WASHINGTON (MNI) – The following is the third and final section of
the text of the summary Federal Reserve’s Beige Book survey of Fed
districts, published Wednesday:

Agriculture and Natural Resources

Agricultural conditions were mostly favorable. Fall harvest was
generally ahead of its normal pace, and above-average yields were
expected in most reporting Districts. There were a few exceptions,
however. Widespread rains flooded farmland and delayed harvests in the
Minneapolis District while dry weather affected some crops in the
Atlanta and St. Louis Districts. Unfavorable weather conditions and
resulting crop losses abroad continued to boost export demand for U.S.
agricultural products. Commodity prices strengthened further, boosting
optimism among producers in the Dallas District and spurring higher
cropland values and capital spending on agricultural equipment in the
Kansas City District. Additionally, corn producers in the Chicago
District were holding on to recently harvested corn in hope of even
higher prices.

The energy sector continued to expand, with activity rising further
in the Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco
Districts. The Minneapolis District reported that mines were operating
near capacity, and coal production was robust in the Cleveland and
Kansas City Districts. Firms in the Dallas District noted strong
domestic land-based drilling and a pickup in overseas demand had offset
losses resulting from the moratorium in the Gulf of Mexico. The
Cleveland and Kansas City Districts reported that strong activity had
prompted hiring and an increase in capital spending at some energy
firms. Respondents’ outlooks were mostly positive, although low natural
gas prices had dampened the outlook for producers in the Cleveland and
Dallas Districts.

Prices and Wages

Input costs rose slightly, but prices of final goods and services
were stable across Districts. Upward pressures on agricultural
commodities and industrial metals prices were reported by several
Districts. In addition, shipping costs increased in the Philadelphia,
Atlanta, and Dallas Districts, and retailers in the Philadelphia and
Chicago Districts reported higher wholesale prices. Pass-through of
rising input costs to final prices remained limited although there were
scattered reports of increases. Prices of petrochemicals rose in the
Dallas District, and a few manufacturers in the Boston District said
recent price increases on some of their products had been successful.
Some manufacturers in the Atlanta District noted rising costs of
materials and employee benefits would likely be passed on to customers
in the near-term, and several manufacturers in the Cleveland District
announced plans to raise product prices in an attempt to recover rising
costs. In response to rising food costs, food producers in the Dallas
District reported plans to raise prices, and menu prices at restaurants
rose modestly in the Kansas City District.

Wage pressures remained minimal. Most District reports found little
evidence of wage increases in general. There were widespread reports
across Districts that firms anticipated increased costs of employee
benefits as a result of healthcare reform.

Hiring remained limited, with many firms reluctant to add to
permanent payrolls given economic softness. Reports from staffing firms
were mixed. Staffing firms in the New York and Dallas Districts noted a
slowdown in demand for their services, and contacts in the Cleveland
District said new job openings declined. Richmond’s report noted demand
for temporary workers picked up slightly since the last report, and
staffing contacts in the Philadelphia District said clients were adding
positions as workloads increased. The Atlanta report noted a preference
for increasing staff hours and using temporary help rather than hiring
additional full-time staff.

—

Prepared at the Federal Reserve Bank of Dallas based on information
collected on or before October 8, 2010. This document summarizes
comments received from business and other contacts outside the Federal
Reserve and is not a commentary on the views of Federal Reserve
officials. ii

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** Market News International Washington Bureau: 202-371-2121 **

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