US econ­omy ex­pands with range of wage growth: Fed

The Pak Banker - - COM­PA­NIES/BOSS -

The US econ­omy con­tin­ued to ex­pand across most of the coun­try, while wage growth was de­scribed as vary­ing widely, "from flat to strong," a Fed­eral Re­serve re­port showed.

Seven of the Fed's 12 re­gional dis­tricts char­ac­ter­ized the econ­omy as grow­ing "mod­er­ately," at a "mod­est pace" or "slightly," ac­cord­ing to the cen­tral bank's Beige Book, an eco­nomic sur­vey pub­lished eight times a year.

Re­ports on man­u­fac­tur­ing were mixed, with the sec­tor con­tin­u­ing to suf­fer as a strength­en­ing dol­lar and a "weak­en­ing global out­look" took a toll on over­seas sales. Mem­bers of the Fed­eral Open Mar­ket Com­mit­tee gather in two weeks to dis­cuss their out­look for the econ­omy and set the Fed's bench­mark in­ter­est rate.

While re­cent data on jobs, con­sumer spend­ing and in­fla­tion have been mostly pos­i­tive, con­cerns about global growth and fi­nan­cial mar­ket volatil­ity have re­duced ex­pec­ta­tions for a rate in­crease this month.

In­vestors see only a 12 per­cent prob­a­bil­ity of a rate hike at the FOMC's March 15-16 meet­ing, based on prices in fed­eral funds fu­tures con­tracts. The com­mit­tee tight­ened pol­icy for first time in al­most a decade in De­cem­ber, lift­ing the tar­get range of the fed funds rate to 0.25 per­cent to 0.5 per­cent.

The Fed's sur­vey showed that while wages gen­er­ally in­creased since the start of the year, the growth was in­con­sis­tent.

The Kansas City, Rich­mond and At­lanta re­gions re­ported "flat wage growth." In the St. Louis dis­trict, growth in pay was re­ported by 56 per­cent of con­tacts, the most in two years, ac­cord­ing to the re­port, re­leased Wed­nes­day in Wash­ing­ton.

Pay var­ied by skill through­out the coun­try as well. Pos­i­tive wage growth was ev­i­dent in seven Fed re­gions for high­skilled em­ploy­ees, while five Fed banks noted wage growth among lower-skilled and en­try-level work­ers.

Most Fed dis­tricts high­lighted "mod- est growth in the la­bor mar­ket." Con­tacts in seven of the cen­tral bank's re­gions, mainly along the East Coast and in the Mid­west, said they had dif­fi­culty find­ing skilled work­ers. The Cleve­land and Rich­mond Fed banks even noted lowlevel po­si­tions were "be­com­ing in­creas­ingly dif­fi­cult to fill."

Con­sumer spend­ing in­creased in the ma­jor­ity of dis­tricts, the re­port said, with auto sales re­main­ing at "el­e­vated lev­els." Loan de­mand in­creased in most dis­tricts while credit qual­ity and credit stan­dards re­mained sta­ble.

Res­i­den­tial real es­tate sales grew in all dis­tricts ex­cept for New York and Kansas City, where weaker sales were at­trib­uted to sea­sonal pat­terns. Sev­eral dis­tricts re­ported "strong growth" in mul­ti­fam­ily con­struc­tion. Non­res­i­den­tial sales ranged from flat to strong.

The re­port was based on in­for­ma­tion col­lected from early Jan­uary through Feb. 22. It sum­ma­rizes com­ments re­ceived from busi­nesses and other con­tacts out­side the Fed­eral Re­serve sys­tem.

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