Businesses in several regions of the United States were reluctant to hire workers in August because of uncertainty over the economic outlook, a Federal Reserve report said Wednesday.
While 11 of 12 Fed districts described ‘little or no’ net change in employment compared with the prior month, seven districts described firms as ‘hesitant,’ with two districts reporting a rise in layoffs, according to the central bank’s ‘Beige Book’ survey of economic conditions.
‘Contacts in multiple districts reported reducing headcounts through attrition — encouraged, at times, by return-to-office policies and facilitated, at times, by greater automation, including new AI tools,’ said the Fed report, which comes ahead of Friday’s monthly US employment market report.
In terms of overall economic conditions, most of the 12 districts reported ‘little or no’ change, with four reporting ‘modest growth.’
Contacts reported flat or declining consumer spending due to households where ‘wages were failing to keep up with rising prices’ amid president Donald Trump’s tariffs, said the report.
The Fed is set to announce its latest monetary policy decision on September 17 against a backdrop of intense pressure for an interest rate cut from Trump.
Futures markets overwhelmingly expect the US central bank to lower rates by a quarter of a percentage point following a poor July jobs report. However, that outlook could shift if Friday’s jobs report significantly exceeds expectations.
Much of the Beige Book’s labour market language painted a subdued picture of hiring.
Businesses in New York are in a ‘wait and see’ mode on hiring, with larger firms in particular ‘less willing to make commitments.’
In Boston, some began hiring after a pause ‘but with a preference for temporary positions,’ while some firms in Atlanta ‘continued to welcome attrition in their workforce.’ In Minneapolis, some firms were not filling open positions ‘given economic uncertainty.’
However, New York and St Louis were among the districts where contacts encountered labour shortages in sectors such as construction, manufacturing and agriculture.
These sectors are experiencing ‘abnormally high turnover,’ which is attributed to ‘the loss of immigrant labour’ amid Trump’s immigration crackdown.