Consumer loan demand is boosting loan growth moderately at banks, although bankers are becoming increasingly concerned about delinquency rates. The fall harvest is ahead of schedule for most crops, although yields are generally below average. Manufacturing and Other Business Activity District contacts report that growth has moderated slightly in the past two months, partly because tight labor markets continue to limit production at many firms, especially small ones. Ongoing record low unemployment rates have forced many firms to search for workers outside their local areas. FedEx, for example, reports recruiting hourly workers from outside the Memphis region.
Firms also continue to use cash bonuses to attract and retain workers.
Concerns about finding a sufficient number of qualified workers have delayed some firms' expansion plans. Contacts report that upward wage pressures have picked up recently-in some cases, wage increases are approaching 6 percent. Contacts also note that health care costs are rising dramatically, and hikes of 10 to 15 percent are common. Rising pharmaceutical costs are a primary reason. Strong sales growth has been reported in the plastics and building-materials industries.