US economy on moderate growth track: Fed Beige Book

A trader at the New York Stock Exchange on Feb 6, 2015. The US economy continued to grow at a fairly moderate rate in recent weeks despite bad winter weather in some regions, according to a Federal Reserve report released on March 4, 2015. -- PHOTO:
A trader at the New York Stock Exchange on Feb 6, 2015. The US economy continued to grow at a fairly moderate rate in recent weeks despite bad winter weather in some regions, according to a Federal Reserve report released on March 4, 2015. -- PHOTO: AFP

WASHINGTON (AFP) - The US economy continued to grow at a fairly moderate rate in recent weeks despite bad winter weather in some regions, according to a Federal Reserve report released Wednesday.

"Economic activity continued to expand across most regions and sectors from early January through mid-February," with a "moderate pace" seen in half of the central bank's 12 districts, the Beige Book said.

The compilation of economic information serves as a framework for monetary policy decisions by the Federal Open Market Committee. The FOMC's next meeting is scheduled on March 17 and 18.

Analysts said the report and generally positive indicators appeared to pave the way for the Fed to raise interest rates as planned this year, widely expected by at least mid-year but not expected to be announced at next week's FOMC meeting.

"The Federal Reserve's March Beige Book depicts an economy that continues to fire on all cylinders," said Mr Christopher Velarides of Moody's Analytics.

The analyst predicted another strong Labour Department jobs report on Friday as businesses report increasing sales.

The January jobs report marked 11 consecutive months of jobs growth above 200,000, and Mr Velarides put the February jobs gain at 250,000.

According to the consensus estimate for February, the economy added 240,000 jobs, slowing from 257,000 in January, and the unemployment rate slipped a tenth point to 5.6 percent.

The Beige Book showed that unseasonably harsh weather had weighed on consumer spending and the housing market in certain areas, particularly in the North-east. Fed contacts in the Boston area, pummelled by heavy snowfalls, "were fairly upbeat this period, notwithstanding the severe weather," the report said.

Employment either remained stable or rose in a broad range of sectors, but wage pressures were moderate in most districts. Some contacts reported wage hikes to attract skilled workers for hard-to-fill positions, such as service sector firms in the New York district.

Generally weak inflation remained in play, with most districts reporting "flat to slight increases" in overall prices.

The slide in crude-oil prices, which have fallen more than 50 per cent since June, showed up in reduced production in several districts as energy companies scaled back investment. Most energy firms in Texas expected payrolls to fall in the first half of the year.

The West Coast ports slowdown over a contract dispute between management and union workers also hampered transport of goods, leading some manufacturers to hold higher levels of inventories as a precaution. The ports dispute was resolved Feb 21 but it will take some time to clear the huge backlog of shipments.

Consumer spending, the main driver of US economic growth, climbed overall, except for the Kansas City district in the central part of the country where retail sales declined.