Fed Beige Book: US sees steady growth in July-August

GMT 03:54 2015 Thursday ,03 September

Arab Today, arab today Fed Beige Book: US sees steady growth in July-August

US economy
Washington - AFP

The US economy stuck to its modest-to-moderate pace in recent months but companies complained that China's slowdown and the strong dollar were hurting business, a Federal Reserve report said Wednesday.

Most of the Fed's 12 districts also reported only slight or modest growth in hiring, though a handful said there were increasing wage pressures due to tighter labor market conditions, according to the Beige Book regional survey.

With the Fed expected to weigh a long-awaited interest rate increase at its coming policy meeting on September 16-17, the Beige Book gave no sense of any significant pickup in growth in the July and August survey period that would force the Fed's hand.

But businesses were relatively optimistic of continued steady growth.

"Respondents in most sectors across districts expected growth to continue at its recent pace, but the Kansas City report cited more mixed expectations," it said.

The Beige Book, which provides largely anecdotal evidence on economic conditions to the monetary policymakers of the Federal Open Market Committee, gave some indication of pressures on businesses.

Businesses in three districts -- San Francisco, Boston and Dallas -- "explicitly mentioned the Chinese slowdown as a factor" in reduced demand for certain products.

Survey respondents in five districts said the strong dollar was a negative factor for their businesses; cheap steel imports especially were hurting US steel makers, it said.

And the dollar was hitting retail sales in areas along the borders with Canada and Mexico, discouraging shoppers from both countries.

The slowdown in the oil industry, due to the plunge in crude prices, has also meant lower demand for machinery in some areas.

But other indicators -- tourism, loan growth, commercial and residential real estate, and auto sales -- were all fairly buoyant.

Still, hiring, one of the Fed's two key barometers for interest rate policy -- the other is inflation -- was flat to modestly better in most areas.

Similarly, wages were generally stable, but facing upward pressure in San Francisco, the leading technology hub, St. Louis and Cleveland districts.

Those factors could point to a relatively modest August jobs report from the Labor Department on Friday.

Meanwhile the Beige Book said most districts reported stable prices, more evidence of the lack of inflationary pressures across the country.

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