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US economic activity increases, employment edges up

US economic activity increases, employment edges up

Craig Johnson
| January 15, 2025

Main article

US economic activity increased slightly to moderately in late November and December, according to the Federal Reserve Beige Book report. Employment rose, with six districts reporting a slight increase and six citing no change. Some contacted by the Federal Reserve for the report cited the need for AI skills.

Overall, most districts reported strong holiday sales that exceeded expectations and that vehicle sales grew modestly. Manufacturing decreased slightly, but the nonfinancial services sector grew with leisure and hospitality as well as transportation — notably air travel — standing out.

“Construction employment edged up, while manufacturing job growth was flat,” according to the Beige Book. “Contacts across multiple sectors noted difficulty finding skilled workers, and reports of layoffs remained rare. However, contacts in some districts expressed greater uncertainty about their future staffing needs.”

There were also concerns that changes in immigration and tariff policies could negatively affect the economy.

Meanwhile, wage growth ticked up to a moderate pace in most districts.

The New York district noted demand for workers picked up following a pause after the election. One staffing firm in upstate New York reported that finding qualified workers has continued to become easier.

In the Philadelphia district, staffing firm contacts reported little change in demand for services and little wage pressure.

The Richmond, Virginia, district noted one staffing firm reported concerns about skills becoming obsolete, saying, “that several candidates were not able to land a job due to outdated skills and/or AI has led to fewer job openings in their fields.”

These workers will likely need to accept lower wages to find work, the firm said.

A contact in Memphis, Tennessee, also mentioned AI, according to the St. Louis district. The contact reported that generative AI will “shape their workforce” in the coming years and expects new hires will be able to use these technologies.

Staffing firms in the Minneapolis district reported clients were not hiring and this was particularly the case in manufacturing.

“Some staffing contacts reported that there were more candidates than jobs, a flip-flop of earlier labor conditions,” according to the Minneapolis district.

The Dallas district reported services employment increased, led by education and health services. However, employment fell in trade, transportation and utilities as well as information services.