Economic activity in the First District expanded slightly in recent months, according to the latest Beige Book report released by the Federal Reserve Bank of Boston. While home sales showed renewed strength, consumer spending remained flat, and labor demand weakened further.
The Beige Book is published eight times a year and compiles anecdotal information on current economic conditions from business contacts, economists, and market experts across each Federal Reserve District.
Manufacturers reported modest growth in sales and noted that uncertainty related to tariffs had lessened. The nonfinancial services sector experienced slight revenue growth. Commercial real estate activity picked up slightly as the office market began a slow recovery. However, employment edged lower due to weakening labor demand, though no large layoffs were reported.
A grocery store chain described stable employment levels and said it was recruiting only to offset attrition. A clothing retailer found hiring easier than before and added more seasonal workers compared to last year. In manufacturing, employment declined slightly as firms cited ongoing uncertainty as a restraint on hiring. Staffing services contacts reported weaker labor demand overall, especially for temporary roles. According to a Massachusetts business association contact, “AI was holding back entry-level hiring.” About half of surveyed firms faced no difficulties or even easier conditions when hiring recently; others continued to struggle with finding qualified applicants.
Wages rose modestly overall while starting wages stayed flat. Most businesses anticipated stable head counts over the next 12 months; some planned moderate layoffs or reductions through attrition.
Prices increased at a modest pace but not as quickly as previously observed. A grocery store chain implemented moderate price increases but marked up beef, coffee, and cocoa products considerably due to supply-side cost pressures such as tariffs; egg prices dropped significantly. Restaurant menu prices were steady but could rise if beef costs continue increasing. Manufacturers’ output prices went up slightly amid mild cost pressures; one manufacturer facing strong tariff-related cost pressures planned future price hikes. Nonfinancial services firms kept billing rates unchanged despite higher insurance costs.
Retail goods sales (excluding autos) fell modestly while tourism softened somewhat; restaurant spending rebounded enough to keep overall consumer spending flat. Airline passenger volumes through Boston decreased compared with 2024 levels while cruise passenger numbers held steady.
Manufacturing sales grew modestly from the previous quarter with some firms seeing strong annual revenue gains—one attributed this to promotional activity and affluent customer spending; another saw increased demand tied to AI infrastructure investments.
Nonfinancial services revenues rose slightly on average. One law firm credited stronger-than-expected merger and acquisition activity for its revenue boost. Staffing service reports were mixed: consolidation in regional health-care staffing benefited some while others struggled due to slower labor demand generally. A Massachusetts higher education contact noted reduced demand for professional master’s programs because of uncertainty about AI’s impact on career prospects.
Commercial real estate activity increased marginally with improved office property demand driven by return-to-office policies in areas like Hartford lowering vacancy rates there—but elsewhere vacancies remained unchanged. Industrial leasing was steady at healthy levels; apartment rent growth moderated amid weak low-end market demand.
Residential real estate saw above-average increases in home sales during September 2025 versus the previous year—an improvement from August results—attributed mainly to lower mortgage rates and rising inventories across single-family homes and condos except for Rhode Island where single-family sales dropped sharply year-over-year. Inventory continued expanding rapidly while home prices rose moderately; condo prices were mostly unchanged over the same period.
More information about district economic conditions is available at www.bostonfed.org/regional-economy.
Historical Beige Book content can be accessed through the Board of Governors website.
The Minneapolis Fed hosts district-specific Beige Book archives dating back decades at its own site.
