Hiring remained sluggish while business activity expanded modestly the past six weeks in Ohio and the parts of neighboring states that make up the Federal Reserve Bank of Cleveland’s Fourth District.
The Cleveland Fed said as part of a national Federal Reserve report issued Wednesday that there continued to be “robust” shale gas activity in the district.
The Cleveland Fed report said:
• Hiring overall was slow. Staffing firms saw little change in the number of job openings and placements during the past six weeks. Primarily manufacturing and health care had job openings.
• Manufacturing orders and production were mainly flat or down slightly. Suppliers to the motor vehicle industry were seeing increases in orders. Steel producers said shipping volumes were lower compared to the third quarter of 2012. About a third of producers said they expect to reduce capital investment this year; few said they plan to add capacity. Less than half of the surveyed companies said they plan to hire this year.
• Homebuilders said there continued to be an upturn in new single-family home sales and are confident that sales will increase starting in the spring. Overall residential and nonresidential construction activity rose. Builders have cut back on discounting. General contractors and subcontractors expect to hire modestly this year and expressed concern about the availability of highly skilled trade workers and back-office personnel.
• Retailers said the holiday shopping season was solid although some said sales figures fell below expectations. New and used motor vehicle sales increased from a year ago. Little new retail hiring was planned except at new stores.
• Shale gas activity in eastern Ohio showed 187 wells drilled with 44 producing. Shale well output in West Virginia was up 138 percent from the prior year and in Pennsylvania well output rose 42 percent in the first six months of 2012 compared to the last six months of 2011. Coal production was trending down in the district. Little energy-related hiring in energy was anticipated for the next six to 12 months apart from shale gas companies.
• A slowdown in freight transport volume seen in September and October has abated. Freight executives were optimistic in their outlook for 2013 but had tentative hiring plans.
• Demand for business credit was steady to down slightly. Consumer credit picked up in large part because of holiday shopping. Delinquency rates held steady or declined.
Nationally, the Federal Reserve said the economy picked up across much of the country last month, boosted by auto and home sales, even as the outlook for unemployment showed few signs of improvement.
“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the central bank said in its Beige Book business survey, which is based on reports from the Fed’s district banks.
The report, prepared for discussion at the Federal Open Market Committee’s Jan. 29-30 meeting, could strengthen the resolve of policymakers who want to press on with the Fed’s $85 billion in monthly bond purchases until the labor market improves substantially.
“There’s still plenty of potential headwinds” for the economy, said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, N.J. Policy makers “have not seen the recovery in labor markets that they had hoped for yet.”
The New York and Philadelphia districts rebounded from Hurricane Sandy while Boston, Richmond and Atlanta reported slight growth increases.