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Discussion Paper
The State of Hiring in the Fifth District
The past two years have been marked by a historically tight labor market in which many firms have had difficulty hiring and retaining workers who possess the necessary skill sets. In a recent post, we explored evidence from our business surveys that suggests that the labor market may be cooling somewhat. Our employment and availability of skills indexes have returned to pre-pandemic levels, and our estimates of wage growth have come down from their 2022 peak. Nonetheless, wage growth estimates remain above pre-pandemic levels, and data from our August surveys suggests that many firms are ...
Discussion Paper
Are Recession Fears Replacing Supply Chain Challenges? Evidence from Fifth District Business Surveys
The last year and a half have been fraught with persistent supply chain challenges, the highest rate of inflation since the 1980s, and record levels of job openings and quits. As such, it is not surprising that in the Richmond Fed's May monthly business surveys, the top three concerns across all Fifth District firms surveyed were inflation, supply chain disruptions, and availability of labor. This was corroborated by national data collected as part of the second quarter release of the Richmond Fed's CFO Survey.
Discussion Paper
Are Capital Expenditures Getting Too Expensive?
Capital expenditure (CapEx) is business spending used to acquire, improve, and maintain physical assets, such as buildings and machinery. These projects often require extensive planning because once in motion, they tend to be expensive, drawn out, and costly to stop. As such, a firm's willingness to undertake capital expenditures can be indicative of its future economic outlook. For example, a retail business may be less likely to invest in opening a new storefront if it's pessimistic about future demand for its product. In our monthly Fifth District surveys, we regularly ask firms if they ...
Discussion Paper
Is Wage Growth Normalizing? What Fifth District Businesses Are Saying About Wages
In the past few years, firms across the nation have reported increased wages due, at least in part, to a supply of labor that cannot keep up with robust demand. Last July, we wrote about how Fifth District firms reported notable acceleration in the growth rates of both realized and expected wages. More recently, wage growth has declined, and a rising share of firms expect their wage growth for 2024 to be "about normal." However, wage growth remains above pre-COVID-19 levels. Our business surveys suggest that wage growth might remain elevated for some time.
Discussion Paper
The Fifth District Labor Market: Normalization or the Beginning of a Slowdown?
The U.S. labor market continues to surprise economists and forecasters with its resilience. In 2023, employers have added more than 300,000 jobs per month on average, and that's after adding around 500,000 jobs per month on average throughout 2021 and 2022. The unemployment rate is persistently low, and the job postings rate remains extremely high. There are, however, some signs of slowing. In addition to job postings falling from its peak, the pace of job and wage growth has slowed.Reports from employers in the Fifth Federal Reserve District have been similarly strong, but with signs of ...
Discussion Paper
What Do Softened Business Expectations Mean for Hiring?
n October, we saw a downturn in our Fifth District indexes for expected demand and business conditions over the next six months, especially in the service sector. Employment expectations over the same period, however, remained largely unchanged. This month, firms' six-month expectations for demand and business conditions remained soft, and near-term employment expectations remained steady.Every November, we ask firms for their employment outlook over a longer time horizon: the next 12 months. Longer-run employment expectations also appeared to remain positive. Compared to last year, a similar ...
Discussion Paper
Are Customers Pulling Back on Spending? Evidence From the Richmond Fed Business Surveys
In the last few years, consumer spending in the United States has been remarkably resilient. In our August business survey, we sought to understand if Fifth District firms have recently experienced softening demand for their goods or services. A majority of firms reported that over the past three months, customers decreased the amount of goods and services purchased — both in quantity and in dollar amount. The survey also found that demand has softened more for manufacturers and retailers than firms in other industries. Additionally, firms reported that lower-income customers pulled back on ...