Beige Book shows improving US economy

The US economy is continuing to show signs of health, with manufacturing, residential real estate and consumer spending improving during the last six weeks, the Federal Reserve said on Wednesday.
In its latest Beige Book survey, the Fed said that overall economic activity had “increased somewhat” in 11 of the 12 districts it tracks. Although St. Louis lagged behind, most regions saw greater tourism traffic, renewed consumer demand and fresh indications of hiring.
However, the Fed noted that the labour market remains weak and that the services sector is mixed, with banks seeing smaller loan volumes and credit quality still deteriorating.
Unemployment remains a top concern for the Fed, but there were some reasons for hope in the latest survey. Most districts said that businesses were showing more demand for temporary workers and in some areas employers were extending the hours of their workers. These are both precursors of future hiring.
The real-estate sector also continues to be mixed, with residential real estate slowly improving but commercial property still looking to bottom out. The Fed said that commercial real-estate activity was “slow” across the US, although some areas saw upticks in leasing.
Michael Feroli, an economist at JPMorgan, said he thought the overall tone from the Fed had brightened and that the improvement noted in the housing market was unexpected.
Meanwhile, manufacturing continued to be a bright spot for the US economy. Nearly every region saw increases in new orders, shipments and production at factories, but for some the improvement is not coming quickly enough.
“Business is better than a year ago, but not exciting,” a Philadelphia-area manufacturer told the Fed.
The Beige Book comes as Ben Bernanke, Fed chairman, told Congress he expects that a “moderate economic recovery” would unfold in the US over the next several quarters.

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