WASHINGTON-Economic activity expanded at a "modest to moderate pace" in recent weeks amid signs of rising prices and ongoing strength in labor markets, a Federal Reserve report said Wednesday.
Price pressures strengthened since the last report, the Fed said Wednesday in its latest roundup of anecdotal information about regional economic conditions, known as the beige book. Most districts reported modest to moderate growth in selling prices and moderate increases in input costs.
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Signs of stirring inflationary pressures offer support to the Fed's plans to gradually raise short-term interest rates. Fed policy makers have expressed puzzlement about the surprising softness in inflation readings in recent months.
Wednesday's report said most districts also had modest to moderate growth in employment from October through Nov. 17.
"Pre-holiday reports of consumer spending on retail and autos were mixed but largely flat; still, the outlook for holiday sales was generally optimistic," according to the survey, which collected information on economic activity from 12 district banks.
The prior beige book report, released on Oct. 18, found economic activity grew at a measured pace across the country in September and October, despite sector-wide disruptions caused by the late-summer hurricanes in the Southern and Eastern U.S.
Wednesday's report showed the after-effects of the storms are still rippling through the economy. Construction material costs rose in most regions, with many districts citing higher demand due to rebuilding efforts following the storms. The Dallas district said business had mostly returned to normal after Hurricane Harvey.
The beige book offered a relatively optimistic view of conditions across the country. Employment growth increased and firms struggled to find workers across skill levels. Despite this labor-market tightness, most districts reported only modest to moderate wage pressure.
"Wage increases are modest," Ms. Yellen told lawmakers on the Joint Economic Committee earlier Wednesday. One lesson from that, she said, is "the labor market and the economy are not significantly overheated in spite of the fact that we have a very low unemployment rate." The jobless rate was 4.1% in October, its lowest level since December 2000.
The report comes two weeks ahead of the Fed's next policy committee meeting, at which it is widely expected to raise short-term interest rates.
The Fed last raised rates in June to a range between 1% and 1.25%, the second increase of the year. At their Sept. 19-20 policy meeting, Fed officials penciled in one more quarter-percentage-point rate rise in 2017 and three in 2018.
The Fed's beige book report can be accessed at: https://www.federalreserve.gov/monetarypolicy/beigebook/default.htm
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(END) Dow Jones Newswires
November 29, 2017 14:15 ET (19:15 GMT)