WASHINGTON – A Federal Reserve survey shows economic growth remained healthy in most U.S. regions in late November and December, helped by gains in consumer spending and factory output.
Nine of the Fed’s 12 banking districts described growth as moderate, according to the Beige Book survey released Wednesday. That’s up from seven districts in October through early November. And two of those districts said growth had accelerated since the previous report.
Only two districts — Boston and Philadelphia — said growth was modest, while Kansas City said it “held steady.”
Three-quarters of the districts said shoppers spent more over the winter holidays. And all but Kansas City said manufacturing production grew.
The Beige Book survey is based on anecdotal reports from businesses and will be considered along with other data when the Fed meets next Jan. 28-29.
The report showed little signs of the slowdown in hiring that the government reported last week. The Labor Department said Friday that employers added only 74,000 jobs last month, down from an average of 214,000 in the preceding four months.
The Fed survey, however, said two-thirds of the districts reported increases in hiring. That may bolster the view among many economists that December’s hiring slowdown was temporary and partly the result of bad weather.
Still, weaker December job gains could lead the Fed to rethink its recent decision to pull back on some of its stimulus.
Fed policymakers decided last month to cut the monthly purchases to $75 billion from $85 billion and suggested it would further trim its buying in future meetings. The bond purchases are intended to spur more borrowing and spending.
But Dana Saporta, an economist at Credit Suisse, said the report was positive enough to suggest that the Fed will continue reducing its purchases.
“We find nothing that threatens to divert the Fed from its current tapering path,” she said.
There have been other signs that the economy is growing at a solid pace. Americans increased their spending at retailers in November and December at a faster pace than the previous year, according to the National Retail Federation.
Greater consumer spending is a key reason that most economists expect growth will top 3 per cent at an annual rate in the October-December quarter. That would mark a second straight quarter of healthy growth after a 4.1 per cent expansion from July through September.
Several districts reported significant improvement in manufacturing, suggesting businesses and consumers are spending more. A manufacturer in the Dallas district said that his company “had too many jobs to bid on … for the first time since before the recession,” according to the Beige Book.
Most districts also said home sales, construction and prices continued to rise. Several districts said the housing recovery was boosting output “all the way from raw materials like lumber to finished products like kitchen cabinets.”
However, reports on tourism were more mixed. Atlanta reported healthy increases in hotel room reservations. But hotels in Manhattan said revenues per room in November fell more than 10 per cent from a year earlier, the first 12-month decline since the fall of 2012. Travel and tourism were also weaker in Hawaii and Las Vegas.
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