Fri, Jun 07, 2013 - Page 15 News List

Fed regional survey finds US economy putting along

AFP and Reuters, WASHINGTON and NEW YORK

The US Federal Reserve’s regional survey on Wednesday painted a picture of a US economy still putting along at the same pace of the past year, with jobs growing slowly and no threat of inflation.

The Beige Book update on activity in the 12 Fed districts — a key input into monetary policy decisions — said the economy continues to grow at a “modest to moderate” speed, with conditions slowly, but steadily improving in the six weeks since the previous report.

Helped by the surge in home building, manufacturing as well as services continued to expand across the country — contradicting some recent data suggesting that the manufacturing sector was contracting.

SLOW GROWTH

Consumer spending growth was mostly slow and bank lending continued to rise.

Prices remained restrained, while hiring “increased at a measured pace in several districts,” the report said. Wage pressures “remained contained overall” despite rises in certain jobs.

Analysts said the Fed’s tweak of its overall description of activity to “modest to moderate” from “moderate” in the April Beige Book amounted to a subtle downgrade of its view.

However, the details in the report suggested that economic growth had not changed significantly from the 2.4 percent pace of the first quarter.

That gives little impetus to the Fed’s policy board, the Federal Open Market Committee, to immediately begin tailing back its quantitative-easing bond purchases JOBS

Separately, private employers added 135,000 jobs last month, the ADP National Employment Report showed on Wednesday, an acceleration from April, but missing forecasts for a gain of 165,000.

April’s private payrolls were revised to an increase of 113,000 from the previously reported 119,000 gain.

“The number was weak,” said Mark Zandi, chief economist at Moody’s Analytics, which jointly developed the report.

“The ADP [data] is suggesting, instead of job growth stepping up, it’s actually stepping down as we move into the summer months,” Zandi told reporters. “It’s not like we’re falling off a cliff, it just feels like we’re throttling back a little bit.”

MANUFACTURERS

The ADP report showed manufacturers shed payrolls last month and a separate report indicated that jobs growth in the vast services sector was weak last month, with a gauge of employment at services firms falling to its lowest in close to a year.

The ADP figures come two days ahead of the government’s more comprehensive labor market report, which includes both public and private sector employment.

That report is expected to show job growth increased only slightly, with non-farm payrolls seen rising by 170,000 compared with the 165,000 seen in April.

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