U.S. Fed Beige Book "Employment Slightly Declined…Labor Demand Weakened in About Half of Districts"

Korea Economic Daily

Summary

The Fed said in the November Beige Book that employment slightly decreased and labor demand weakened in about half of districts.
Despite an increase in layoff announcements, many firms indicated they were limiting headcount by natural attrition or by only filling vacancies.
With expectations of a policy rate cut rising ahead of the December FOMC, markets are closely watching the Beige Book.

The U.S. central bank (Fed) said in its November Beige Book, released on the 26th (local time), that "employment slightly decreased, and about half of districts reported weakening labor demand."

In the report, released ahead of the Federal Open Market Committee (FOMC) meeting on Dec. 9–10 that will set the policy rate, the Fed made this assessment of the labor market.

The report explained that "despite an increase in layoff announcements, respondents in more districts said they were limiting headcount by filling only vacancies or through natural attrition rather than by conducting layoffs."

The report noted that some firms said artificial intelligence (AI) is replacing entry-level positions or has raised existing employees' productivity enough that new hires are not necessary.

Regarding overall trends in the U.S. economy, it judged that there was little change overall since the previous month's report.

The Beige Book is an economic conditions report in which the 12 Federal Reserve Banks contact banks, firms, and experts in their districts to collect recent economic developments. It is typically published two weeks before an FOMC meeting that determines monetary policy.

The November Beige Book reflected the results of regional economic surveys compiled through the 17th of this month since the previous Beige Book publication.

With opinions within the Fed split between a 0.25 percentage-point cut and keeping rates unchanged ahead of a possible rate cut next month, and as the Labor Department's October employment report was canceled due to the impact of a U.S. federal government shutdown, Wall Street has been closely watching the Beige Book, which contains the Fed's own survey results on recent economic trends.

Wall Street experts have raised expectations for a December rate cut after New York Fed president John Williams said, "I still see room to adjust the policy rate further in the near term."

Ko Jeong-sam, Hankyung.com reporter jsk@hankyung.com