WASHINGTON The Federal Reserve on Wednesday said its business contacts suggest economic activity is still expanding modestly in most regions though pockets of weakness and strained labor markets remain a problem for some districts.
In its September Beige Book report, based on anecdotal evidence collected by regional Fed banks, the Fed said hiring conditions were little changed over the several weeks. New York and Chicago, however, pointed to a weakening backdrop.
Consumer spending appeared to be holding up despite a slack job market, with a number of districts reporting modest gains in retail sales. Still, the pace of growth seemed consistent with the U.S. economy's recent track record of softness. U.S. second-quarter gross domestic product was recently revised down to a paltry 1.3 percent annual rate.
The Fed last month announced an open-ended program of bond-buying, starting with $40 billion a month in mortgage debt purchases, in an effort to jumpstart an anemic recovery that continues to lack traction some three years after it began.
The U.S. unemployment rate has remained stubbornly high, though it did post a surprising drop in September to 7.8 percent from 8.1 percent.
"Stagnant demand and uncertainty related to the upcoming presidential election, U.S. fiscal policy and European debt issues (were) cited by some as restraining hiring," the Beige Book said.
U.S. manufacturing activity was mixed but had on balance improved somewhat from the last report, the Fed said.
In another sign that a battered U.S. housing sector may finally be starting to mend, the Beige Book echoed recent data pointing to improvement. Most districts reported an increase in existing home sales, the report said.
(Reporting By Pedro Nicolaci da Costa; Editing by Andrea Ricci)