The US economy expanded at a "modest but uneven" pace since late April, reflecting sluggish retail sales and improvement in services and manufacturing, the Federal Reserve said.
"Retail sales were flat in most districts" through May, while business at manufacturers and at service companies from banks to hotels "improved overall, but varied across regions and segments," the Fed said in its latest regional economic report card, known as the beige book.
"They are saying that things are soft and, if anything, seem to be softening from the very strong first quarter," said David Wyss, chief economist at Standard & Poor's in New York.
That probably means Fed policy makers will wait several months before raising the benchmark overnight bank lending rate from a 40-year low of 1.75 percent, economists said. Central bankers next meet June 25 and 26, and will use the beige book in their deliberations.
"We were expecting a September rate hike and, if anything, this suggests it will be put off longer than that," Wyss said.
The economy is probably expanding at a 2.9 percent annual pace in the quarter that ends this month, about half the 5.6 percent growth rate of the first three months of the year, according to the latest Blue Chip Economic Indicators survey.
Growth may accelerate to a 3.4 percent pace in the third quarter, followed by a 3.7 percent rate in the fourth, according to the consensus estimate, which was released Monday.
Stocks rose Wednesday in a rally during the final hour of trading after Procter & Gamble Co, the world's largest household-products company, and appliance maker Maytag Corp increased profit forecasts. The Dow Jones Industrial Average rose 100 points, or 1.1 percent, to close at 9,617.71. The NASDAQ Composite Index rose 22 points, or 1.5 percent, to close at 1,519.12.
Fed Chairman Alan Greenspan suggested last week that central bank policy makers may leave rates unchanged for now because inflation remains "remarkably quiescent" and the economy is in a "soft spot."
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