Employment rose at a modest to moderate pace in most districts in late May and June amid tight labor markets, according to the Federal Reserve’s Beige Book report released Wednesday. The Beige Book, a collection of observations from the 12 federal regional banks, provides a snapshot of current economic conditions. 

Firms reported shortages of qualified labor across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, IT professionals, and truck drivers. Some districts indicated labor shortages were constraining growth. Firms were adding work hours, strengthening retention efforts, partnering with local schools, and converting temporary workers to permanent. There were also reports of firms raising compensation to attract and retain employees.

Retail contacts reported that labor supply was tight and one contact said labor costs increased 10% over the previous year. All surveyed manufacturers were hiring or maintaining current levels of employment. Manufacturing contacts said the labor market was tight, but the exceptional difficulties were mostly in highly skilled areas like engineering. Labor shortages continued to be an issue in the hospitality industry, particularly in seasonal destinations like Cape Cod. Contacts in the software and information technology areas expressed concerns about restrictive immigration policies.

Overall, economic activity continued to expand across the US, with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The outliers were the Dallas district, which reported strong growth driven in part by the energy sector, and the St. Louis district, where growth was described as slight. Manufacturers in all districts expressed concern about tariffs and in many districts reported higher prices and supply disruptions that they attributed to the new trade policies.

Observations by staffing firms include:

Philadelphia: Staffing firms reported ongoing demand for workers, but a scarcity of candidates, as well as difficulty hiring and retaining employees. As the job market tightens, wages have risen, and employers have converted more full-time temporary workers to permanent employees than is normal. However, according to one contact, many temp orders continued to be for part-time work.

Chicago: A staffing firm that primarily supplies manufacturers with production workers reported no change in billable hours.

Minneapolis: A Montana staffing firm reported that “hiring demand and job orders are up, but [worker] candidates are down.”

Dallas: A staffing firm said they had partnered with a manufacturing company, where workers could attend a paid, six-week welding course and receive full-time employment following successful completion. Revenue growth in the professional and business services sector was solid, with staffing services firms noting persistently high demand, driven by widespread increases in activity across geographies and sectors.