*DJ Fed Beige Book: Econ Expansion 'Moderate Or Steady'
*DJ Beige Bk: Hiring Up;Labor Cost Pressures Little Changed
*DJ Beige Bk: Consumer Prices Up At 'Only A Moderate Rate'
*DJ Beige Bk: Manufacturing Expanded In January, February
*DJ Beige Bk: Warm Weather, Gift Cards Pushed Spending Up
*DJ Beige Bk: Housing Activity, Home Price Gains Slowed
DJ Beige Bk: Hiring Up;Labor Cost Pressures Little Changed
By Brian Blackstone and Campion Walsh
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Economic activity "continued to expand" in most of the U.S. Federal Reserve's 12 regional districts in January and February and employment strengthened, but labor costs and retail prices remained under control, the Federal Reserve said Wednesday.
According to the Fed's Beige Book, a summary of economic activity prepared for use at the central bank's next Federal Open Market Committee meeting on March 27 and 28, most districts described the expansion as "moderate or steady."
San Francisco and Dallas reported robust activity, while Richmond, Va., and Philadelphia reported more moderate gains.
The Fed said that business contacts "generally reported ongoing input cost pressures," with energy prices "mentioned frequently."
However, those pressures didn't appear to spill over into consumer prices, with the Fed stating that "prices at the retail level increased at only a moderate rate."
The most recent report was prepared by the Federal Reserve Bank of Chicago and reflects information gathered before March 6.
Most regions reported broad-based hiring gains, with demand for temporary help "strong in most areas," according to the Beige Book. Meanwhile, "almost every District reported shortages of high-skilled workers," the Fed stated.
The U.S. generated 243,000 new jobs in February following January's 170,000 rise, the Labor Department said last week. The unemployment rate stood at 4.8% in February, 0.1 point above the four-and-a-half-year low reached in January.
The central bank cautioned in its last two policy statements in December and January that high resource utilization - the jobless rate is considered a key barometer of resource use - posed a threat to inflation.
But, according to the Beige Book, "labor cost pressures were little changed" in January and February, with most districts reporting "that wages increased modestly on average." The sole exception was Philadelphia, which reported faster wage growth, especially in finance, construction and manufacturing.
Regarding the housing sector, the Fed observed that "most Districts said that residential activity slowed from high levels" and that "home price appreciation slowed in many areas."
In contrast, commercial building picked up in early 2006, the Fed stated.
(MORE TO FOLLOW) Dow Jones Newswires
03-15-06 1400ET
DJ Beige Bk: Hiring Up;Labor Cost Pressures Little Changed-2
According to the Fed's Beige Book, manufacturing strengthened in early 2006, with demand for factory products "widespread across industries."
However, "several districts commented on the ongoing struggles of the domestic nameplates in the auto industry," the Fed said, citing anecdotal reports from Chicago, Cleveland, Atlanta and Kansas City.
Consumer spending, meanwhile, "showed solid gains during January" in many regions, the Beige Book stated, thanks in part to warm temperatures and holiday gift card redemptions.
But sales softened last month in the New York, Philadelphia, Richmond, Chicago and Dallas regions as those factors unwound, the Fed stated. Other regions such as Atlanta, St. Louis, Kansas City and San Francisco "apparently maintained much of their momentum," the Beige Book stated.
Auto sales were described as "sluggish" or "unusually slow" with auto inventories above desired levels. Overall retail inventories "were generally at desired levels," the Fed stated.
Consumer borrowing softened in early 2006, the Fed said, while commercial lending expanded "at a modest pace."
Meanwhile, "comments about household and business credit quality were mostly favorable" and "no district reported a change in lending standards," the Fed stated.
-By Brian Blackstone and Campion Walsh; Dow Jones Newswires; 202-828-3397; brian.blackstone@dowjones.com |
