Key points

• The Federal Reserve's Brown Book indicates that economic activity in the United States has moderately expanded, with growth varying across industries and regions. Retail spending remains stable, and consumers show greater sensitivity to prices.
• Although the outlook for the summer hotel industry is mixed, the travel and tourism industry has strengthened due to an increase in leisure and business travel. Manufacturing activities remained relatively stable.
• Overall, the employment rate has slightly increased, with a slight increase in employment rates in eight regions. The availability of labor has improved, and wage growth has been moderate, returning to pre pandemic levels.

National economic activities

From early April to mid May, economic activity in the United States has expanded, but the growth situation varies across industries and regions. Most regions have achieved slight or moderate growth, but two regions have remained unchanged. Retail spending remains mostly flat, with consumers becoming more price sensitive and reducing non essential expenses. Car sales remain stable, and some manufacturers have introduced incentive measures to promote sales. The travel and tourism industry has shown strong performance due to an increase in leisure and business travel, but the outlook for the summer hotel industry is mixed.

Industry performance

The demand for non-financial services is increasing, and the performance of the transportation industry is uneven; Port and railway activities have increased, while truck transportation and freight demand have shown slight differences. The demand for services from non-profit organizations and community organizations continues to be strong. Manufacturing activity has remained stable to slightly increased, with two regions reporting a decline. Due to the tightening of credit standards and high interest rates, loan growth is restricted.

The demand for housing has moderately increased, although the rise in interest rates has affected sales, the construction of single household housing has increased. Due to supply issues, credit tightening, and rising borrowing costs, the commercial real estate industry has weakened. Energy activities remain stable, while agricultural reports show differentiation. Despite the easing of drought conditions, there are still concerns about farm finances and income. The overall outlook is more pessimistic due to increased uncertainty and rising downside risks.

Labour market

Overall employment has slightly increased. Eight regions reported moderate employment growth, while four regions reported no changes. The labor supply has improved, although there are still shortages in certain industries. Employee mobility has decreased, and employers have increased their bargaining power.

In terms of recruitment, some regions are expected to continue to achieve moderate employment growth, while others anticipate a decrease in recruitment due to weakened commercial demand and increased economic uncertainty. Wage growth is moderate, and some regions have noticed that wage levels have returned to pre pandemic levels.

Price

The price of goods has slightly increased. Many regions report that consumers are resistant to price increases, leading to increased input costs and reduced profit margins. Retailers attract customers through discounts. Input costs, especially insurance costs, continue to rise, although some building material costs have decreased. The cost of raw materials in the manufacturing industry has also decreased. It is expected that price growth will remain moderate in the short term.

Market Outlook

Given the mixed signals from various industries and the constraints brought about by high interest rates and credit tightening, the market outlook tends to be pessimistic. The increased uncertainty and potential downside risks further support this cautious stance. Traders should be prepared for potential market fluctuations and consider adopting risk mitigation strategies in the short term.