As the Federal Reserve prepares for a policy-setting meeting later this month, the central bank's latest round-up of the nation's economic conditions finds an improvement from the winter slump. The Beige Book survey says all 12 Fed districts reported an expansion of economic activity over the past six weeks.
Despite the encouraging showing for the overall economy, the job market's strength appears to be confined to key sectors and regions. The housing market appears to remain a concern.
What about jobs?
Just two days ahead of the Labor Department's May employment report, the Fed says the job market generally strengthened and that "hiring activity (was) steady to stronger across most of the country."
Echoing comments seen in previous reports, the Beige Book notes scattered shortages of skilled workers in certain areas of the country. " In regions including those around New York, Richmond, Minneapolis, Kansas City, Dallas, and San Francisco, wages have been increasing for some workers in information technology, engineering, professional services and some skilled trades. But the central bank notes that inflation pressures remain under control.
Car buying gears up
Car sales were put on ice during the severe winter in many parts of the country but appear to have rebounded strongly. The Fed uses the word "robust." On the other hand, retail sales generally appeared to be mixed, with the late arrival of spring weather blamed for hurting sales -- particularly in the Boston and New York regions.
Housing market issues
The report says the housing market has been "mixed" since the previous report and that a lack of supply of homes for sale has been a "constraining factor." Sales of previously-owned homes were said to be held back around Boston, New York, and Kansas City because of "low or dwindling inventories." Also mixed was new construction and sales of new homes. A number of regions reported that apartment, or multi-unit, construction was faring well.
Call it the Blah Book?
True to the plain color of the document, Sterne Agee chief economist Lindsey Piegza says the Beige Book was just "blah." She found nothing that changes her view of the economy. She says Friday's jobs report will likely be more important to determining future Fed policy. The risk, she says, is that the economy continues to under-perform expectations.
Piegza says interest rates will likely remain low for longer than most people, and the markets, currently expect.
The Fed's next meeting
Fed Chair Janet Yellen is scheduled to hold her next news conference June 18, following a two-day policy-setting meeting. The Fed is still believed to be on track toward raising interest rates next year as it continues to wind down its monthly asset purchases.
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