An American Flag in a ferry terminal in New York City
Washington - AFP
The US economy is now growing all across the country, recovering at a "moderate" to "modest" pace after brutal winter weather, the Federal Reserve said in a report Wednesday.
"All twelve Federal Reserve Districts report that economic activity expanded," said the Fed's latest "Beige Book" report, based on a survey of economic conditions in recent weeks.
That marked an improvement from the previous Beige Book, released on April 16, when two districts -- Cleveland and St. Louis -- reported a decline in economic activity as the economy was emerging from a first-quarter contraction of 1.0 percent.
The May Beige Book said growth was described as "moderate" in seven Fed districts and "modest" in five. Activity in the area around Kansas City slowed slightly.
"Overall, this report is consistent with our expectation of a pick-up in growth in the second quarter after a weather-related contraction in Q1," said Cooper Howes of Barclays in a research note.
The May report, covering a survey period through May 23, will be used at a monetary policy meeting of the Federal Open Market Committee on June 17-18.
The FOMC is expected to continue to pare another $10 billion from its asset-purchase program aimed at supporting growth, taking it to $35 billion a month.
Consumer spending, the engine of two-thirds of US economic activity, grew at a "moderate" pace across almost all districts, the report said.
"Although improved weather generally gave a boost to business, lingering wintry weather in the Northeast continued to weigh on sales in parts of the Boston and New York districts," it said.
There was "brisk growth" in vehicle sales overall. Sales of new vehicles were "robust" and continued to outshine sales of used cars and trucks.
Several districts noted "particularly strong" demand for auto loans, including Cleveland, Atlanta, Chicago, Dallas, and San Francisco.
Non-auto retailers reported mixed results, the report said. Cold and wet weather was somewhat of a drag in the Boston and New York districts.
A number of districts noted that the late Easter holiday this year, combined with the late arrival of warm weather, had pushed back the spring shopping season.
Tourism was viewed as "fairly strong" in much of the country, including in New York, Boston and Atlanta.
Nonfinancial services had mixed performances, while banking and financial services saw loan demand strengthen on the whole.
Manufacturing, the key element of US industrial production, increased in all 12 districts, improving from "most" districts in the last report.
The housing market's performance was mixed, with several districts saying lack of inventory was holding back sales.
- Labor market improves -
The ailing labor market, the Fed's primary concern as it calibrates its exit from exceptional stimulus, signaled further gains ahead of Friday's government jobs report for May.
Respondents generally said that labor market conditions had improved since the previous report, with hiring activity "steady to stronger across most of the country."
But several districts continued to point out employers were having trouble finding skilled workers.
Wage pressures remained "subdued" in most of the country, the report said, amid still-elevated unemployment, with the jobless rate at 6.3 percent in April.
Wage increases were seen among highly skilled workers in information technology, engineering, professional services, and some skilled trades.
On the inflation front, price pressures were "contained," with most districts reporting that both input and finished goods prices were little changed or up only slightly since the previous report.
Although inflation continues tread well below the Fed's long-term target of 2.0 percent, the central bank has repeatedly said it expects prices eventually will turn higher.
Energy activity increased "modestly," the report said, with the San Francisco district reporting that crude oil production rose "robustly." Crude oil prices increased. Natural gas production was stable "at a high level."
Agriculture, which represents a tiny fraction of the economy, suffered in several regions from dry or drought conditions or wet field conditions. Dairy demand surged in Dallas, especially for export, pushing dairy product prices to record highs.