U.S. economic growth healthy in late ’13, Fed survey finds

WASHINGTON - A Federal Reserve survey shows economic growth remained healthy in most U.S. regions in late November and December, helped by gains in consumer spending and factory output.

Nine of the Fed’s 12 banking districts described growth as moderate, according to the Beige Book survey released Wednesday. That’s up from seven districts in October through early November.And two of those districts said growth had accelerated since the previous report.

Only two districts - Boston and Philadelphia - said growth was modest, while Kansas City, Mo., said it “held steady.”

“The economic outlook is positive in most districts, with some reports citing expectations of ‘more of the same’ and some expecting a pickup in growth,” the Fed said in its report.

The St. Louis district, which includes Arkansas, re-ported moderate growth with residential, commercial and industrial real estate market conditions showing continued improvement. A sample of small and midsize St. Louis district banks reported that lending remained largely unchanged.

The report said a source in Northwest Arkansas noted an “emerging market for medical office space” and another in central Arkansas “noted growing activity in the industrial real estate market.”

Three-quarters of the districts said shoppers spent more over the Christmas shopping season. And all but Kansas City said manufacturing production grew.

The Beige Book survey is based on anecdotal reports from businesses and will be considered along with other data when the Fed meets next Jan. 28-29.

The report showed little signs of the slowdown in hiring that the government reported last week. The Labor Department said Friday that employers added only 74,000 jobs last month, down from an average of 214,000 in the preceding four months.

The Fed survey, however, said two-thirds of the districts reported increases in hiring. That may bolster the view among many economists that December’s hiring slowdown was temporary and partly the result of bad weather.

Still, weaker December job gains could lead the Fed to rethink its recent decision to pull back on some of its stimulus.

“This was really an aberration and a lot of the weakness is weather-driven,” Aneta Markowska, chief U.S. economist at Societe Generale SA in New York, said of the jobs report before Wednesday’s Beige Book release. “This economy is definitely showing some good momentum. We’re pretty upbeat on growth, which we think will translate into job creation.”

Fed policymakers decided last month to cut its monthly bond purchases to $75 billion from $85 billion and suggested they would further trim the buying in future meetings. The bond purchases are intended to spur more borrowing and spending.

There have been other signs that the economy is growing at a solid pace. Americans increased their spending at retailers in November and December at a faster pace than the previous year, according to the National Retail Federation.

Greater consumer spending is a key reason that most economists expect growth will top 3 percent at an annual rate in the October-December quarter. That would mark a second straight quarter of healthy growth after a 4.1 percent expansion from July through September.

Several districts reported significant improvement in manufacturing, suggesting businesses and consumers are spending more. A manufacturer in the Dallas district said that his company “had too many jobs to bid on … for the first time since before the recession,” according to the Beige Book.

Most districts also said home sales, construction and prices continued to rise. Several districts said the housing recovery was boosting output “all the way from raw materials like lumber to finished products like kitchen cabinets.”

However, reports on tourism were more mixed. Atlanta reported healthy increases in hotel room reservations. But hotels in Manhattan said revenue per room in November fell more than 10 percent from a year earlier, the first 12-month decline since the fall of 2012. Travel and tourism were also weaker in Hawaii and Las Vegas.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press and Jeff Kearns and Joshua Zumbrun of Bloomberg News.

Business, Pages 27 on 01/16/2014

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