Fed says economy grew modestly over summer
The U.S. economy expanded modestly in July and August as manufacturing activity picked up slightly, retail sales were flat and payrolls increased moderately in a tight labor market, the Federal Reserve said Wednesday.
The depiction of a tepidly growing economy in the Fed’s “beige book” was little changed from its previous summary. But Fed policymakers are expected to scrutinize the final edition of the account before they decide whether to raise interest rates at a Sept. 20-21 meeting for the first time this year.
While job growth generally has been strong despite a slowdown in August, the economy has expanded at a sluggish pace for three consecutive quarters and a measure of service-sector activity fell sharply in August.
The beige book, named for the color of its cover, is an anecdotal snapshot of the economy that lacks the hard data of official reports but provides more color and a breakdown of activity by region.
Job growth was “moderate,” the beige book said. The Labor Department reported strong employment gains averaging about 273,000 in June and July but a slowdown to just 151,000 additions in August. Yet hiring may be at least partly constrained by a smaller pool of available workers as a result of the 4.9% unemployment rate. The Fed said the labor market “remained tight” in the Boston, Chicago, New York, San Francisco, St. Louis and Minneapolis districts. And there were “an unusually high number of job openings” in Boston.
“In many districts, businesses reported trouble filling job vacancies for high-skilled positions, especially those aimed at technology specialists, engineers and selected construction workers,” the report said.
Retail sales “appeared little changed” during the summer, in line with the government’s flat reading of July sales following three strong months of gains.
Auto sales, a pillar of economic growth, slowed in a number of regions but “remained at high levels in general.” That, too, mirrors official data showing a drop in vehicle sales in August.