Highlights
The Beige Book, prepared by the Philadelphia Fed covering Aug. 30 to Oct. 11, offered initial hints of building inflationary pressures in a report that is certain to cement a further interest rate hike at the Nov. 1 FOMC meeting. Several districts said higher input costs were passing through to retail prices and that wages were rising. All districts reported a rise in input costs with two districts reporting a "general escalation."

The report described growth as moderate with significant hurricane dislocations reported by the Atlanta and Dallas Feds. The report said retail sales were soft in most districts but that manufacturing was strong. Reports on the housing sector were mixed but still showed strength, and importantly the report said demand for commercial real estate, which has been struggling to snap out of a long slump, is rising.

Bonds and the dollar showed no reaction to the report. But the report does show evidence of building inflation pressures and could support the minority who are recommending accommodation be removed in more aggressive 50-basis-point increments.

Below is the first part of the Fed's summary:

"Economic activity continued to expand in September, according to information received by Federal Reserve District Banks. Most Districts described the pace of activity as moderate or gradual. Richmond reported some quickening in the pace of growth while New York reported a slowdown. Atlanta reported mixed economic conditions, with significant negative effects on the District economy from hurricane damage. Dallas reported expansion overall but also experienced noticeable disruptions to the District economy as a result of Hurricanes Katrina and Rita.

"Retail sales of general merchandise increased in most Districts, but a number of Banks reported that retail sales were either below plan or weak. Auto sales fell throughout the Districts. Tourism activity was mixed. Service sector activity continued to expand. Manufacturing advanced in all Districts except St. Louis and Atlanta. Commercial real estate markets continued to firm up. Residential real estate activity remained generally strong, but reports that demand for homes has eased have become somewhat more common. Agricultural conditions were viewed as mostly good. Mining and energy production increased except in the Gulf of Mexico, where damage to onshore and offshore oil and gas facilities is still being repaired. Bank loans and deposits rose.

"Employment has been rising, and Federal Reserve Districts reported some tightening in labor markets. Wage increases have been moderate, although a number of Districts noted increased upward pressure on wages and salaries in the service sectors and for some skilled occupations in several industries. All Districts reported cost increases for energy, petroleum-based products, building materials, and shipping. Several Districts indicated that input cost increases are being passed through to retail prices."

2005 Release Schedule

Released On: 1/19 3/9 4/20 6/15 7/27 9/7 10/19 11/30 Released For: Dec Feb Mar May Jun Aug Sep Oct