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 user 2003-10-16 at 10:06:00 am Views: 145
  • #7759
    Fed’s latest beige book upbeat
    The U.S. economy is demonstrating steady signs of recovery despite a “generally slack” Labour Market, according to the latest beige book report from the U.S. Federal Reserve.

    The book is an anecdotal compilation of reports from the Fed’s 12 regional banks. On Wednesday, the Fed said 10 of its regions reported growth over the past month, while only two, Boston and Cleveland, reported “mixed but steady” activity. As a group, the 12 banks reported that economic activity has been buoyed by solid consumer spending and stronger manufacturing.

    “Consumer spending generally strengthened, though most districts report a recent pullback in auto sales,” the Fed said. Consumer spending accounts for two-thirds of all economic activity in what ranks as the world’s largest economy.

    The upbeat report comes two weeks before the Fed’s Federal Open Market Committee convenes to make its next decision on interest rates. The consensus among economists is that the committee will hold pat.

    U.S. interest rates remain at 40-year lows of one per cent, significantly lower than the Bank of Canada’s comparable lending rate of 2.75 per cent. For more than two years, the U.S. manufacturing sector has proven the weakest link of the chain as the nation’s economy weathers a downturn kick started by the Sept. 11 terrorist attacks of 2001. Hundreds of thousands of factory jobs have been lost.

    However, in its latest beige book, the Fed said there are signs of hope. “The majority of the districts report a pickup in manufacturing activity, with several indicating significant improvement in a wide variety of industries,” the Fed said. “Machine tool orders strengthened in the Atlanta and Chicago districts; semiconductor producers note a pickup in demand in the San Francisco district.”

    The lumber and construction materials industries, as well as high-tech manufacturers in the Dallas district, also reported gains in recent weeks, the Fed said. Despite “generally slack” employment markets, the Fed said there are modest signs of improvement in a number of regions. “In general, labour markets are characterized as stagnant in Boston, Cleveland, Atlanta, Minneapolis, and San Francisco. “On the other hand, Richmond, Chicago, Minneapolis, and Dallas report increased demand for temporary workers, while New York reports a pickup in hiring across a number of sectors.”