certain states and industries but described a US economy that was generally holding up.time, two-thirds of the Fed »s districts described a softening or weakening in the pace of business activity, and the others all referred to subdued, slow, or modest growth.
«The slowing is broad-based,» said Julia Coronado, a senior US economist at Barclays Capital. «It« s definitely not just a regional issue anymore. »Was some better news about the economy yesterday, though in the current environment, better is a relative concept. An index of business activity at non-manufacturing businesses, based on a survey by the Institute for Supply Management rose to 49.3 in February - a sharp rise over January but still indicating a contraction in the service sector.January reading of 44.6 had stunned analysts and prompted concern that a severe recession could be in the offing; the more modest contraction in February was a relief. «It tells us growth remains sluggish,» said Peter Kretzmer, a senior economist at Bank of America. «It» s not alarming like last month's number was. »Yesterday, the Labor Department said the nation« s businesses are becoming more productive, as output per hour worked rose at a solid 1.9 percent annual rate in the fourth quarter. But labor costs per unit of output also rose, suggesting some inflation is occurring.the financial markets entered crisis mode in August and the housing market downturn contracted, leaders of the Federal Reserve have been looking for evidence that ordinary businesses were being affected - not just home builders and Wall Street banks.beige book offered that evidence in spades. The business environment for manufacturers was «mixed, but on the whole, subdued,» a conclusion underscored by a Commerce Department report yesterday that factory orders fell 2.5 percent in January.Fed report described vehicle sales as «slow or sluggish, with little exception.» Trucking, shipping, and other transportation services were off. Banks were tightening the availability of credit in most areas, and demand for loans was stable to dropping.not only did weakness continue in the residential real estate sector, but it also showed signs of spreading into commercial real estate - offices, shopping centers, and the like. Among the precious few signs of life in the national real estate market was from the New York Fed, which reported that «Manhattan» s co-op and condo market has shown some resilience. »
«What this says to me is it's pretty bad out there,» said David Wyss, chief economist of Standard & Poor «s. «Everything we» re getting in is looking more and more like the start of a recession. »
report strengthens the case for the Fed to cut interest rates further to stimulate the economy, which it is all but certain to do at a March 18 meting.most significant exceptions to that ugly picture were in sectors that have benefited from rising prices for commodities, especially food and energy. Phenomena that are a drain on most Americans 'pocketbooks can be quite lucrative for those who drill for oil or grow corn. «High prices and a large 2007 crop has boosted farm income and spurred investment in farm equipment,» reported the Dallas Fed.same high prices, however, are fueling inflation, as reflected in the most recent indexes on consumer and wholesale prices.
«Contacts outside of the construction and retail indu...
