Economy Shows Modest, Uneven Gains in May

The nation’s economic recovery progressed at a modest pace in late April and May, although improvements were spotty, the Federal Reserve said Wednesday in its latest snapshot of business activity around the country.

“The tone was one of modest but uneven growth, with some major sectors showing signs of improvement while others softened or remained weak,” the Fed said in its “beige book” survey.

Manufacturers--hardest hit by last year’s recession--reported higher production levels, shipments and orders, but there were pockets of weakness. Suppliers of aircraft parts in Boston and San Francisco said orders were down. Manufacturers in Philadelphia, Atlanta, Dallas and San Francisco said demand for telecommunications equipment remained weak.

Retail sales were flat in most areas, hampered by unusually cool weather in some parts of the country. Automobile sales were mixed.

On the real estate front, home sales mostly stayed robust as low mortgage rates motivated buyers.

But commercial properties continued to struggle, with most areas reporting high vacancy rates and lower rental rates.

The jobs market was sluggish, though the Boston, Philadelphia, Richmond, Va., and Atlanta Fed districts reported higher demand for temporary workers, an encouraging sign for future job growth.

The Fed survey is based on information collected before June 3 from the Fed’s 12 regional bank districts. It will be used by Fed policymakers when they meet June 25-26 to discuss interest rate policy. Most economists predict the Fed will leave short-term interest rates--now at 40-year lows--unchanged through the summer.

Separately, the Labor Department said import prices were unchanged in May as falling costs for cars and capital goods offset price increases for petroleum and industrial supplies.

*

Reuters was used in compiling this report.