WASHINGTON – The U.S. economy expanded in the past two months, even as manufacturers in some regions took a hit from a stronger dollar and a slowdown in energy-related investment, a Federal Reserve report showed.
Four of 12 Fed districts reported "moderate" growth, and three others described the expansion as "modest," according to the Beige Book, released Wednesday in Washington, which is based on reports gathered from early April to late May by regional Fed banks.
The report offers central bank officials, who next meet June 16-17, anecdotal evidence about the state of the economy as they consider when to raise interest rates for the first time since 2006. Figures released May 29 showed the economy shrank in the first quarter amid harsh winter weather, a strong dollar and delays at ports.
A stronger dollar crimped industries including steel, with Fed banks in Boston, Cleveland, Chicago, Minneapolis and Dallas "noting its negative impact on export sales or capital investment in segments with significant overseas exposure."
Lower oil prices are taking a toll on the economy, the Beige Book showed: "The downturn in the oil and gas industry tempered manufacturing growth in over half the districts, particularly for industries dependent on the energy sector."
The "hurdle is pretty high for raising rates at the moment," Chicago Fed President Charles Evans told reporters Wednesday in Chicago. "The thing that worries me the most in the forecast is the fact that the inflation outlook is too slow to get to 2 percent."
A Labor Department report in two days is projected to show a 226,000 increase in May employment, according to the median estimate of economists surveyed by Bloomberg. That compares with an increase of 223,000 in April.
The latest Beige Book was prepared by the Dallas Fed based on information collected on or before May 22.
