The U.S. economy continued to expand across most of the country, while wage growth was described as varying widely, “from flat to strong,” a Federal Reserve report showed.
Seven of the Fed’s 12 regional districts characterized the economy as growing “moderately,” at a “modest pace” or “slightly,” according to the central bank’s Beige Book, an economic survey published eight times a year.
Reports on manufacturing were mixed, with the sector continuing to suffer as a strengthening dollar and a “weakening global outlook” took a toll on overseas sales.
Members of the Federal Open Market Committee gather in two weeks to discuss their outlook for the economy and set the Fed’s benchmark interest rate. While recent data on jobs, consumer spending and inflation have been mostly positive, concerns about global growth and financial market volatility have reduced expectations for a rate increase this month.
Investors see only a 12 percent probability of a rate hike at the FOMC’s March 15-16 meeting, based on prices in federal funds futures contracts. The committee tightened policy for first time in almost a decade in December, lifting the target range of the fed funds rate to 0.25 percent to 0.5 percent.
The Fed’s survey showed that while wages generally increased since the start of the year, the growth was inconsistent.
The Kansas City, Richmond and Atlanta regions reported “flat wage growth.” In the St. Louis district, growth in pay was reported by 56 percent of contacts, the most in two years, according to the report, released Wednesday in Washington.
Pay varied by skill throughout the country as well. Positive wage growth was evident in seven Fed regions for high-skilled employees, while five Fed banks noted wage growth among lower-skilled and entry-level workers.
Most Fed districts highlighted “modest growth in the labor market.” Contacts in seven of the central bank’s regions, mainly along the East Coast and in the Midwest, said they had difficulty finding skilled workers. The Cleveland and Richmond Fed banks even noted low-level positions were “becoming increasingly difficult to fill.”
Consumer spending increased in the majority of districts, the report said, with auto sales remaining at “elevated levels.” Loan demand increased in most districts while credit quality and credit standards remained stable.
Residential real estate sales grew in all districts except for New York and Kansas City, where weaker sales were attributed to seasonal patterns. Several districts reported “strong growth” in multifamily construction. Nonresidential sales ranged from flat to strong.
The report was based on information collected from early January through Feb. 22. It summarizes comments received from businesses and other contacts outside the Federal Reserve system.