ECONOMY INCHES UP; MAY BE TOO SLOW FOR FED

Wage growth was “subdued” in most districts and price pressures were “contained,” giving the Fed little reason to lift interest rates.

The economy grew modestly the past six weeks, with consumer spending and the housing market accelerating while a strong dollar and low oil prices continued to hamper manufacturers, the Federal Reserve said Wednesday.

Activity picked up modestly in half of the Fed’s regional bank districts and moderately in just three regions — Minneapolis, Dallas and San Francisco, according to the Fed’s beige book, which provides an anecdotal snapshot of the economy. That appears to represent a slight downgrade from its previous report, which said the economy expanded moderately in six regions.

The Fed said wage growth remained “subdued” in most districts and price pressures were “contained,” giving Fed policymakers little reason to lift interest rates. The Fed is closely scrutinizing the report for signs of a pickup in economic activity and pay growth as it struggles to decide whether to raise its benchmark interest rate before the end of the year.

Despite disappointing payroll gains in both August and September, the report said labor markets “gently tightened.” Most districts said employment was up “modestly to moderately.” But in many areas, employers were still struggling to find skilled, and even unskilled, workers. The findings could indicate that the Labor Department may yet revise up its jobgrowth totals for the past two months, and that a big reason for the slowdown in gains was a shortage of workers rather than reduced employer demand.

Consumer spending, meanwhile, increased moderately, driven largely by continued strong auto sales. Besides autos, sales were mixed in the New York and Atlanta areas and slower in Richmond, Va., Chicago and Kansas City, Mo.

Tourism also was mixed, with business increasing in Minneapolis, San Francisco, Philadelphia, Atlanta and Chicago. Activity weakened in New York, Kansas City and Dallas, partly because the strong dollar has made trips to the U.S. more expensive for foreign visitors.

Another bright spot was the housing market, and all regions except Chicago notched rising prices and sales. Low and moderately priced homes were moving more briskly than high-end units, and apartment construction outpaced singlefamily building.

But limited supplies continued to constrain the market, including in Boston, New York, Richmond and St. Louis. Commercial real estate sales and construction are also recovering smartly across the country.

Manufacturers, however, struggled as the rising greenback made their exports more expensive for foreign customers and low oil prices curtailed investment in drilling equipment. The beige book described industry conditions as “sluggish.”