The pickup in growth reported by each Fed region corresponds with stronger hiring and declining unemployment over the last three months. The latest Beige Book, as the Fed report is formally known, sketched a picture of an economy improving in most major sectors:
Manufacturing output rose in all districts. Auto manufacturing, steelmakers, and other metal producers all reported solid growth.
Hiring rose slightly in many districts, with manufacturing employment picking up in six.
Home sales increased in at least half of the districts, a notable improvement from the Fed's last report in January. Sales are expected to climb further in four districts. And six districts reported rising construction of apartments.
Retail sales rose in seven districts. The Fed said there was optimism in many districts that "sales will improve" in the coming months.
Not all the news was good. Some manufacturers expressed concerns about Europe's financial crisis. And most districts said employers were under little pressure to raise wages. Gold plunged $77 per ounce as traders dialed back expectations that the dollar would be weakened by another round of economic stimulus from the Fed.
"On balance, the Beige Book was slightly more positive than the previous report but largely in line with economic data already reported over the past two months," said Joseph A. LaVorgna, chief U.S. economist at Deutsche Bank.
Employers have added an average of 200,000 net jobs a month in November, December, and January. That has pushed unemployment down to 8.3 percent. Most economists forecast another big month of job growth in February. Consumer confidence rose to its highest point in a year last month, as measured by the Conference Board.
Chairman Ben S. Bernanke acknowledged during a congressional hearing Wednesday that the economy had performed better than Fed expected.
If it continues to do so, he said, the Fed might have to reassess its outlook for a slow recovery. That could prompt the Fed to back off its plan to hold its key interest rate near zero until late 2014. A spike in inflation could also force the Fed to reconsider that policy.
The Beige Book is released eight times a year. Its findings from each of the Fed's regional bank districts are all anecdotal.
The Philadelphia View
Business activity in the Philadelphia region has picked up in the last month, according to anecdotal evidence collected by the Federal Reserve Bank of Philadelphia for the Fed's so-called Beige Book report. Among the findings for the region since the last Beige Book:
has grown, with broad sectors contributing
to the gain.
Retail sales maintained steady year-over-year increases.
Motor-vehicle dealers experienced unseasonably strong sales growth.
Banks reported slight growth in lending and continued improvement of credit quality.
New-home construction started the year strong with the warm-weather assist. Commercial real estate contacts continued to report steadily improving markets for industrial, retail, and office space.
Service-sector firms, overall, reported continued growth.
For the next six months, manufacturers anticipate rising shipments
and orders; retailers expect slightly stronger sales; and auto dealers are increasingly confident that the current surge in sales will carry into the spring. But banking, real estate, and service-sector firms continue to plan for slow growth in 2012.
- Reid Kanaley