WASHINGTON — Nearly all Federal Reserve districts reported modest or moderate economic growth in the past six weeks as business outlook improved and hurricane-related rebuilding pushed prices higher, the latest Beige Book survey showed Wednesday.
The survey — which will inform the Federal Open Market Committee of the latest conditions on the ground ahead of its Dec. 12-13 meeting — was conducted by the St. Louis Fed before Nov. 17.
Half of the 12 districts reported moderate growth while all but one of the rest said economic activity improved modestly. In the Chicago district, growth was slight overall, the survey said.
Rebuilding after the destructive hurricane season nudged costs higher, particularly for construction materials and freight transportation, the Beige Book said. Firms in the Dallas Fed district, hit particularly hard by Hurricane Harvey earlier this year, reported a return to business as usual as the initial post-hurricane surge in retail and auto sales "begun to recede."
With the districts reporting favorable growth conditions, the report should help support an FOMC decision to increase its short-term benchmark interest rate by another 25 basis points at the conclusion of its December meeting. Policymakers are also due to issue an update to their economic projections through 2020, and Fed Chair Janet Yellen will hold a press conference afterward.
That some businesses were passing through increased input costs to consumers should come as welcome news for policymakers concerned about weakness in inflation this year. Several districts noted input cost increases in transportation and manufacturing and in turned charged customers more, the Beige Book said.
"Most districts reported modest to moderate growth in selling prices and moderate increases in non-labor input costs," the survey said.
An IT service provider in the Richmond district reported "it was able to raise prices considerably in recent months without losing any customers." On Broadway in New York, theater ticket prices were up 15% from a year earlier.
Pre-holiday consumer spending on retail and autos were mixed but largely flat, though the "outlook for holiday sales was generally optimistic," the survey said.
Manufacturing activity expanded in all districts and most firms said they expected activity to continue to pick up. Demand from overseas spurred sales, and many respondents were optimistic about 2018. Factories in the Cleveland and St. Louis districts said they were also spending more on plant expansions and product development.
Businesses overall continued to report very tight labor market conditions, saying they were having difficulties finding qualified workers across various skill levels. Wage growth was "modest or moderate" in most districts though some employers were using signing bonuses and other nonwage benefits to attract new hires.
Residential real estate activity remained constrained while commercial activity grew slightly.
