The US economy continues to expand nationwide with only slight upward price pressures despite reports of tightening labor markets and higher wages, a US Federal Reserve Beige Book survey said on Wednesday.
All but two of the 12 Fed districts reported at least a slight increase in economic activity, with only New York seeing no expansion at all, and six reporting “moderate” growth and four describing it as “modest.”
However, the strong US dollar is weighing on manufacturing in some districts.
The report, which collects views of economists, business contacts and others in the 12 Federal Reserve districts in preparation for the monetary policy meeting next month, noted improved retail sales and home construction in most regions.
However, the manufacturing situation was mixed “with the strong US dollar being cited as a headwind to more robust demand in a few districts,” the report said.
In addition, vehicle sales fell in most regions, which some said “might be attributed to uncertainty surrounding the presidential election” that took place on Nov. 8.
Analysts are nearly unanimous in expecting the policysetting Federal Open Market Committee to raise the key benchmark interest rate when it next meets on Dec. 13 and Dec. 14, which would be the first hike in a year and only the second since rates were lowered to near zero in December 2008.
A key factor policymakers are watching are signs of inflation, including rising wages.
The Fed report said that employment had continued to expand and seven districts saw signs of tighter labor conditions, including reports from staffing agencies of rising wages and difficulty filling positions.
Even so, “as in the past four Beige Books, wage growth was characterized generally as modest,” it said.
In addition, there was only “slight price growth” reported, as three districts saw modest prices increases, while in the others the rise was described as slight or limited.
Residential real-estate activity improved nationwide, with home construction and prices up in most districts, while the energy sector continued to improve, albeit slowly, in most areas, the report said.
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