The US economy grew moderately last month and early this month, and hiring was more robust than in the previous six-week period, the US Federal Reserve said on Wednesday.
The Fed report on business conditions said nine of its 12 districts reported growth that was “modest” or “moderate.” That is roughly in line with the conditions described in the previous report.
Strength in auto sales, tourism and home sales last month and early this month offset weakness in manufacturing.
Photo: AFP
The report comes two days before US Federal Reserve Chairman Ben Bernanke will address an annual conference of economists in Jackson Hole, Wyoming. Investors will be listening for any signals about whether the Fed might take action at its next policy meeting on Sept. 12 and Sept. 13 to stimulate the economy.
Michael Gapin, an economist at Barclays, said he viewed the latest Fed survey of business conditions as slightly more positive than last month’s report.
However, he said companies continue to worry about threats, including economic weakness in Europe.
Analysts said nothing in the report would discourage the Fed from helping the economy, if its policymakers saw the need for it.
“As long as activity grows at a rate that fails to bring down the unemployment rate, Fed action remains on the table,” said Paul Edelstein, director of financial economics at HIS Global Insight.
The economy is still struggling to gain traction more than three years after the end of the “Great Recession” in June 2009.
The Fed report said that six of its districts reported weaker demand in manufacturing. And it highlighted concerns about a severe drought affecting cotton, soybean and corn crops in its Chicago, St Louis and Kansas City districts.
The report, known as the “Beige Book,” is released eight times a year. It is based on information that the Fed’s 12 regional banks gather from business contacts around the country.
At its last policy meeting from July to 31 Aug. 1, the Fed took no action. However, the minutes from that meeting signaled that officials might act as soon as next month, possibly by launching a fresh round of bond buying. The goal of the bond purchases would be to lower long-term interest rates to encourage more borrowing and spending.
The Fed has already sought to drive down long-term rates by buying more than US$2 trillion in Treasury bonds and mortgage-backed securities in two previous rounds of bond purchases. These purchases are known as “quantitative easing.”
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