Economic activity in the First District remained generally flat, according to the latest Beige Book report. The report, compiled from business contacts and sector analysis, found that increased consumer spending on goods was balanced by a decrease in tourism and hospitality expenditures. Manufacturing saw modest growth, nonfinancial services edged up, and financial services activity was stable. Bank loan volumes and performance did not change significantly.
Commercial real estate activity showed some weakening, with home sales also declining moderately. Some small businesses faced staffing disruptions and lower sales due to increased immigration enforcement. Employment decreased slightly overall, with wages posting minor gains and prices rising modestly. The general outlook improved as uncertainty declined, though it remains a concern for several contacts.
Labor market conditions indicated a slight drop in employment despite most businesses maintaining their workforce levels. One manufacturer reduced staff because of higher input costs that could not be passed on to consumers. Wage growth slowed recently, while benefits remained flat; however, some firms expect health insurance costs to rise and plan to pass some of these increases onto employees. Staffing firms reported more demand as economic confidence grew among their clients. There was an increase in job applicants for junior positions, but recruiting skilled workers for in-person roles—particularly in Boston—remained difficult due to high living costs and commuting challenges. Most industries anticipated steady employment levels over the next six months except staffing and consulting firms, which expect more hiring.
Price pressures were mixed but trended upward overall. Food commodity prices such as eggs fell sharply compared to the previous year, while beef prices rose substantially according to one regional grocer. A sporting goods retailer noted suppliers raised prices due to tariffs after previous delays. A flower importer enacted its third price hike in 12 months because of a weaker U.S. dollar; retailers responded by reducing bouquet sizes rather than raising sticker prices directly. Manufacturers’ input costs remained high from earlier tariff increases but were stable recently; output prices ticked up slightly overall with some exceptions where firms made larger adjustments to maintain margins. Financial services experienced moderate price increases at one large firm. While many companies expect continued cost pressures from tariffs, most do not plan full cost pass-throughs given customers’ sensitivity to higher prices.
Consumer spending was unchanged overall since the last report but varied across sectors. Tourism and hospitality saw modest revenue declines while retail receipts strengthened somewhat. One grocery chain attributed an alcohol sales boost to winter storms and local football playoffs despite a longer-term downward trend in alcohol purchases. Flower importers reported steady Valentine’s Day demand but noted weaker wholesale demand since Christmas except for the holiday itself. Sporting goods retailers had stronger-than-expected sales volumes yet remain concerned about ongoing uncertainty and rising costs.
Manufacturing activity grew modestly amid strong demand but continued tariff-related raw material price pressures persisted for most contacts. One lab equipment company reported robust annual revenue growth even as key customers faced federal policy headwinds. Capital expenditures and inventories stayed mostly stable with expectations; one firm plans expansion as international customers shift production stateside. Some manufacturers said tariff-related uncertainty stabilized recently while others still face risks from policy changes or foreign exchange volatility.
Nonfinancial services—including staffing—reported slight increases in business activity, revenues, and profits compared to last quarter. Staffing firms benefited from a rebound in hiring for professional services and IT roles without notable pay or billing rate changes; they expressed greater optimism about future demand alongside decreased uncertainty.
Financial services businesses described steady conditions with no major changes in bank loan volume or nonperforming loans; loan pricing declined modestly under pressure from local competition on mortgage and commercial lending rates, leading banks to lower rates for pending loans accordingly.
Commercial real estate activity softened somewhat: industrial leasing slowed (with rent softening for larger spaces), retail leasing picked up slightly (with modest rent increases), while office leasing stayed subdued overall. Multifamily investment retreated slightly—a trend linked by one contact to a Massachusetts rent-control ballot initiative—and lenders sought more real estate assets but largely avoided office properties due to risk concerns.
Residential property markets saw moderate declines in single-family home and condominium sales year-over-year—a result partly attributed to January snowstorms—with single-family home prices up moderately but condo prices down slightly relative to January 2025 levels; inventories increased moderately across northern New England but dropped sharply in Massachusetts, while properties spent longer on the market than last year’s January figures did.
Community contacts highlighted ongoing strains among low- and moderate-income residents facing high food, rent, and energy costs—including home heating expenses—and noted persistent reliance on food pantries following last October’s initial reports of need (especially acute during November’s temporary SNAP suspension). Small businesses reported negative impacts from stepped-up immigration enforcement—including staffing issues or revenue drops tied to lower foot traffic—in certain Maine communities experiencing enforcement surges; nonprofits described difficulty meeting increased service demands amid rising healthcare costs, shrinking resources, and uncertain federal funding streams.
The Federal Reserve Bank of Boston supports community revitalization through research initiatives (official website) as part of its broader role within the U.S Federal Reserve System (official website). The Boston Fed works toward economic stability across New England via monetary policy implementation (official website), banking oversight efforts (official website), community programs (official website), monitoring local economic trends (official website), all under the leadership of President Susan Collins since July 2022 (official website). Its operations extend throughout all six New England states (official website).
For additional information about District economic conditions visit: www.bostonfed.org/regional-economy.
