U.S. Business Activity Picks Up Due to Stronger Consumer Spending - Fed's Beige Book -- Update
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
Manufacturing continued to grow swiftly as well, the report
"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
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
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)
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