The US economy showed less-than-stellar growth in the final weeks of last year, but produced solid holiday sales and enters the new year with a “modestly favorable” outlook, the US Federal Reserve said on Wednesday.
On the day the US and China signed a long-awaited partial trade truce after months of conflict, the Fed said tariffs continued to weigh on the economy in some regions.
The Fed’s “beige book” survey of conditions nationwide painted a mixed picture, with circumstances improving in the Richmond, Virginia; and Dallas, Texas; regions, but lackluster in the Philadelphia, Pennsylvania; St Louis and Kansas City, Missouri; regions.
“In many districts, tariffs and trade uncertainty continued to weigh on some businesses,” the report said.
However, “expectations for the near-term outlook remained modestly favorable across the nation,” it said.
US President Donald Trump last month relieved some of the pressure on US businesses by canceling a planned round of tariffs on Chinese goods and slashing some others as part of a partial trade deal with Beijing, ending nearly two years of escalating conflict.
The two sides signed the deal on Wednesday.
However, many of the China tariffs remain in place — costs borne by US businesses and consumers, which are weighing on investment and growth — and Trump has also slapped tariffs on European exports, including wine, and threatened to do more.
In the Philadelphia region, the looming wine tariffs “prompted an area merchant to stock up with over 35,000 cases” to beat the sanctions and minimize price hikes, the report said.
Overall economic growth in the area “slowed to a slight pace,” it said.
Across the nation, “holiday sales were said to be solid” in the crucial annual shopping period, while tourism was “mixed” and manufacturing — a sector hit badly by Trump’s trade disputes — was “essentially flat” in most areas.
Labor remained scarce, with employers struggling to fill open positions, a trend that now dates back more than a year.
However, in the manufacturing, transportation and energy sectors, there were job cuts and reduced hiring.
The Kansas City region was mixed, with strong retail sales and solid performance in the professional and high-tech services industries — but manufacturing and transport “continued to decline.”
Fed policymakers cut interest rates three times last year, but said toward the end of the year that they did not expect to do so again unless circumstances changed substantially.
The report was prepared in advance of the Fed’s next policy meeting on Jan. 28 to 29.
Markets overwhelmingly expect policymakers to leave interest rates untouched until November at the earliest.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by