The Tenth District economy expanded at a moderate pace in the June and early July survey period. Consumer spending rose solidly and was especially strong among restaurants and auto dealers. Factory production rebounded from weakness in the prior survey period, and high-tech and transportation services firms reported continued growth. District bankers reported weaker loan demand but increased deposits and improved loan quality. Weak home sales and expanded inventory levels further pressured single-family home prices, while commercial real estate activity remained slow but stable. Activity in the energy sector was robust as drilling expanded in most District states. Conditions in agriculture were generally strong. Rising input costs were reported in several sectors, but wage pressures were limited to select industries and occupations.
District tourism visitor counts were generally up, especially at Colorado mountain resorts, but were slowed by wildfires and drought in northern New Mexico. District hoteliers reported increased occupancy and daily room rates.
Real Estate and Construction
Excess inventory weighed on single-family home prices, while commercial real estate remained weak but stable. Real estate firms reported flat existing home sales, higher home inventory, and lower home prices in June and early July. Contacts reported an increased share of existing home purchases by investors in all-cash transactions. Expectations for improvement in the housing sector were subdued. Home builders reported little new construction activity but noted increased buyer traffic. Entry-level homes sold well, along with high-end homes in some Colorado mountain resort communities.
Wages, Prices and Inflation
District contacts reported only limited wage pressures but noted additional upward pressure on input prices. Labor shortages and wage pressures were reported in the retail sector and for select occupations in the high-tech, energy, and transportation sectors. In addition, several contacts expected future non-wage employment costs to rise as a result of increased state unemployment insurance premiums. Manufacturers reported continued upward pressure on input costs; slightly fewer manufacturers reported increased finished product prices.
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