The U.S. economy expanded at a "modest to moderate" pace since mid-April while hiring remained relatively subdued, according to a Federal Reserve report based on discussions with business contacts.
Continue Reading Below
Consumer spending picked up and housing continued to show signs of strength, the Fed's Beige Book showed. The previous report cited "moderate" growth, so the addition of the word "modest" may hint at some weakening.
Hiring increased at a "measured pace," the report said, but the regional details were mixed.
"Labor markets continued to improve in the New York District. The Boston District reported that with only a few exceptions, businesses were not hiring much beyond replacement, while labor markets in the Richmond District were uneven," the report said.
Wall Street has been on edge about the possibility that the U.S. central bank could begin to curtail its bond-buying stimulus plan in coming months. The Fed is currently purchasing $85 billion in mortgage and Treasury securities to support a fragile recovery.
The real estate sector, at the epicenter of the financial meltdown of 2008, is finally gaining some traction, the report confirmed.
"Residential real estate and construction activity grew at a moderate to strong pace in most districts," according to the Beige Book.
The Fed report said manufacturing expanded in most districts.
That was in contrast to a report this week from the Institute for Supply Management, which pointed to the first contraction in the nation's manufacturing sector in several months in May. (Reporting By Pedro Nicolaci da Costa; Editing by Andrea Ricci)