare were exceptions to this trend. Manufacturers' were reluctant to add permanent employees, continuing to use temporary hires instead.

Manufacturing
Manufacturing production increased in September, refreshing from the late summer pause. Several metals manufacturers reported that September sales were the best so far this year. Power generation, mining, and medical equipment manufacturers also reported an increase in orders.

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

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 detergent, frozen foods, transformer, plastic products, motor vehicle parts, and primary metal manufacturing industries reported plans to expand existing operations and hire new employees. ... In contrast, firms in the appliance, tobacco, chemical, and furniture manufacturing industries announced plans to decrease operations and lay off workers.

The District's services sector has also continued to improve since our previous report. Firms in the restaurant, automotive repair, air transportation support, and social services industries opened new facilities in the District and hired new employees. In contrast, contacts in the business support services, hotel, and gambling industries reported plans to decrease operations and lay off workers.

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

Labor markets showed some signs of picking up; however, overall weakness continued. Wage increases were moderate, and overall prices remained relatively level.

Services
Activity in the professional business services sector increased since the last report. Appraisers and title companies reported continued strength during September. "We are swamped with great projects," commented a design and advertising firm. Information technology consulting firms noted solid interest from corporate clients.

Manufacturing
Manufacturing output was up since the last report. A September survey of purchasing managers by Creighton University (Omaha, Neb.) showed strong increases in manufacturing activity in Minnesota and South Dakota, and slight increases in North Dakota. In Montana, a food processing company is expanding operations and a jet engine plant plans to build a facility. In Minnesota, a fishing tackle company recently experienced a big pickup in demand, a metal fabricator saw increased orders, a dental part maker noted increased sales and a bed manufacturer's recent sales were up and higher than anticipated.

Employment, Wages, and Prices
Labor markets showed some signs of picking up; however, overall weakness continued. A department store chain with locations in Minnesota noted that it expects to increase seasonal hiring, while another large retailer will soon open a store in Minnesota with plans to hire about 130 employees.

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

Manufacturing and Other Business Activity
The Tenth District's manufacturing sector reported a mild rebound following softness in the prior reporting period. ... Despite increased activity, few firms reported planned increases in capital spending or hiring in the coming six months. ... Capital spending activity by high-tech firms continued its upward trend but firms reported somewhat diminished expectations for the upcoming six months.

Wages and Prices

Firms continued to report little evidence of wage pressures across District labor markets and did not expect pressure in the near future.

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

Labor Market
Most responding firms reported steady employment levels, and some noted slight hiring activity. Contacts in the airline, primary metals, transportation manufacturing and auto sales industries said they had added workers. Staffing firms reported slower growth in demand for their services, although contacts said direct hire fees for IT and professional workers had risen.

Manufacturing
Manufacturers of high-tech products said that sales and orders were growing at the same or slightly slower pace since the last report. Most respondents said inventories are below or at desired levels. Sales are expected to continue to grow at a moderate pace over the next six months, but there was increased uncertainty in respondents' outlooks.

Services
Staffing firms reported stagnant demand over the reporting period. Business is still at good levels, but contacts say firms are eliminating some previous positions or finding other ways to fill vacant jobs. Despite the slowdown, contacts report that demand is coming from a wide-range of industries, including light industrial, manufacturing, IT, and call centers. Clerical workers remain in high demand. Near-term outlooks remain optimistic, but contacts are more uncertain about the longer term.

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

Wages and Prices

High unemployment and limited demand for new employees held down compensation gains in most regions and sectors. Contacts in most sectors expect that ongoing productivity gains and cost efficiencies will largely offset the need for staffing increases in the near term. However, a few contacts noted that some firms have reached the limits of productivity gains from current staff and will need to add workers as product demand improves.