US economy continues broad expansion: Fed report

WASHINGTON (AFP) - The US economy kept up "modest" or "moderate" growth in recent weeks, although lower oil prices were hitting the Dallas region, according to a Federal Reserve report released Wednesday.

US job growth expanded "moderately" from mid-November through late December, but that was not accompanied by upward pressure on wages, said the Fed's Beige Book, a collection of economic reports from the central bank's 12 districts.

"Significant wage pressures were largely limited to workers with specialised technical skills," said the upbeat report, which will be used as a basis for discussion at the Fed's next monetary policy on Jan 27 and 28.

While "most" survey respondents reported the modest or moderate growth, the Kansas City District, in the Midwest, reported only slight growth.

And the Dallas Fed, in the state of Texas, reflecting the rapid slide in crude oil prices, indicated "that growth slowed slightly during the reporting period and that several contacts expressed concern about the effect of lower oil prices on the District economy."

The continued minimal growth in wages has been a big worry for Fed officials.

It comes despite the best annual job creation since 1999 last year, with the world's largest economy pumping out nearly three million jobs and the unemployment rate falling to 5.6 per cent, its lowest level in six and a half years.

Some analysts say the robust number of jobs created will ultimately show up in higher wages, and some on the Fed's policy arm, the Federal Open Market Committee (FOMC), have pointed to soft wage gains in arguing that the first hike in near-zero interest rates should be delayed.

The minutes of the Dec 16-17 FOMC meeting showed that the first rate hike could come at the April 28-29 meeting, while some see it being announced at the June 16-17 meeting, which is followed by a news conference with Fed chair Janet Yellen.

Join ST's Telegram channel and get the latest breaking news delivered to you.