The Federal Reserve’s latest survey of economic conditions around the nation, released Wednesday, found less robust economic growth in recent weeks, with much of the softness apparently due to weather conditions.
The so-called “beige book,” based on what business and banking contacts told the 12 Federal Reserve Banks prior to Feb. 24, also points to less hiring in many of the 12.
Inflation pressures were described as “largely unchanged.”
The Fed said “economic conditions continued to expand,” but the district-by-district breakdown is less upbeat. While 8 districts reported “improved levels of activity,” the report says that “in most cases the increases were characterized as modest to moderate.”
Meanwhile, two districts – New York and Philadelphia – “experienced a slight decline in activity, which was mostly attributed to the unusually severe weather experienced in those regions.” Growth “slowed” in Chicago, while conditions “remained stable” in the Kansas City district.
The latest survey findings contrast sharply to those reported in the last beige book on Jan. 15. At that time, 9 of 12 districts said economic activity was “expanding at a moderate pace,” two of which – Atlanta and Chicago – “saw conditions improve compared with the previous reporting period.” Two other districts – Boston and Philadelphia – cited “modest” growth, while while Kansas City reported “steady” activity.
Despite the softer tone of the survey results, the beige book said “the outlook among most Districts remained optimistic.”
Fed Chair Janet Yellen observed in congressional testimony last Thursday that recent economic data had, in fact, been “softer” and said she suspected that bad weather explained much of the softness. But she said she and fellow members of the Fed’s policymaking Federal Open Market Committee will have to “get a firmer handle on exactly how much of that set of soft data can be explained by the weather and now much is due to a softer outlook.”
The survey findings, summarized by the Atlanta Federal Reserve Bank, will be reviewed at the March 18-19 meeting of the Fed’s policymaking Federal Open Market Committee.
Weather is often cited in the beige book’s description of various aspects of the economy.
For example, it says “retail sales growth weakened since the previous report for most Districts, as severe winter weather limited activity.” Although manufacturing activity “expanded at a moderate pace” in most districts, “several Districts reported that severe winter weather had a negative effect on sales and production during this period.”
And while many Districts continued to report “improving conditions,” the pace of improvement was slower, and the beige book says most “attributed the slowing pace of improvement to unusually severe winter weather conditions.”
“Unusually bad winter weather” was also blamed in part for a “slowdown” of hiring in the Boston, Richmond and Chicago districts.
Overall, the survey found that “employment levels improved gradually for most districts.” The details seem even less rosy.
The Fed report says the pace of hiring “softened” in three districts; called hiring “sluggish” in four other districts, and described it as as “cautious” in yet another.
By contrast, the Minneapolis Fed said its labor markets had tightened.
The Fed’s bland anecdotal findings on the labor market come amid other recent, discouraging job readings.
Recent non-farm payroll gains have been disappointing, rising just 75,000 in December and 113,000 in January. And advance indicators on March employment, which the Labor Department will detail Friday, have not been greatly encouraging.
Payroll processor ADP reported earlier Wednesday that private payrolls rose 139,000, better than a downwardly revised 127,000 in January but well under expectations.
The employment component of the Institute for Supply Management’s Employment non-manufacturing index showed an outright contraction in jobs, as it plunged from 56.4 to 47.5, lowest level since 2010. The ISM’s earlier manufacturing survey had showed hiring holding steady in modestly positive territory at 52.3.