A Federal Reserve survey has found the US economy grew moderately in most regions of the country in April and May and companies kept hiring.
It was a hopeful sign after a spate of gloomy data released last week.
The Fed survey shows growth in each of its 12 bank districts from April 3 through May 25. Growth was moderate or modest in 10 districts, steady in the Boston district, and slowed in the Philadelphia region.
Hiring was steady or rose modestly, according to the Fed’s report, known as the “Beige Book”.
That’s in stark contrast to the government’s jobs report last week, which said employers added the fewest jobs in a year in May and the unemployment rate ticked up to 8.2 per cent from 8.1 per cent in April.
It was the second positive reading on the economy this week. On Tuesday, a private survey found that the service sector expanded at a slightly faster pace than the previous month. The industries surveyed cover about 90 per cent of the economy and include health care, retail, construction and financial services.
The survey was mostly positive. Manufacturing and home sales improved in most districts, as did residential and commercial construction. Car sales were strong in most areas. And businesses sought more loans, which could signal expansion plans. Small and medium-sized banks in the New York district reported the most broad-based increase in loan demand since the mid-1990s.
But the survey also pointed to some weakness in the economy. Consumer spending was flat or increased only slightly in almost all districts. That could restrain growth because consumer spending drives 70 per cent of economic activity.
Americans received little in the way of pay raises. Weak wage growth could also dampen consumer spending in the coming months.
The Beige Book is released eight times a year and is based on surveys by the Fed’s 12 regional banks. There are no numbers in the report. But its findings, which are released two weeks before the Fed’s policy meeting, help influence the discussions.
The Fed board meets on June 19-20.
