WASHINGTON (Reuters) - Economic activity improved nationwide last month, but worries about Europe’s debt crisis dented confidence, the Federal Reserve said in its Beige Book collection of anecdotal reports.
“Economic activity continued to improve since the last report across all 12 Federal Reserve districts, although many districts described the pace of growth as ‘modest,’” the central bank said.
The report, compiled by the Chicago Fed based on information collected through May 28, showed consumer and business spending picking up and the job market improving slightly, while inflation remained in check.
That recipe lends support to the Fed’s pledge to keep its benchmark interest rate ultra-low for an extended period. The Fed will use this report at its next policy-setting meeting later this month, and is widely expected to leave rates unchanged near zero.
Financial activity was little changed since the last Beige Book, published in April, although business contacts in some regions reported improved demand for business loans.
Loan quality was stabilizing or gradually improving in most districts, although that “remained an issue for banks with large exposures to real estate.”
The Fed also noted some contacts cited concerns over how Europe’s fiscal troubles might affect financial and business conditions, and said uncertainty increased.
The Beige Book, named for the color of the report’s cover, provides the central bank with anecdotal evidence of the economy’s health to help guide policy decisions.
Wednesday’s report included details such as:
* Sales of spring and summer apparel were strong in Boston, New York, Philadelphia, St. Louis, Kansas City and Dallas districts. In the Boston district, retailers noted “some potholes in the recovery path” but said sales were generally positive.
* Auto and parts production increased in the Cleveland, Richmond, and Chicago districts.
* Crop planting was generally ahead of the seasonal norm.
On the inflation front, the Fed said wage pressures were limited, although San Francisco reported some upward pressure on employee benefit costs. Prices of final goods and services were largely unchanged.
ST. LOUIS JOINS IN
In the St. Louis region, which was the only one of the 12 that did not report a strengthening economy in the previous Beige Book, manufacturing activity increased.
“A greater number of contacts reported new hires and plant openings than reported job layoffs and plant closings,” the report said.
The Boston Fed said some of the staffing firms in its region reported a mismatch between job seekers and the needs of employers.
“One contact notes that hundreds of college graduates are looking for work but available positions often require more experience,” it said.
In the New York region, Broadway theaters reported that business has picked up noticeably, after slowing a bit in mid-April.
Reporting by Emily Kaiser; Editing by Andrea Ricci
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