The US economy is growing steadily with little sign of change of pace, but businesses are generally more optimistic about the future, according to the Federal Reserve’s newest Beige Book report Wednesday.
The survey of regional economies reiterated the “modest to moderate” description of activity of the past half-year, but noted that in a number of regions, there are some signs of tightening in the labor market, with companies having trouble filling skilled positions.
The report, which is used by the Federal Open Market Committee to help shape monetary policy, was cautiously upbeat, as has been the case since the end of the first quarter, when extremely harsh winter weather forced the economy to contract.
The rebound since then has been firm but its strength remains in question, with the survey, covering late July and August, noting only “slight to moderate” gains in consumer spending and real estate and construction weakness in half of the Fed’s 12 districts.
It said that the service industry, excluding banks, reported improving business, but manufacturing was more mixed.
However, the report noted that “among districts reporting on their firms’ near-term expectations, the manufacturing outlook remained generally upbeat.”
The report underscored that, even with the pace of activity largely unchanged, there were rising expectations for the next half-year.
Five districts reported that contacts “generally remained optimistic about future growth; most of the other districts cited various examples of ongoing optimism from specific sectors.”
Among key indicators of activity, auto sales in some areas were hot but in others were beginning to fall from recent peaks; tourism was widely improved with higher hotel occupancy rates ; and bank lending was on the rise, though mainly for car and truck purchases.
On the other hand, home loan demand had fallen off, and home sales and construction was also largely flat.
And though a number of districts reported shortages of workers with specific skills — information technology workers, truck drivers, energy sector workers and construction workers — wages were mostly unchanged, suggesting some slack remains in the jobs market.
Likewise, the Beige Book said, inflation was tame: “Overall, price pressures remained largely unchanged.”
Fed Chair Janet Yellen has repeatedly cited continued slack in employment, and little inflationary pressure, to justify the FOMC holding its benchmark federal funds interest rate at the zero level to support the economy.
The FOMC next meets to review monetary policy on September 16-17.