By Steven K. Beckner

BELLEVUE, WASH. (MNI) – The Federal Reserve’s latest survey of
conditions around the country, released Wednesday, did not reveal much
in the way of economic cooling, but neither did it find signs of
accelerating growth or job creation.

The Fed’s so-called “beige book,” based on what business and
banking contacts told the 12 Federal Reserve Banks through May 25, did
find improvement in the housing market and in credit markets, as well as
strength in auto sales.

But the survey found only a “moderate pace” of growth in most
districts, with activity slowing in one region and described as “steady”
in another.

Perhaps most importantly, there were few indications of
improvements in employment, which is the Fed’s primary concern in a
climate of merely “modest” wage and price pressures.

The survey findings, which were summarized by the Dallas Fed, will
be reviewed by the Fed’s policymaking Federal Open Market Committee when
it convenes June 19-20 to revise projections for the economy and for the
federal funds rate.

The Federal Reserve Banks’ anecdotal gleanings report largely
validates recent statistical information on economic growth, jobs and
inflation.

“Reports from the twelve Federal Reserve Districts suggest overall
economic activity expanded at a moderate pace during the reporting
period from early April to late May,” said the beige book summary.

Five exceptions to this “moderate pace” of growth were cited. The
Richmond, St. Louis, and Minneapolis Feds noted only “modest growth,”
while the Boston Fed reported “steady growth.”

The biggest outlier was the Philadelphia Fed’s mid-Atlantic
district, where the survey found that “the pace of expansion had slowed
slightly since the previous Beige Book.”

On the jobs front, the beige book said some firms are having
trouble finding qualified workers, but otherwise pointed to continued
labor market softness.

“Hiring was steady or showed a modest increase,” it said, adding
that “reports of hiring were most prevalent in the manufacturing,
construction, information technology, and professional services
sectors.”

In that environment, “overall upward wage pressures continued to be
fairly modest,” the Fed said.

Likewise, “price inflation was modest across most areas of the
country,” the survey found. “Reports from several Districts, including
New York, Philadelphia, Richmond, Chicago, Minneapolis, and Dallas
indicated selling prices were stable or had softened somewhat since the
previous report.”

The report also confirmed that “cost pressures eased as the price
of energy inputs fell.” Exceptions were the Atlanta Fed, which reported
that “some firms had implemented price increases tied to previous
increases in energy costs,” and the Kansas City Fed, which “noted higher
input and final goods prices.”

The survey found that “manufacturing continued to expand in most
districts,” with particular strength in new motor vehicle sales.

“Consumer spending was unchanged or up modestly,” said the beige
book, which also reported that “demand for nonfinancial services was
generally stable to slightly higher since the last report.”

Echoing recent reports on home sales and housing starts, the beige
book said “conditions in residential and commercial real estate
improved” and said “construction picked up in many areas of the
country.”

There were also indications that banks are loosening up their
lending. “Lenders in most Districts noted an improvement in loan demand
and credit conditions.”

Despite these areas of improvement, the survey found continued
uncertainty and concern among businesses around the nation. “Economic
outlooks remain positive, but contacts were slightly more guarded in
their optimism.”

The findings were released a day before Federal Reserve Chairman
Ben Bernanke was set to testify before the Congressional Joint Economic
Committee.

Fed policymakers will meet in two weeks to update their economic
projections and decide whether to inject more monetary stimulus. Fed
officials were concerned about the slow pace of growth and job creation
even before the Labor Department reported meager May job gains and an
uptick in the unemployment rate. They are also worried about spillovers
from the European debt crisis.

Bernanke has said the Fed is “prepared” to buy more bonds to push
down long-term interest rates if need be, and his testimony today will
be watched closely to see just how soon he is ready to act.

` ** MNI **

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