By Yali N’Diaye

WASHINGTON (MNI) – The U.S. economy continued to expand at “a
modest to moderate pace in January and early February,” according to the
Federal Reserve’s report on Current Economic Conditions released
Wednesday.

On the employment front, “Of the Districts reporting on hiring,
most indicated a slight increase,” the beige book said.

In residential housing, a long-time “sluggish” culprit for dragging
the economic recovery, the report said “market conditions improved
somewhat in most Districts, with several reports of increased home sales
and some reports of increased construction.”

And commercial real estate markets, which in the January 11 beige
book were deemed “soft” with signs of improvement, “showed positive
results in some districts” in January and early February.

Other positive signs came from the consumers, with spending
“generally positive except for sales of seasonal items.”

And going forward, the outlook was “mostly optimistic,” according
to the survey prepared by the Federal Bank of St. Louis based in
information collected through February 17.

“All Districts reporting sales expectations for the coming months
indicated optimism among contacts that sales will improve,” the report
said.

In the banking sector, conditions also “generally improved,” as did
manufacturing where the expansion continued “at a steady pace across the
nation.”

Activity in nonfinancial services was stable or increase, while
agricultural conditions were mixed.

Overall, five districts reported that activity expanded at a
moderate pace, St. Louis reported a “modest” growth and Minneapolis a
“firm” expansion. Activity rose faster in two districts while New York
reported a “slower pace of expansion.” Two districts reported
improvements in “most sectors.”

Against this backdrop, “hiring increased slightly across several
districts,” the report said.

Still, economic activity is not leading to higher inflation, as the
beige book noted that “upward pressures appeared limited” among
districts commenting on wages and “prices of final goods and services
were relatively stable in most districts.”

However, some Districts “anticipate passing rising input prices
through to consumer prices,” the report said.

** Market News International Washington Bureau: 202-371-2121 **

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