Economic activity in most of the US improved slightly in December of 2020 while the labor market saw a slowdown as COVID-19 infections rose again along with new restrictive measures, the Federal Reserve cited in its recent Beige Book report.
Business confidence has improved with expectations of progress in 2021 due to the COVID-19 vaccine outlook, but some optimism has been mitigated since the pandemic’s infection rate resurged. Automotive sales have modestly declined since the last report, while the energy sector has shown increased activity for the first time since the pandemic began. Activity in the manufacturing sector had ongoing recovery in virtually every district despite supply chain issues.
Many Districts noted a rise in employment but at a slow pace and with partial recovery. The manufacturing, construction, and transportation sectors experienced the strongest employment demand, with some companies observing deficient workforces.
Prices have risen in virtually every District since the prior report, with progress in input pricing continuing to outperform finished goods and services prices. Prices for steel products, construction and building materials, along with shipping services were reported to have risen additionally. However, many sectors such as wholesale and retail trading were able to pass on increased costs to the consumer.