The U.S. economy expanded across most regions and industries in July and August, a Federal Reserve report showed, as tighter labor markets boosted wages for some workers.
Six of 12 Fed districts reported "moderate" growth, and five others said expansion was "modest," according to the Beige Book, released Wednesday in Washington. The survey is based on reports gathered on or before Aug. 24 by regional Fed banks.
The report gives central bank officials, who next meet Sept. 16-17, an anecdotal picture of growth as they consider ending more than six years of near-zero interest rates.
"Most districts reported modest to moderate growth in labor demand," the Beige Book said, with this tightening in labor markets pushing up wages slightly in some industries, especially in the New York, Cleveland, St. Louis and San Francisco districts.
The Beige Book also showed that manufacturing activity was mostly positive, with only the New York and Kansas City Fed districts seeing declines.
"Credit quality was reported to be improving in most districts, while credit standards were generally said to be unchanged," the Beige Book said.
The U.S. economy expanded at a 3.7 percent annualized rate in the second quarter, an Aug. 27 report showed, and employment has been rising at a steady clip. Officials will gain an additional month of labor data when August figures are released Friday in Washington.
While domestic economic data have been strong, global equity markets have been volatile in recent weeks, and weaker Chinese growth is clouding the international outlook. China surprised investors on Aug. 11 by devaluing the yuan and aligning its exchange-rate policy more with market forces, stoking speculation that the world's second-largest economy may be slowing more than expected.
Manufacturing in the U.S. expanded in August at the slowest pace since May 2013 as a lack of demand from emerging markets, such as China, translated into weaker factory orders. The Institute for Supply Management's index fell to 51.1 from 52.7 in July, a Sept. 1 report showed.
The unemployment rate has dipped to 5.3 percent, down from a 10 percent peak in 2009, as companies continue to hire workers. As the Fed weighs when to lift interest rates, policy makers are still looking for signs that inflation will move up toward their 2 percent goal. Their preferred gauge of prices rose just 0.3 percent in July from a year earlier.
Despite the slow acceleration in prices, Fed Vice Chairman Stanley Fischer voiced confidence in recent days that inflation would move higher.
"With inflation low, we can probably remove accommodation at a gradual pace," he said Aug. 29 at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming, without specifying when the Fed should start.
Forty-eight percent of 54 economists surveyed Aug. 27-31 by Bloomberg News expect a September increase in the benchmark lending rate, down from 77 percent in an Aug. 7-12 survey. About one-fourth say the Fed will lift off in December, while 17 percent said October.
