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(Bloomberg) — Economic activity increased slightly in November after little change in preceding months, and US businesses grew more upbeat about demand prospects, the Federal Reserve said in its latest Beige Book survey.

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“Though growth in economic activity was generally small, expectations for growth rose moderately across most geographies and sectors,” according to the report published Wednesday in Washington. “Business contacts expressed optimism that demand will rise in coming months. Consumer spending was generally stable.”

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The Fed report had recently painted a bleaker picture of the economy than official government statistics, showing flat growth, lower hiring rates and only small increases in prices. In many cases that contradicts topline economic figures showing still-strong activity, powered by ample consumer spending and a relatively low unemployment rate.

The Fed’s districts reported that inflation was rising only modestly and companies had more trouble passing on higher costs as consumers grew more discerning about pricing.

Hiring was seen as subdued with low worker turnover, while layoffs were also limited. Business contacts said they expected steady to modest growth in employment.

“Wage growth softened to a modest pace across most Districts, as did expectations for wage growth in coming months,” the survey said.

The Beige Book, along with government data, will help shape the debate among Fed policymakers at their Dec. 17-18 meeting as they consider whether to lower interest rates for a third time.

District Highlights

• Boston: “A clothing retailer experienced a sharp decline in sales—attributed in part to the especially warm and dry autumn in New England—as sales of cold-weather apparel came in well below expectations. Snowmobile sales were down sharply from the same period last year, with recent weather patterns again cited as a contributing factor.”
• New York: “Hesitancy surrounding the presidential election had led to a pause in decision making, though contacts anticipated hiring would pick up again.”
• Philadelphia: “Manufacturers’ expectations for growth over the next six months became more widespread for future activity, new orders, and shipments; however, plans for future capital expenditures did not budge.”
• Cleveland: “Selling prices also grew modestly in recent weeks, although the majority of contacts continued to hold prices steady. Some retailers and consumer-facing goods manufacturers who indicated that they had not raised prices said they had offered promotions because of weaker demand and increased consumer price sensitivity.”
• Richmond: “Damages from Hurricane Helene were beginning to be seen in both residential and commercial real estate markets. A North Carolina agent noted residential sales being off 25 percent in the Boone area and 30 to 35 percent in the Asheville market. Longer-term impacts to commercial real estate were more uncertain as many buildings were destroyed and businesses continued to close in recent weeks.”
• Atlanta: “Rising mortgage rates and lagging effects of recent weather events led to a moderate decline in housing demand over the reporting period. While either flat or slightly up in most of the District, year-over-year sales in Florida declined sharply in October. Existing home inventory also increased in many Florida markets, with some, most notably in southwest Florida, now considered oversupplied.”
• Chicago: “Retailers were planning to build up inventories in anticipation of higher tariffs and one construction input supplier was actively doing so. In addition, a computer retailer noted an increase in sales in recent weeks as business clients pulled ahead replacement plans to avoid expected higher prices for imported electronics.”
• St. Louis: “In Kentucky, automobile manufacturing has increased shifts to catch up with production in the aftermath of earlier hurricane disruptions. However, manufacturing for electric vehicles has had pre-emptive layoffs, anticipating continued soft sales.”
• Minneapolis: “District agricultural conditions remained weak. In the most recent survey of agricultural credit conditions, 85 percent of respondents reported that farm incomes decreased in the third quarter from a year earlier, as productive harvests were not sufficient to offset low commodity prices and elevated operating costs.”
• Kansas City: “Renewable industry contacts reported growing commercial electricity demand from large data centers as a key driver for generation capacity additions in the coming years. However, utilities and developers are facing challenges in rapidly building new generation to meet growing demand. Contacts noted constraints in permitting and building new electricity infrastructure (particularly inter-regional transmission), elevated equipment costs, and persistent skilled labor shortages as key headwinds for new renewable energy projects.”
• Dallas: “Contacts noted an increased risk that oil prices in 2025 might be weaker than previously expected, and that the lower price outlook and rising productivity could lead to less capital expenditures next year. Contacts expressed optimism that the pause on liquefied natural gas (LNG) export permits that has been in place most of the year would be lifted soon and enable more natural gas infrastructure and LNG export investment over the next several years.”
• San Francisco: “Labor turnover was generally stable in recent weeks but remained notably down from pandemic highs. However, contacts in business services, community support services, retail, and finance continued to face lingering challenges with retention. Applicant pools for posted positions generally increased, but reports highlighted some quality mismatch between applications and job requirements.”

The Kansas City Fed compiled the latest edition of the Beige Book using information gathered on or before Nov. 22. The report includes anecdotes and commentary about economic conditions from businesses and other contacts in each of the Fed’s 12 districts.

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