The Beige Book

The Beige Book is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Boston (First District) Beige Book Report, June 3, 2026

Summary of Economic Activity

Economic activity expanded slightly, representing an improvement from the previous report. Despite high gas prices, consumer spending excluding autos edged up, and auto sales rose moderately. Manufacturing activity increased slightly, with one firm reporting historically high demand. Nonfinancial services firms reported an uptick in revenues, activity among banks and other financial institutions was unchanged, and real estate activity eased slightly. Employment was roughly flat, and wages showed small gains. Output prices edged higher, and cost pressures remained elevated, mostly related to the Middle East conflict. Perceived uncertainty remained elevated but, on balance, did not increase. The outlook was mixed, as consumer-facing businesses reported decreased confidence, while business-facing firms became more optimistic.

Labor Markets

Employment was mostly unchanged, as selective layoffs largely offset a pickup in hiring. Wages and benefits rose slightly on average, although many firms reported flat compensation. Job openings increased slightly for firms in the manufacturing, retail, accounting, legal, and staffing services industries. Staffing contacts observed increased demand for skilled professional services workers and weaker demand for entry-level workers, with the latter development possibly driven by AI; the same contacts reported some layoffs at large firms and elimination of vacancies at small firms. A Rhode Island contact reported moderate layoffs of public-sector employees amid local fiscal strain. Turnover remained stable at low rates, and labor supply increased slightly overall. However, stricter immigration rules resulted in a shortage of landscaping workers, boosting their wages. Employers in the manufacturing and nonfinancial services industries expected to see slight increases in head counts in the next six months, while those in retail, tourism, and financial services expected stable employment.

Prices

Output prices rose slightly on average, although many firms left prices unchanged. Input prices increased modestly overall, but some contacts reported significant cost pressures. Numerous contacts mentioned the conflict in the Middle East as a source of cost pressures and heightened business uncertainty. Higher energy and fertilizer prices contributed to a moderate increase in food prices, especially for fresh produce. Manufacturers and retailers said increased shipping costs cut into profits, and manufacturers also faced higher raw materials costs. Construction contacts experienced moderate to strong cost pressures not exclusively linked to the conflict, including property taxes and borrowing rates, in addition to energy prices. On average, retailers and manufacturers reported modest output price increases. Auto repair rates rose further, and used-car financing rates remained very high. Bank lending rates were unchanged, as were rates charged for financial and nonfinancial services. Most contacts did not plan to raise their output prices in the near term, even though many were concerned that cost pressures linked to the Middle East conflict could persist for a while.

Consumer Spending

Consumer spending (excluding automobiles) rose slightly in recent months, and auto sales grew moderately. Retailers reported modest gains in revenues, while tourism contacts described activity as flat, noting higher fuel prices had squeezed recreational budgets. A clothing retailer experienced a modest increase in revenues, despite expectations that recent merchandise price increases would crimp sales; the same contact said new fuel surcharges on shipping eroded some of those gains. Following weak auto sales in January and February—even when adjusted for seasonal factors—sales of new automobiles in New Hampshire increased moderately in March and through mid-May. Dealers noted the recent rise in gas prices made hybrid vehicles (but not EVs) easier to sell, even though increased demand was not motivated primarily by a desire to shift to hybrids. New Hampshire's used auto sales also increased some but faced headwinds from high financing and insurance costs; auto service departments in the state experienced reduced activity, owing to the suspension of New Hampshire's vehicle inspection program as well as to rising repair costs. Retail and tourism contacts became somewhat less optimistic on average, pointing to elevated fuel costs and uncertainty; the outlook for new auto sales remained strong among New Hampshire dealers.

Manufacturing and Distribution

Manufacturing activity increased slightly from the last report, with most contacts citing performance that either met or exceeded expectations. One machine parts manufacturer reported unprecedented domestic demand driven by data centers and defense spending, while a different precision manufacturing firm experienced softness in international sales. Capital expenditures rose modestly but remained low; one manufacturer selling capital goods said that interest in expanding capacity was strong, but firms were reluctant to commit to large expenditures because of heightened geopolitical uncertainty. The outlook improved on balance, and uncertainty decreased, although responses were mixed. Two machinery manufacturers experiencing strong demand became more optimistic, whereas consumer-facing firms reported increased pessimism and uncertainty linked to pressure on consumer budgets from higher gas prices. Two other firms maintained a stable, optimistic outlook, despite citing downside risks related to the conflict in the Middle East.

Nonfinancial Services

Revenues increased slightly in recent months among most nonfinancial services contacts, driven by upticks in demand. A Maine community college reported no change in revenues but noted that student enrollment increased moderately in response to a tuition-free community college program in the state, which recently was made permanent. The outlook improved on balance, as half of contacts became more optimistic and the rest said the outlook was stable and optimistic. Some contacts noted that uncertainty remained high. However, none felt that uncertainty had increased recently, and one commented that businesses had gotten used to uncertainty and were moving forward with decisions anyway.

Financial Services

On average, business activity among banking and other (non-bank) financial services industry contacts showed no change since the last report. Banking contacts said loan volumes, loan pricing, loan demand, and nonperforming loan shares were stable but expected the latter to rise in the coming months. The same contacts became less optimistic in response to growing signs of financial strain on local businesses and households. In contrast, the outlook improved slightly among non-bank financial services firms, with one citing support from resilient corporate earnings and AI-related capital expenditures. However, financial services institutions said that uncertainty had increased in response to the conflict in the Middle East and the associated rise in energy prices, sparking concerns about households' financial well-being.

Real Estate and Construction

Real estate sales and leasing activity softened slightly, while construction activity ticked up. In the residential market, closed sales of single-family homes and condominiums fell moderately in April from one year earlier, which contacts attributed to the harsh winter, rising mortgage interest rates, and geopolitical tensions. In March, Rhode Island recorded its lowest level of single-family home sales since 2010, when record-keeping began. Apartment leasing activity edged lower. Home inventory remained scarce, keeping prices elevated. Pending sales and new inventory both increased from a year earlier, generating optimism for the rest of the spring season. In the nonresidential market, leasing activity was flat for industrial and office properties, while retail leasing activity increased slightly, accompanied by modest rent growth and a gradual decline in vacancies. Nonresidential sales stagnated amid expectations that interest rates would stay high for longer. Construction activity and revenues increased slightly overall, even though multifamily construction slowed somewhat. Construction firms experienced diminished profits following recent cost increases. The outlook for nonresidential activity and for construction dimmed on increased uncertainty tied to the Middle East conflict and proposed rent control in Massachusetts.

For more information about District economic conditions visit: www.bostonfed.org/regional-economy.

All Beige Book content going back to 1996 can be found at the Board of Governors website.

The Minneapolis Fed hosts the Beige Book archives by district, going back to 1970.