Overall economic activity increased slightly since late May. Five Districts reported slight or modest growth, five noted no change, and two reported slight and modest declines. Reports on consumer spending were mixed; growth was generally observed in consumer services, but some retailers noted shifts away from discretionary spending. Tourism and travel activity was robust, and hospitality contacts expected a busy summer season. Auto sales remained unchanged or exhibited moderate growth across most Districts. Manufacturing activity edged up in half of the Districts and declined in the other half. Transportation activity was down or flat in most Districts that reported on it, as some contacts reported reduced demand due to high inventory levels and others noted continued challenges from labor shortages. Banking conditions were mostly subdued, as lending activity continued to soften. Despite higher mortgage rates, demand for residential real estate remained steady, although sales were constrained by low inventories. Construction for both residential and commercial units was slightly lower on balance. Agricultural conditions were mixed geographically but softened slightly on balance, with some contacts expecting further softening for the remainder of 2023. Energy activity decreased. Overall economic expectations for the coming months generally continued to call for slow growth.

Labor Markets
Employment increased modestly this period, with most Districts experiencing some job growth. Labor demand remained healthy, though some contacts reported that hiring was getting more targeted and selective. Employers continued to have difficulty finding workers, particularly in health care, transportation, and hospitality, and for high-skilled positions in general. However, many Districts reported that labor availability had improved and that some employers were having an easier time hiring than they were having previously. Employers also reported that the unusually high turnover rates in recent years appear to be returning to pre-pandemic norms. Wages continued to rise, but more moderately. Contacts in multiple Districts reported that wage increases were returning to or nearing pre-pandemic levels.

Prices
Prices increased at a modest pace overall, and several Districts noted some slowing in the pace of increase. Consumer prices generally increased, though reports differed in the extent to which firms were able to pass along input cost increases. Contacts in some Districts noted reluctance to raise prices because consumers had grown more sensitive to prices, while others reported that solid demand allowed firms to maintain margins. Input cost pressures remained elevated for services firms but eased notably in the manufacturing sector. Freight rates continued to decrease, along with the prices for many construction inputs, though concrete prices increased. Price expectations were generally stable or lower over the next several months.

Highlights by Federal Reserve District
Boston
Business activity expanded at a slight pace. Employment gains were small and prices were stable. Consumer spending increased by a small margin. Manufacturers reported moderate revenue growth. Home sales were disappointing and life sciences leasing activity slowed dramatically. The outlook was optimistic outside of real estate, but remained neutral or became increasingly pessimistic among real estate contacts.

New York
Regional economic activity stabilized after a period of weakness. Labor market conditions were strong, with some firming in recent weeks. Inflationary pressures eased noticeably. Consumer spending grew steadily. Housing markets were solid but low inventory continued to restrain sales activity.

Philadelphia
Business activity continued to decline slightly during the current Beige Book period. Consumer demand ticked down, although elevated profit margins buoyed overall sales figures. Employment fell slightly despite improved labor availability. Wage growth and inflation subsided but continued at a modest pace. Expectations for economic growth remained subdued.

Cleveland
The Fourth District economy was generally stable in recent weeks as high interest rates continued to constrain households' big-ticket goods purchases and businesses' project plans. Bankers and transportation firms cited these effects as contributing to weaker demand for their own services. Nevertheless, contacts were generally more optimistic about the near-term outlook and less concerned that a U.S. recession would occur in 2023.

Richmond
The regional economy grew slightly in recent weeks. Consumer spending on retail goods, as well as on travel and tourism, picked up modestly. Manufacturing and transportation sectors noted a slowdown in demand. Residential real estate was constrained by a lack of inventory. Commercial real estate activity and lending declined. Employment increased moderately and price growth eased slightly but remained robust, overall.

Atlanta
Economic activity grew slowly. Labor markets became less tight, and wage pressures eased. Nonlabor costs moderated, on balance. Discretionary retail sales softened. Auto sales remained strong. Domestic leisure travel softened, and international and business travel rose. Housing demand remained strong. Transportation activity slowed. Energy demand was steady. Agriculture conditions softened.

Chicago
Economic activity was little changed. Employment increased moderately; nonbusiness contacts saw little change in activity; consumer spending was flat; business spending and construction and real estate activity declined slightly; and manufacturing decreased modestly. Prices and wages rose moderately, while financial conditions tightened slightly further. Expectations for farm incomes in 2023 decreased some.

St. Louis
Economic conditions have remained unchanged since our previous report. Employers continued to struggle finding skilled workers, but turnover slowed and wage pressures lessened. Consumer spending was largely steady, but contacts reported a shift away from discretionary goods. Homebuying activity increased, but the commercial real estate sector saw worsening conditions.

Minneapolis
Economic activity in the region grew slightly in recent weeks. Employment rose moderately as labor availability improved. Price pressures were mild and wages rose moderately. Consumer spending was flat. Professional services reported solid activity and a positive outlook. Residential construction and real estate remained low. Dry conditions have lowered the farm outlook. Minority- and women-owned firms reported steady activity.

Kansas City
Total economic activity across the Tenth District changed little during June. Though hiring was flat, expected employment levels at most businesses continued to point downward. Businesses predominantly reported they are relying on natural turnover and attrition to reduce their headcounts, rather than layoffs. Concerns about credit quality and credit access rose broadly, including among micro-businesses, consumers, and commercial real estate.

Dallas
Modest expansion continued buoyed by gains in the service sector and single-family housing. Factory output, drilling activity and loan demand declined, and credit conditions tightened further. Employment rose moderately, and wage growth remained high. Price pressures evaporated in manufacturing but stayed elevated in the service sector. Uncertainty continued to rise, and contacts cited diminishing demand, higher labor costs, rising interest rates, and inflation as their primary outlook concerns.

San Francisco
Economic activity softened modestly. Labor availability improved across sectors. Wage growth slowed notably while price increases persisted. Retail sales moderated, and activity in the services sectors eased somewhat. Manufacturing activity was solid but weakened slightly, while conditions in the agriculture and residential real estate sectors were mixed. Commercial real estate activity fell, and financial sector activity was largely unchanged.