November 26, 2025
Summary of Economic Activity
The Fifth District economy continued to grow at a modest rate in recent weeks. Consumer spending at retail establishments grew modestly despite somewhat lower foot traffic and some tentativeness by consumers to make large purchases. Spending on travel and tourism increased slightly as some hotels saw growth in leisure travel. Manufacturing activity slowed modestly this reporting cycle. Activity in financial services, nonfinancial services, and real estate markets were little changed in recent weeks. Employment was largely unchanged with many firms reporting contentment with their current level of staffing, and wage growth remained moderate. Price growth fluctuated slightly across sectors but generally remained at a moderate pace of year-over-year growth.
Labor Markets
Employment in the Fifth District remained unchanged in the most recent period. Many contacts reported satisfaction with current staffing levels. An engineering firm reported no plans to hire due to recently hiring young employees whose training and mentoring takes priority. Contacts wanting to increase head count were frustrated with the applicant pool. For instance, a construction company reported stalled business growth due to difficulty finding "quality" entry level workers. A cabinet maker recently purchased equipment at a favorable price, which nudged their decision to add a new facility and grow their total head count. Contacts reported moderate wage growth, with several noting that they needed to increase compensation to help retain workers.
Prices
Price growth remained moderate in recent weeks. According to our most recent surveys, service sector firms reported a slight easing of price growth and manufacturers saw a slight increase, but in both sectors, year-over-year growth remained within a moderate range. Businesses continued to experience rising input costs, some of which were due to tariffs; however, a few contacts noted that prices for certain goods were lower than expected because the tariff rate was reduced or the increase was postponed.
Manufacturing
Manufacturing activity in the Fifth District declined modestly during the recent reporting period. Several contacts said that their customers reduced new orders due to uncertainty about tariffs. Textile manufacturers specifically noted decreases in both the number and size of new orders. A rail parts manufacturer indicated that clients were reluctant to commit to longer-term contracts because of uncertainty about final pricing. However, some firms connected to construction reported slight improvements in business conditions. A brick manufacturer and a drywall producer both noted increases in business, while a millwork company that supplies residential and commercial construction now anticipates higher demand for their products. Both companies cited the recent interest rate cut as a factor influencing this increased spending.
Ports and Transportation
Overall volumes at Fifth District maritime ports were relatively flat compared to last cycle. Tariff-driven supply-chain diversification has rerouted some ocean carrier container traffic to other East and West Coast shipping hubs, which led to a slight decrease in import volumes at ports in our District. Loaded exports were a bright spot, however, driven by ag products like grain coming by rail from Virginia and Midwest states shipping out to Southeast Asia and the Middle East. The volume of vessels carrying auto imports has remained steady overall, with numbers not yet reflecting the new fee on roll-on roll-off ships that went into effect in October. Contacts noted that more auto traffic may begin to come into the US by rail from Mexico to avoid the extra charges on Chinese vessels. Truckload transport volumes remained low. One contact shared that while their firm has received small, single-digit rate increases, their costs for insurance, tires, and other equipment have gone up significantly.
Retail, Travel, and Tourism
Consumer spending continued to grow at a modest rate in recent weeks. Retailers reported steady growth in total sales but noted that customer foot traffic was lower and big-ticket sales were down somewhat. Several contacts expressed concern that declining consumer confidence was impacting customer willingness to make larger purchases. Spending on travel and tourism grew slightly, on balance, but reports varied by region and type of travel. For example, a hotelier in Virginia said that weekend leisure travel was flat to up slightly in recent weeks but business travel during the week was down modestly. Meanwhile, hotels in South Carolina saw increased bookings and revenues with one contact noting that the increase since the previous reporting cycle was due to now entering a typically stronger travel season.
Real Estate and Construction
Residential real estate activity was little changed this cycle, but reports varied significantly by location. While most agents in Virginia and the Carolinas saw flat or slightly increased activity, contacts in northern Virginia, D.C., and Maryland saw a decrease in activity due in part to employment uncertainty among federal workers and contractors. One broker added that despite being furloughed, one of their government employee clients was still able to qualify for a loan. Inventory across the Fifth District continued to grow as days on market slowly inched up. Builders remained positive as they completed sites but aired concerns about slower new starts because of the time-consuming permitting process and need for skilled construction workers.
Commercial real estate activity remained largely the same. According to a Maryland broker, general uncertainty in the market was constraining activity. Retail and medical offices across the District continued to perform well. The flight to quality Class A office space continued while outdated Class A, B, and C buildings remained vacant. Industrial remained flat with a broker in South Carolina noting speculative industrial got ahead of itself over the last few years. Multi-family construction slowed in North Carolina with current concerns of over development, while a broker in Virginia noted multi-family tenant delinquencies were starting to happen.
Banking and Finance
Financial institutions continued to report stable loan demand that was described as "well distributed" across their various commercial lines of business. Contacts also reported stable demand within their home mortgage and equity line portfolios primarily driven by lower borrowing rates. Deposit levels continued to be stable with a banker describing any increases in balances as happening "slow and steady." Competition was still strong within the marketplace for available deposit balances, though. Institutions continued to report modest increases in loan delinquencies, primarily within their consumer loan portfolios that includes both autos and mortgages.
Nonfinancial Services
Nonfinancial service providers continued to report stable demand for their services, but economic uncertainty and hiring qualified employees remained a challenge. Staffing firms continued to report that overall demand for their services declined, overall, despite some increase in demand for seasonal workers. An interior design firm reported a trend of clients scaling back projects due to rising costs. Similarly, a nonprofit had to reduce the scope of a major capital construction project due to increased costs from tariff impacts and contractor availability constraints.
For more information about District economic conditions visit: https://www.richmondfed.org/research/data_analysis.