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Fed's Beige Book sees modest improvements in labor market conditions

Economic activity has continued to expand in at a "modest to moderate" pace since the previous Beige Book, which was released in mid-January, while the "majority" of Districts reported modest improvements in labor market conditions.

The prior Beige Book had said that all twelve Fed Districts characterized growth as modest or moderate, although this time the Boston and Chicago Districts reported slow growth.

Most Districts reported expansion in consumer spending, although retail sales slowed in several Districts through late February. The Fed cited fiscal policy and higher gasoline prices as having a negative effect on sales.

Among other key sectors, tourism strengthened in a number of Districts while services demand was generally positive. Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries, the Beige Book said. Stronger real estate activity was reported in most areas.

Regarding prices, the Fed said pressures remained modest, except for certain raw materials and slightly higher retail prices.

The majority of Districts reported "modest improvements in labor market conditions", although hiring plans were limited in several Districts. Wage pressures were mostly limited.

The Beige Book survey, released two weeks before each policy meeting, is based on information gathered by officials at the Fed's 12 regional banks. Today's report was prepared based on information collected on or before February 22, 2013 by the Kansas City Fed, and will be used for discussions at the next policy meeting on March 19-20.

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