WASHINGTON The economy continued its slow recovery in recent weeks, the Federal Reserve said on Wednesday, with pockets of strength in manufacturing offset by "depressed" housing markets and employers still reluctant to hire in significant numbers.
The U.S. central bank's Beige Book showed more anecdotal evidence that the economy is struggling to break into a faster expansion needed to generate sufficient job growth.
The lukewarm report appeared unlikely to derail the Fed's latest efforts to push down borrowing costs by boosting its purchases of Treasury debt. The Fed in early November made a controversial decision to buy $600 billion more in long-term Treasuries, drawing sharp criticism from foreign governments who said this would weaken the dollar.
Fed Vice Chair Janet Yellen said on Wednesday the Fed's actions were "hardly a panacea" for weak U.S. growth and would be more effective if coupled with near-term fiscal stimulus.
"Reports from the twelve Federal Reserve Districts indicate that the economy continued to improve, on balance, during the reporting period from early/mid-October to mid-November," the Fed said in the report, which was prepared for the central bank's next policy meeting on December 14.
The Fed said economic activity in the Boston, Cleveland, Atlanta, Dallas and San Francisco districts increased at a "slight to modest" pace, while the New York, Richmond, Chicago, Minneapolis and Kansas City districts reported a "somewhat stronger" pace of activity.
Philadelphia and St. Louis reported business conditions as "mixed", the Fed said.
AUTO MANUFACTURING PICKS UP
The Beige Book showed that manufacturing continued to expand in almost all districts, with "relatively strong growth seen in the metal fabrication and the automotive industries."
But it said housing markets remained depressed, with several districts reporting a further weakening in the sector over the past six weeks.
The Fed said reports on consumer spending were seen as positive, with several districts expecting holiday sales to exceed year-ago levels. But it noted households were sensitive to prices and were still focused on buying necessities.
"Hiring activity showed some improvement across most districts, although employers are waiting for clearer signals of expanding business prospects before adding significantly to payrolls," the Fed said. Atlanta and Chicago reported a preference for hiring temporary workers, while staffing firms in Dallas described hiring activity as "strong".
Wage pressures remained "subdued" across districts, indicating little inflation pressure.
A government report on Friday is expected to show that the U.S. unemployment rate held steady at 9.6 percent in November, even as private sector payrolls rose for an 11th straight month.
The Fed said prices for final goods and services were fairly stable across districts despite rising input costs, especially for agricultural commodities, metals and fuel.
The Beige Book was prepared by the Cleveland Fed based on information collected on or before November 19. (Editing by James Dalgleish)