The U.S. economy showed signs of faster growth during the last six weeks, although the West Coast remained an area of subpar expansion, the Federal Reserve said Wednesday in its survey of regional economies.
“Reports from the 12 Federal Reserve districts provided additional signs that the pace of economic activity increased a notch during June and the first half of July,” according to the report, known as the “beige book.” It found “generally more positive assessments of current economic activity” and “increased optimism about economic prospects in coming months.”
Eight of the 12 regional banks reported “somewhat stronger growth,” the survey said. The Chicago, St. Louis and San Francisco districts reported continued “sluggish” activity, while Atlanta said conditions were mixed. No district said its economy weakened since the last survey, June 11.
The report detected early signs of a recovery in manufacturing, but said that consumer spending was “lackluster” and prices were “little changed,” a condition that puts pressure on corporate profits.
Central bank policymakers will use the collection of economic anecdotes when they meet to set interest rate policy Aug. 12. The Fed last month lowered its benchmark overnight bank lending rate to 1%, a 45-year low. Policymakers are expected to leave rates unchanged.
The “beige book” “paints a somewhat upbeat picture of economic growth but the improvement that it’s suggesting falls well short of suggesting a robust growth pace,” said Conrad DeQuadros, an economist at Bear Stearns Cos. in New York.
On Tuesday, the Conference Board said that U.S. consumer confidence declined unexpectedly in July to the lowest in four months as Americans’ view of their job prospects sank to the weakest in almost a decade. The figures are based on a survey of 5,000 households.
The beige book dovetailed with recent comments from Fed officials, who predicted a stronger recovery.
The gains in manufacturing reinforce earlier signs of strength in the sector, which accounts for about 15% of U.S. economic output and most of the job losses of the last three years.
Light vehicle production was “pretty good” in the Chicago district, while San Francisco, Boston and Dallas reported improvements in computer-related industries. Textile shipments “continued to fall” in Atlanta and Richmond.
While capital spending remained “weak” in manufacturing, several reported an increase in planned investment, the Fed said.
Retail sales were “mixed across districts” since the last report, improving “noticeably” in the New York district and posting “slight to modest gains” in Atlanta, Kansas City, Minneapolis and Philadelphia. Sales were “flat” in San Francisco, “lackluster” in Chicago and down in St. Louis.
The San Francisco district covers the states of California, Oregon, Washington, Idaho, Arizona, Nevada, Utah, Alaska and Hawaii.