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Economic activity expanded at a modest to moderate pace in January and February, according to anecdotal reports from contacts across the 12 Federal Reserve Districts. Consumer spending was mixed, home sales and construction saw modest growth, and the manufacturing sector continued to see broad-based gains, with all but one district noting at least modest growth in activity. Districts pointing to particular strength in manufacturing included Cleveland, Richmond, Atlanta, Dallas and San Francisco.
Employment grew at a moderate pace compared to reports from the 12 districts in November. Most districts reported persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services. Several districts reported continued worker shortages across most sectors, with construction, information technology and manufacturing hit the hardest. Wage growth picked up to a moderate pace in many districts, driven in most places by tight labor market conditions. A few districts reported modest increases in compensation following passage of the Tax Cuts and Jobs Act.
Prices increased in all districts, and most reports indicated moderate inflation. Four districts saw a marked increase in steel prices, due in part to a decline in foreign competition. Price growth for building materials such as lumber picked up, stemming from an uptick in construction activity. Several districts reported moderate increases in broad transportation costs, caused primarily by higher fuel costs that boosted freight rates. Home and commercial lease prices rose across most of the country.