U.S. Businesses Optimistic About Economy Due to Vaccines and Hiring, Fed Beige Book Says -- Update
March 03 2021 - 4:37PM
Dow Jones News
By Hannah Lang
Most businesses are optimistic about the economic recovery this
year as coronavirus vaccines are more widely distributed and hiring
picked up slowly across the country, a Federal Reserve report said
Wednesday.
The Fed's periodic compilation of anecdotes from business
contacts, known as the Beige Book, said the U.S. economy continued
to grow modestly in the first several weeks of 2021, though some
industries, such as leisure and hospitality, continued "to be
restrained by ongoing Covid-19 restrictions."
"Economic activity expanded modestly from January to
mid-February," the report said, adding that "most businesses remain
optimistic regarding the next 6-12 months."
The Fed said the economy expanded in eight of the Fed's 12
regions, with areas including the Northeast reporting mixed or
stagnant results. The New York area economy declined modestly and
the Boston area saw mixed results, the report said.
Overall manufacturing activity increased moderately despite
supply-chain challenges, the report said, and nearly every region
reported manufacturing growth. In Philadelphia, manufacturers told
the Fed they have noticed longer delivery times, growing backlogs
and increased demand from customers around the globe.
The leisure and hospitality industry continued to struggle in
most regions of the country, but some contacts reported a
brightening outlook. In Boston, hospitality businesses were
"optimistic for the first time since the pandemic began," the
report said.
While the report said business contacts expect hiring to pick
up, it also said many businesses are having trouble finding
workers, particularly in low-skill occupations and skilled trade
positions. "Constraints on labor supply included those related to
Covid-19, child care, and unemployment benefits," the report
said.
Business costs such as materials rose moderately from January
through mid-February, the Fed said, widely attributed in many
regions of the country to supply-chain disruptions and high demand
in areas such as housing.
Separately, surveys of purchasing managers released Wednesday
showed services businesses continued to expand in February.
Data firm IHS Markit said its U.S. services index increased to
59.8 in February, from 58.3 in January, while the Institute for
Supply Management's services index slipped to 55.3 in February,
from 58.7 the prior month. A reading above 50 indicates growth,
while a level below 50 signals contraction.
Chris Williamson, IHS Markit's chief business economist, said an
upturn in new orders powered broad-based services industry
improvement. "Even some hard-hit consumer-facing sectors are
enjoying some loosening of restrictions or adapting to life with
the virus," he said.
(END) Dow Jones Newswires
March 03, 2021 16:22 ET (21:22 GMT)
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