Fed survey: Economy showing improvement

Washington (June 4)  Federal Reserve survey shows the U.S. economy strengthening over the past two months in areas from manufacturing and construction to retail sales and bank lending.

Seven of the Fed's 12 regions — Boston, New York, Richmond, Chicago, Minneapolis, Dallas and San Francisco — reported "moderate" growth during the early spring, while the remaining five described growth as "modest," according to the Beige Book survey released Wednesday.

Retail sales were reviving, helped by pent-up demand for new cars after the harsh winter, the survey found. Manufacturing was expanding in all regions, along with lending. One weakness was home sales, held back in large part by a tight supply of available homes.

The Beige Book is based on anecdotal reports from businesses and will be considered along with other data when Fed policymakers meet June 17-18.

Nothing in the report is likely to alter the widespread view that the Fed thinks the economy is reviving after a winter slowdown.

Beginning in December, the Fed has been reducing its bond purchases, which were designed to keep long-term rates low to spur spending and economic growth. The purchases, now at $45 billion a month, will likely be phased out entirely this fall.

The Fed survey said the job market in much of the country has improved since its last Beige Book. Cleveland and Chicago reported increased demand for temporary workers. Several districts reported that employers were having trouble finding skilled workers.

Two-thirds of the Fed's districts reported rising demand for bank loans. Particular strength was seen in New York and San Francisco. Demand for auto loans was strong, coinciding with reports of robust new-car sales.

But the Boston, New York and Kansas City regions reported that home sales were being held back by low or dwindling supplies of available homes. Other regions also described availability as low.