Economic activity in the First District increased slightly, according to the latest Beige Book report released by the Federal Reserve Bank of Boston. The report, which is published eight times a year, compiles anecdotal information from business and community contacts across the region.
The summary noted that consumer spending and manufacturing sales saw modest gains. Commercial real estate activity also rose slightly, surpassing expectations. Software and IT services firms reported small revenue increases and strong demand. Home sales remained flat, but housing inventory increased notably.
Employment levels did not change overall, though layoffs became more common. Wage increases continued at a modest pace. The report stated, “Employment was flat overall, as both hiring and layoffs increased modestly.” In manufacturing, employment was steady as some firms added workers to meet demand while others reduced staff to offset cost increases related to tariffs.
The labor market showed some signs of slack in Maine and Vermont, despite ongoing hiring challenges. Cuts to federal grant funding contributed to layoffs in education and health care sectors. IT services employment grew modestly, particularly in sales and technical roles.
Price increases continued at a moderate rate due to higher construction costs, energy prices, and wholesale food prices. Liability insurance rates also rose sharply. Restaurant profitability declined as menu prices stayed mostly unchanged despite rising costs. “Prices rose moderately on average, as certain cost pressures increased,” the report said.
Retail and tourism sectors experienced modest growth. Tourism demand shifted toward luxury accommodations while budget-friendly options saw less growth. Hotel occupancy rates in greater Boston and Cape Cod increased slightly compared to last year. Retailers and restaurants in Cape Cod, coastal New Hampshire, and Maine reported moderate growth in summer spending due to more day trips. However, Canadian travel to New England remained sharply down from last year.
Manufacturing sales increased modestly since the previous report. Some firms saw revenues exceed projections despite slight declines compared to last year. Demand increased in medical, retail, wholesale, and restaurant segments. However, uncertainty made planning difficult for some businesses.
Software and IT services continued to see strong demand with slight revenue growth over the last quarter. One contact reported very strong annual revenue growth. Firms attributed this demand to the essential nature of their services and investments related to AI adoption.
Commercial real estate activity was up slightly after seasonal adjustments. Leasing activity picked up after Labor Day, particularly in Boston’s office market. Office rents stayed flat while operating costs continued to rise. Retail leasing was stable with low vacancies and modest rent growth.
Residential real estate sales of single-family homes were flat or down slightly overall as of August but increased in northern New England states compared to last August. Condo sales were up slightly on average but varied widely by state. House prices rose moderately compared to last year but at a slower rate than previously reported.
Community contacts expressed growing concern about the economic security of low- and moderate-income households in the region. More people used food pantries and had trouble paying bills. Consumers increasingly relied on savings for basic needs and reduced their spending where possible.
The outlook among business contacts improved somewhat, with most now either neutral or cautiously optimistic about future conditions.
Further details about regional economic conditions can be found at www.bostonfed.org/regional-economy.
All past Beige Book content since 1996 is available at the Board of Governors website (https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm), while archives by district dating back to 1970 are hosted by the Minneapolis Fed (https://www.minneapolisfed.org/beige-book-archive).
Journalists seeking additional information can contact the Boston Fed’s media relations team for access to economists and leadership.
