By Yali N’Diaye

WASHINGTON (MNI) – The Federal Reserve Wednesday reported that its
latest survey of economic conditions around the country, the “Beige
Book,” showed that economic activity improved “somewhat” with both
consumers and businesses more confident about the future.

The District of St. Louis was singled out, however, as
experiencing “‘softened’ economic conditions.”

The overall improvement, however, did not translate into labor
market gains, which were still qualified as “weak” despite some
evidence of hiring of temporary workers, keeping wages contained.

In fact, overall the report did not signal any new inflationnary
pressures, as retail prices “remained level.”

“Where producers faced cost pressures on inputs, they were largely
unable to pass those prices downstream to selling prices,” the Beige
Book said.

The report was prepared by the Federal Reserve Bank of Minneapolis
based on information collected through April 5.

The Beige Book was generally positive not only on economic activity
since the last report but also on prospects about future activity,
saying, “Several Districts described consumers as somewhat more
confident.”

Consumer spending did, in fact, increase during the period,
translating into higher retails sales and vehicle sales.

Even the housing sector showed signs of strengthening. “Many
Districts reported increased activity in housing markets from low
levels,” the survey said.

This improvement occurred despite a decrease in loan volumes and
credit quality.

And just as consumer confidence improved, “Businesses were
cautiously optimistic regarding future sales,” the survey found, against
a backdrop of stronger manufacturing activity “in all Districts except
St. Louis.” Orders, shipments and production were all reported on the
way up.

However, there remained soft spots in the economy, starting with
the commercial real estate sector described as “very weak.”

Between a very weak commercial real estate market and improved
manufacturing, residential real estate and tourism conditions, the
survey found that activity was “mixed” in business services and bank
lending.

And while businesses show more optimism, they are still hesitant to
hire, limiting such moves to temporary workers.

In line with weak labor markets, wage pressures remained “minimal
or contained.”

Overall, “Retail prices generally remained level, but some input
prices increased.”

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

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