US Beige book sees recovery

City A.M. Reporter
HALF of the Federal Reserve&rsquo;s 12 districts saw evidence that the US economy had improved by the end of August, although labour markets remained weak and retail sales were flat, a Fed report said last night.<br /><br />Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted gains.<br /><br />&ldquo;Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive,&rdquo; the Fed&rsquo;s Beige Book survey said.<br /><br />The modestly upbeat report said most regions reported some improvement in hard-hit residential real estate markets and an uptick in manufacturing.<br /><br />&ldquo;Certainly the economy is very much in a bottoming process but is not off to the races by any means,&rdquo; said Dan Peirce, portfolio manager in the global asset allocation team with State Street Global Advisors.<br /><br />Despite improvements in housing markets, most districts reported downward pressure on house prices, the Fed said.<br /><br />Tempering the brighter spots, Fed contacts reported that demand for commercial property remained weak and that businesspeople in some areas believed recently higher vehicle sales levels were likely not sustainable after the government&rsquo;s &ldquo;cash for clunkers&rdquo; incentive program lapses.<br /><br />Overall consumer sales were flat and loan demand was weak and credit standards remained tight, the Fed said. But even some of the gloomiest segments of the economy held glimmers of hope.<br /><br />&ldquo;Labour market conditions remained weak across all districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs,&rdquo; the report said.