The U.S. economy improved in nine of the Federal Reserve's 12 regions in January and February while being hampered by snowstorms in the eastern United States, the central bank said Wednesday.
"In most cases the increases were modest," the Fed said in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. Consumer spending increased in many regions, while commercial real estate and loan demand were "weak" and labor markets "soft," the Fed said.
Wednesday's Beige Book reflects information collected on or before Feb. 22 and informs Fed policy-makers ahead of their next meeting March 16.
"Consumer spending improved slightly in many districts since the last survey, but severe snowstorms in early February limited activity in some districts," the Fed said.
While payroll reductions slowed in most areas, "hiring plans still remained generally soft," and pressures on employers to raise wages were "minimal," the Fed said.
The Beige Book said nonfinancial services were "steady or improved" in the majority of districts, and manufacturing "increased further" in most areas. The report said housing markets improved in some areas, were "weak or softened further" in three districts, including New York, and little changed or mixed in two other regions. The weather hampered the market along the East Coast.
The Fed has held its key interest rate near zero for more than a year and is expected to keep it there at its upcoming meeting. The rationale: Super low rates will induce Americans to boost spending, which would aid economic growth.
"The country is not living out a post-recession, post-crisis story. . . . We're in an early chapter of the story, and the ending is uncertain - quite uncertain," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said Wednesday during a speech in New York.
In other economic data released Wednesday, the Institute for Supply Management's index of activity at nonmanufacturing businesses rose sharply, to 53 from 50.5. Numbers above 50 indicate that activity at service businesses is rising.
And a report on the job market by ADP, the payroll processing company, found that private payrolls declined by 20,000 in February.
That suggests that while the job market remains weak, it is not falling off a cliff or heading back toward a double dip.
There has been a spate of disappointing economic data in recent weeks, including surprising increases in the number of new jobless claims. The February jobs report to be released Friday is likely to be bleak.
The White House is blaming the weather, saying that last month's snowstorms are expected to have artificially inflated job losses by at least 100,000.
But private economists say the report can't just be dismissed. They note that once the snow effect is filtered out, the data will still signal weak hiring, little if any job growth and an unemployment rate predicted to rise to 9.8 percent or more from 9.7 percent.
- Combined News Services