By Gwynn Guilford

The U.S. economy "accelerated to a moderate pace" from February to early April, as rising rates of Covid-19 vaccinations, business reopenings and federal-stimulus funds boosted consumer spending across the country, a Federal Reserve report said.

The Fed's periodic roundup of anecdotes from business sources, known as the Beige Book, on Wednesday indicated that the U.S. economy is increasingly firing on multiple cylinders.

Service-sector activity is reviving as more people venture out and firms expand operations, releasing pent-up demand for dining, travel, and other activities that had largely been on hold during the pandemic.

Manufacturing continued to grow swiftly as well, the report said.

"Outlooks were more optimistic than in the previous report, boosted in part by an acceleration in COVID-19 vaccinations," the Fed report said.

The Fed said the economy grew in all 12 Fed regions. New York expanded at a "strong pace for the first time in the pandemic," while the pickup in activity accelerated in Minneapolis, Dallas and Cleveland.

Overall manufacturing activity continued to expand despite supply-chain challenges, the Fed said, with half of the reporting districts reporting "robust growth" in the sector.

Reports from business contacts on leisure and hospitality grew more upbeat, boosted by spring-break travel as well as increased vaccination, stimulus payments and the relaxing of pandemic-related restrictions.

Hotel bookings and vacation rentals for summer stays on Cape Cod are already sharply higher than typically in April, putting occupancy rates, hotel-room rates, and rental rates on track to break records in coming months. In New York City, as tourism demand picked up, some hotels that had announced permanent closures recently announced plans to reopen. Museums and restaurants there reported a steady upswing in business.

Residential builders noted higher costs and other production challenges, as more demand and tight supply of single-family homes pushed home prices up further.

Prospects are hazier for certain parts of the economy, however. The report indicated mixed accounts of the health of commercial real estate and construction. In the energy sector, for instance, coal production slipped, while oil and gas drilling either stayed stable or rose.

Business contacts in the report said they expect hiring to pick up. However, many said they were having trouble finding workers, particularly in entry-level positions and skilled-trade positions. Businesses said the reasons behind hiring issues included worker health-safety concerns, childcare issues, reduced public transportation, job-search fatigue, a lack of qualified applicants and extended government financial support. Manufacturers in Chicago complained of higher turnover of new temporary workers, with some simply never arriving for work.

The report indicated widespread accounts of businesses raising selling prices, but usually not enough to keep up with the increase in costs. The chief source of higher business costs was ongoing supply-chain delays and disruptions, especially in getting shipments from overseas. Other reasons cited included winter weather in Texas and the Suez Canal blockage. Nearly three-quarters of Philadelphia-area manufacturing contacts said they expected to pay higher prices over the next six months, while half predicted charging customers more for their goods.

Not all business contacts looked forward to a post-vaccine revival. A Boston frozen fish manufacturer said it was worried the pandemic's end might dampen demand for its products, which have enjoyed strong recent sales as people stayed at home.

Separately, optimism among small businesses continued to rebound in March, buoyed by more upbeat sales expectations, according to an index by the National Federation of Independent Business released Tuesday. However, uncertainty increased as well, as many respondents were unsure whether to expand their business in coming months. More than two-fifths of owners reported job openings that couldn't be filled, the highest reading on record.

(END) Dow Jones Newswires

April 14, 2021 15:28 ET (19:28 GMT)