“While many districts described the improvements as only moderate, most districts stated that gains were widespread across sectors,” the US central bank said in its Beige Book survey released on Wednesday. “Manufacturing continued to lead, with virtually every district citing examples of steady improvement, often with reports of increased hiring.”
Manufacturing activity increased across the board, with strength in industries including auto and auto parts, commercial aircraft and high-tech goods.
Despite the general improvement, “uncertainties remained high” in many districts, the Fed said, with seven regions reporting sales and production disruptions in the wake of Japan’s earthquake and nuclear crisis. Businesses also reported uncertainty over government spending as Congress battled over the 2011 federal budget.
While wage pressures were “weak or subdued” in most of the 12 districts, businesses reported upward pressure on prices due to higher commodity costs, particularly for energy and raw materials.
Input prices rose, especially for petroleum, agricultural commodities including cotton, and industrial metals. The surging cost of oil spurred shippers to impose fuel surcharges in some regions as well. Signs that companies could pass cost increases on to their customers were mixed, the report said, with manufacturers facing less resistance than retailers or builders.
Retail sales improved across most districts as consumers spent more, except in Boston, where sales were mixed, and Richmond, where sales were weak. Car sales increased, except in Richmond and Chicago, but businesses in several regions were worried about the impact of the Japanese crisis on the supply chain.
Job growth was generally stronger, with eight districts reporting increased or modest improvement in employment activity. But hiring was limited or delayed in Philadelphia, Cleveland and San Francisco and conditions were mixed in St Louis.
The weak housing market continued to weigh on the economic recovery, with demand for single-family homes little changed or weaker across all districts. Commercial real estate was also weak, but seven districts did report “slight improvements.”
The Fed’s report follows growing signs of an accelerating recovery on several fronts. The labor department earlier this month reported the economy added a stronger-than-expected 216,000 jobs in March, while the latest purchasing managers’ index showed the manufacturing sector continued to expand over the month.
Published: April 13 2011 20:21 | Last updated: April 13 2011 20:21
By Shannon Bond in New York