The latest reports indicate that the world’s largest economy experienced modest expansion over the course of the past six weeks.
The Federal Reserve Beige Book survey collates the opinions of US firms eight times over the course of the year and (as it helps the Fed to set interest rates) it’s considered a strong indicator of economic health. This latest review has indicated that ‘widespread improvement’ in the housing market has gone some way to strengthening the US economy and partially made up for poor levels of consumer spending.
Political instability, global concerns, fears regarding next year’s ‘fiscal cliff’ and rising petrol prices where proven by the survey to have negatively impacted consumer spending, which was recorded as ‘flat to up slightly’.
Employment conditions were also shown to be ‘little changed from August’ with hiring still restrained by European and global economic concerns.
But, the Beige Book also showed that all 12 districts participating in the survey experienced a boost in existing home sales whilst new sales and construction were ‘mostly improved’.
Manufacturing activity appeared mixed but was improved in general with some districts recording ‘significant gains’ in the sectors of transport, construction and energy.
This Beige Book survey is thought by analysts to be more upbeat than the one conducted 6 weeks ago. A spokesperson for Moody’s Analytics commented: ‘Signs of slowing or mixed growth were less evident than in the previous report’.
However, several pieces of key US data are due for release this afternoon, including Initial Jobless Claims, Import/Export Prices and International Trade Balance. If any of these economic indicators come in lower than expected the increased positivity inspired by the Beige Book survey could prove short lived.
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