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 “continued to increase, on
balance” since the June 9 report.

However, only eight Districts actually reported stronger activity,
with “a number” of them describing the increase as “modest,” compared
with the June findings that showed activity improved in all 12
Districts.

On a positive side, activity strengthened in manufacturing,
tourism, and retail, while the banking sector reported that conditions
were “largely mixed.”

That said, where activity improved, it was often modestly. And
while retail sales “generally indicated a continued rise in spending,”
necessities were the driving force while big-ticket items “moved more
slowly.”

In addition, auto sales declined in recent weeks.

On the negative side, residential real estate that benefitted from
the homebuyer tax credit earlier this year suffered from the expiration
of its deadline on April 30, leading to a “sluggish” market in most
Districts after that date.

Commercial real estate also proved “weak.”

And ongoing “restrictive” lending standards in most Districts did
not bring relief to economic activity.

Against this backdrop, labor market conditions only “improved
modestly,” contributing to constrain wage pressures.

Consumer prices were also “relatively stable in most Districts.”

While eight Districts reported that economic activity increased
based on information collected by the St. Louis Federal Reserve through
July 19, Atlanta and Chicago Districts “said that the pace of economic
activity had slowed recently.”

In the Chicago District, “Most contacts remained cautiously
optimistic,” the report said. “However, increased uncertainty about the
path of the economic recovery negatively affected business and consumer
confidence and spending.”

As a result, wage and price pressures “continued to be small.”

In the District of Atlanta, “Reports from Sixth District business
contacts indicated that the pace of economic activity slowed somewhat in
June and early July.”

The BP oil spill continues to raise concerns about the impact on
economic activity and employment.

“Tourism reports were generally positive, however, significant
concerns were expressed over the potential impact from the oil spill on
the Gulf coast,” the District reported.

And while private payroll increased through early July, “the
outlook regarding labor market conditions along the Gulf coast remained
tempered by the impact from the oil spill.”

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

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