The national summary
The Federal Reserve published its September 2026 Beige Book on September 2, based on information collected on or before August 24, 2026.
Its national summary stated that residential construction declined while nonresidential construction increased on balance. Ten of the twelve Federal Reserve districts reported slight-to-moderate economic growth and two reported no change. Financial conditions improved slightly, with loan volumes solid or increasing in most districts.
District detail differed. The Boston Fed reported that residential real estate sales improved modestly. The Richmond Fed described residential and commercial markets experiencing a typical seasonal slowdown.
The split between housing and everything else
Residential construction falling while nonresidential construction rises is the most substantive line in the summary, because the two sectors draw on the same trades, the same materials and the same regional labour pools.
Analysis: when both move together, the cause is usually macroeconomic — rates, credit, general demand. When they diverge, the cause is more likely to be relative returns. Homebuilders respond to mortgage rates and affordability; commercial developers in the current cycle are responding to data centre, industrial and institutional demand that is largely rate-insensitive because the tenants are creditworthy corporates signing long leases.
That interpretation is consistent with the Beige Book's own evidence, though the report itself does not draw the inference.
A pay rise that tells the story
The Richmond district reported that a Maryland construction company implemented a 35 percent pay increase to retain workers amid labour competition driven by data centre construction.
A single firm's decision is anecdote rather than data, and the Beige Book is explicitly a compilation of anecdotal reports rather than a statistical survey. But a 35 percent retention increase is a large enough number to indicate a genuine bidding war for skilled trades in that market.
It also illustrates the transmission mechanism between the two construction sectors. Data centre projects can absorb labour cost increases that a homebuilder working to a sale price cannot. Where they compete for the same electricians and pipefitters, the homebuilder loses the crew, and residential starts fall for reasons that have nothing to do with housing demand.
How to read this document
The Beige Book is published eight times a year and compiles reports gathered by each Reserve Bank from business contacts in its district. The Federal Reserve states explicitly that it is not a commentary on the views of Federal Open Market Committee officials.
Its value is timeliness and texture: it captures conditions weeks before most official statistics and reports things — a retention pay rise, a seasonal slowdown — that no series measures. Its limitation is that it is qualitative and selective, and the contacts are not a random sample.
The overall outlook was described as mixed, with contacts more pessimistic amid inflation, energy price and policy uncertainty.
The labour strain extends beyond one contractor
The Richmond district's full labour-markets section, published the same day, describes the skilled labour pool in the Fifth District as tight, with contacts reporting increased competition from non-local companies pursuing data centre work. The 35 percent pay increase at the Maryland construction firm was cited as a retention strategy specifically, not simply a hiring incentive, indicating the firm was responding to workers who could leave rather than to a general shortage of applicants.
A separate account published later in September by the Richmond Fed's regional research team, drawing on business conversations gathered between early August and early September, found that data centres and their supply chains reported remarkably strong demand alongside firms in the defense sector, while businesses without direct data centre exposure were more cautious about the months ahead — a split that runs in the same direction as the residential-versus-nonresidential construction divide in the national summary.