The Federal Reserve Board’s Beige Book notes that all of the Federal Reserve districts except for St. Louis have reported a moderate pace of growth in the past month. In St. Louis, it says that there were “more plant closures than plant openings or expansions.” Overall, though, the Fed’s assessment of its regional economies was mostly upbeat. With a number of sectors experiencing improvements in activity, the only holdout mentioned explicitly was the real estate market, which continues to be “lackluster across most of the nation.”
Manufacturers have mostly noted increasing new orders, shipments and production. This finding has been observed in various regional sentiment surveys, as well. Manufacturing employment is also picking up and wages and salaries have remained stable. If anything, the Beige Book noted that some firms were finding it more difficult to find qualified applicants. On this point, the Fed said:
Boston, Philadelphia, Cleveland, Richmond, Atlanta, and Minneapolis noted that some firms looking to fill open positions were having difficulty finding qualified workers, particularly for high-skilled manufacturing and technical positions. Atlanta noted there was growing concern that the skills of the unemployed were deteriorating.
Pricing pressures, which have been a major challenge for manufacturers over the past year due to elevated energy and raw material costs, have eased somewhat.
Of course, this more-optimistic assessment of the U.S. economy stands in contrast to larger concerns about the global one. Earlier in the day, the Fed, along with its counterparts in Canada, the European Union, Japan, Switzerland, and the United Kingdom, agreed to provide more liquidity to the global financial system. This coordinated action will lower the borrowing costs for U.S. dollar swaps, and in effect, it will help to ease some of the recent strains in European markets. World financial markets have reacted favorably to the move, with equity markets up significantly.
Still, it should be said that this action was more about symbolism than anything, as it was a sign of how serious these various central banks feel the current sovereign debt crisis has become. The solution to the larger issues will be harder to come by.
Chad Moutray is chief economist, National Association of Manufacturers.
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