Federal Reserve survey shows modest US growth, tight labour conditions and tame prices

The US economy continued to grow “modestly” or “moderately” in nearly all regions in recent weeks, though new signs appeared that optimism has waned in some districts, a Federal Reserve survey showed.

The central bank’s Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks through May 22, said several sectors from manufacturing to housing continued to expand slowly. Consumer spending softened, however, with many districts reporting little or no change in non-auto retail sales.

“A majority of districts reported that firms expressed positive near-term outlooks; however, optimism waned somewhat in a few districts,” according to the report, released Wednesday in Washington.

While policy makers are expected to raise interest rates in June, the survey’s findings underlined the growing tension in the US economy, and among Fed officials, over seemingly contradictory signals from inflation and the labour market.

Unemployment hit 4.4 per cent in April, its lowest in a decade. Despite that, the Fed’s preferred gauge of inflation, after stripping out food and energy, rose just 1.5 per cent in the 12 months through April, the third straight month it has slowed.