WASHINGTON (MNI) - Only two of 12 Federal Reserve districts reported setbacks and the rest saw the same kind of "modest or moderate" economic expansion as earlier in the year, with adverse weather a lingering but fading factor, the Federal Reserve's latest Beige Book survey showed Wednesday.
The continuation of only vaguely discernible incremental improvement did not contain any hints of foreseeable change in the outlook that could alter Federal Open Market Committee timelines for tapering and eventual tightening.
The jobs picture was "mixed" but generally positive, loan demand and credit quality was improved, manufacturing and steel production continued to expand but the agricultural economy was feeling the effects of the freeze and western drought.
Nevertheless the upper Midwest appeared to be the center of optimism, seeing economic activity pick up in March as the Chicago District reported, while the Cleveland and St. Louis districts were less favored, reporting a decline in activity.
The survey conducted eight times a year for consideration of the FOMC was done by the Richmond Bank and extended through April 7.
"The expansion was characterized as modest or moderate by the Boston, Philadelphia, Richmond, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts," the Beige Book survey found. "Chicago reported that economic growth had picked up, and New York and Philadelphia indicated that business activity had rebounded from weather-related slowdowns earlier in the year." New York and the Philly districts had reported declines in the survey published March 5.
"The Cleveland and St. Louis Districts both reported a decline in economic activity," the report continued.
"Consumer spending increased in most Districts, as weather conditions improved and foot traffic returned," the Fed said. "Auto sales were up in the New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco Districts, but they were little changed from a year earlier in Kansas City and Cleveland."
Wage pressures were "contained or minimal" in most Districts and some reported shortages of skilled workers in the manufacturing and information technology sectors.
Price pressures were "subdued" in manufacturing and "steady" in services, in the services-centric New York district. Philadelphia saw manufacturing prices edging up while prices rose more slowly in Richmond. Construction supplies and livestock prices appeared to be among those under the most pressure.
Retailers were varied in their assessments, with one large auto dealer outside Washington, D.C. reporting "that business had increased dramatically" as consumer attitudes improved. In nearby Baltimore, a discount store manager said sales revenues were unchanged. Several retailers in the Kansas City district noted strong sales yet for autos, results were flat.
Boston reported advertising and consulting "were strong" and overall, shipping volumes at ports and via trucks were generally stronger. The report added, "Even in districts where transportation was soft, the outlook was optimistic."
Weather references were across the spectrum with some districts saying winter was less severe than usual, others noting the severe impact that had made headlines early in the survey period, and for many district, weather's effects were "lingering."
The scattered anecdotal accounts, which compose the entirely of the Beige Book, made it difficult to reach a firm conclusion about the total impact of the cold weather. The drought conditions in the West, however, were unequivocally damaging. The killing piglet virus was reported from east to west, by Richmond, Chicago, Kansas City and San Francisco and prices of beef and pork were up everywhere.
One area where wage pressures were seen to be pronounced was in the Dallas district. New York saw "scattered wage pressures."
Residential construction was hampered by weather in some areas and there were reports of fears that the housing industry was leveling off "after a year of fairly robust growth" Some builders "expressed frustration with financing issues or customers who keep push back contract signings." Yet, the report said, "Most of our contacts anticipate that the housing market will grow at a slow but steady pace."
