Economic activity grew at a measured pace across the country even though employment growth slowed somewhat in July and August, according to a new report from the Federal Reserve.
"Economic activity expanded at a modest to moderate pace," the central bank said Wednesday in its latest roundup of anecdotal information about regional economic conditions, known as the beige book. "Employment growth slowed some on balance, ranging from a slight to a modest rate in most districts."
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The report was based on information collected through Aug. 28 across the Fed's 12 districts.
Despite the slowdown in employment growth, Fed districts said the labor market remained tight. Some said a shortage of workers at all skill levels had led firms to turn down business. One business in Mankato, Minn., described the lack of workers as "the number one concern."
But most Fed districts reported "limited" wage pressures, although some firms in the Dallas and San Francisco regions said "labor shortages were pushing up wages."
Employers have added 176,000 jobs a month through the first eight months of 2017, down slightly from 194,000 over the same period last year.
As in previous reports, price growth remained subdued. Some areas, such as Philadelphia and Richmond, Va., said that the price that businesses paid for their inputs had risen faster than the prices they charged consumers.
The report said Hurricane Harvey, which struck Texas last month, had knocked a fifth of the oil and natural gas production in the Gulf of Mexico offline. Fifteen refineries were forced to shut down while others operated at limited capacity, leading to gasoline price increases in some areas. In Richmond, spot prices for freight rose following the storm as freight traffic had to be diverted around the country. Overall, though, the report said "it was too soon to gauge the full extent of the impact" of the hurricane.
The report comes as Fed officials are getting ready for their Sept. 19-20 policy meeting at which they are expected to announce the start of shrinking their $4.5 trillion portfolio.
The central bank has already raised short-term interest rates twice this year and has penciled in a third rate increase for 2017. But subdued price pressures have led some officials to suggest holding off on another rate move.
The Fed's preferred inflation measure rose 1.4% in June from the previous year, unchanged from May's report. That's down from February, when the measure ticked up 2.2%. Officials target a 2% inflation rate.
"We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target," Fed governor Lael Brainard said in a speech Tuesday.
Write to David Harrison at firstname.lastname@example.org
(END) Dow Jones Newswires
September 06, 2017 14:28 ET (18:28 GMT)