WASHINGTON(AP) — The U.S. economy was growing at a moderate pace in most regions of the country in April and May, as consumers ramped up spending at retailers and auto dealers, the Federal Reserve said Wednesday.
In its latest survey of business conditions around the country, the Fed said that manufacturing activity held steady or increased, except in the energy industry. Some companies laid off workers and cut back on drilling activities in response to the big fall in oil prices over the past year.
The Fed report, known as the beige book, will be reviewed by officials at the Fed's next meeting June 16-17 meeting. Economists expect the central bank to delay any rate hike until they see more signs of an economic rebound.
Four districts — Boston, Atlanta, Chicago and St. Louis — reported moderate growth in manufacturing, while some other districts said growth was basically flat during the survey period.
The report found wide-ranging consequences from the fall in energy prices, with over half of the Fed's 12 districts reporting a negative impact on companies that either operate in the energy sector or provide services to energy companies. Kansas City described a sharp fall in activity in energy producers Oklahoma and New Mexico, while the Dallas district said that oilfield machinery sales were down significantly from a year ago.
The report noted that consumer spending rose in all districts except Richmond and New York. The drop in gas prices was spurring a shift from sales of cars to light trucks and SUVs. Tourism also picked up in a number of districts, lifting demand for summer hotel and resort bookings.
The Fed report found that the rise in the value of the dollar wasn't uniformly hurting demand for U.S. manufactured goods. The Philadelphia and Richmond districts reported stronger demand in the rubber and plastic industries. In San Francisco, biotech and pharmaceutical companies also saw growing demand.
But the report said that business contacts in the Boston, Cleveland, Chicago, Minneapolis and Dallas districts all reported a drag on either export sales or business investment plans from the stronger dollar, which makes U.S.-made products more expensive on foreign markets.
Residential real estate and construction activity expanded in most districts. Employment was up except in the energy sector, with New York, Cleveland and Kansas City noting widespread shortages of truck drivers.
Chicago and Minneapolis reported poultry flocks had been hit hard by avian flu. Minneapolis producers expect the outbreak to cost them more than $300 million.
In April, the Fed downgraded its view of the U.S. economy to reflect the impact of an unusually harsh winter. Economists said the beige book indicates that policymakers are likely to upgrade the outlook at their June meeting.
Private analysts, however, said they still think the Fed will prefer to wait until later in the year, possibly September, before beginning to raise a key interest rate. That rate has been at a record low near zero since December 2008.