U.S. economy expanded in April, May — Fed

The U.S. jobs picture showed signs of improvement in April and May, the Federal Reserve said Wednesday, as potentially worrisome wage pressures and consumer prices appeared tame.

“Reports from the Federal Reserve Banks indicate that economic activity in April and May continued to expand across the nation,” the Fed said in its “beige book” report, an anecdotal look at the U.S. economy as seen through the eyes of its 12 regional banks.

“Employment activity continued to improve, with hiring increasing at a faster pace in most districts; meanwhile, wages and salaries experienced little or muted upward pressures,” the Fed said.

“Many Reserve Banks reported modest increases in consumer prices, but most districts noted rising prices of inputs, especially energy-related products, building materials, and steel.”

The beige book, which takes its name from the color of its cover, is issued about two weeks before the central bank’s policy-making panel, the Federal Open Market Committee, is to meet. Wednesday’s report will be perused at the FOMC’s June 29-30 meeting, where analysts widely expect the Fed to raise short-term interest rates to seek to head off inflation.

However, on Tuesday, in an appearance before the Senate Banking Committee, Fed Chairman Alan Greenspan sought to reassure investors that coming rate increases were likely to be ”measured” in pace.

“Most districts indicated strengthening of labor markets. Boston, New York, Chicago, Minneapolis, St. Louis, Kansas City, and San Francisco reported increasing employment, plant expansions, and plant openings across several sectors,” the Fed said.

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The Fed also said manufacturing activity continued to rise in most areas and retail sales were “even or rose” in most districts.

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The central bank said residential real estate was “robust” and some areas saw improved or stable commercial real estate markets.

“According to contacts in Chicago, Dallas, and Richmond districts, ’fence-sitters’ were jumping into the market in anticipation of a rise in mortgage rates,” the Fed said.

Wednesday’s beige book was compiled by the Federal Reserve Bank of St. Louis, based on information gathered before June 7.