[09-04-14] The economy strengthened in all regions of the country in July and August, including in areas like consumer spending, auto sales and tourism, the Federal Reserve reported in a survey released on Wednesday.
A separate report from the Commerce Department showed that business orders for factory goods shot up by a record amount in July, reflecting a surge in demand in the volatile category of commercial aircraft. But outside of transportation, orders actually fell slightly during the month, although the setback was expected to be temporary.
The Fed said all 12 of its regions reported growth. Six — New York, Cleveland, Chicago, Minneapolis, Dallas and San Francisco — characterized growth as “moderate.” The other regions reported somewhat slower expansion. Four described growth as “modest,” and two noted signs of improvement.
The survey found no clear evidence that the economy was expanding so fast that the Fed might soon need to begin raising interest rates to prevent inflation.Most regions reported optimism about crucial economic sectors. A majority cited increased loan demand, for example, and hotel occupancies.
The survey, known as the Beige Book, is based on anecdotal reports from businesses and will be considered with other data when Fed policy makers meet on Sept. 16 and 17.
After that meeting, the Fed is expected to reduce its monthly bond purchases for a seventh time but leave its key short-term interest rate unchanged. That rate has been near zero since December 2008 in an effort to overcome the financial crisis and revive the economy.
Now, with job growth strong and unemployment falling, investors have been speculating about when the Fed will start raising rates. Most analysts think the first increase will occur around mid-2015.
In other economic news, the Commerce Department said factory orders rose 10.5 percent in July, the biggest one-month increase on record going back to 1992. Orders for civilian jetliners rose fourfold. But excluding transportation, orders edged down 0.8 percent and an important category that serves as a proxy for business investment plans fell 0.7 percent.
Manufacturing has been a source of strength this year, helped by robust demand for new cars, other consumer items and business equipment. Economists expect that strength to continue.
The report showed that orders for durable goods, items expected to last at least three years, were up 22.6 percent in July, unchanged from the estimate in a preliminary report last week. Orders for nondurable goods such as paper, chemicals and food were down 0.9 percent in July after a 0.4 percent increase in June.
In addition to the surge in demand for airplanes, orders for motor vehicles and parts rose 7.3 percent, reflecting continued strong consumer demand for new cars and trucks.
But there was slippage in other areas. Orders for primary metals such as steel fell 0.3 percent, demand for machinery was down 1.2 percent, and orders for computers and other electronics products fell 14.7 percent.
Most economists expect that manufacturing production will provide solid support in the second half of this year.
Publisher: The Associated Press
Link: http://www.nytimes.com/2014/09/04/business/economy/all-fed-regions-report-growth-as-economy-improves.html?ref=economy
