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Wednesday, 12 June, 2002, 20:09 GMT 21:09 UK
US economic growth patchy
US economy graphic
The US central bank's snapshot of the world's largest economy, the Beige Book, has confirmed that recovery is taking place but remains weak and patchy.

"Reports from Federal Reserve Districts indicated that overall economic activity expanded at a moderate pace in late April and May," the closely-watched report said.

"The tone was one of modest but uneven growth, with some major sectors showing signs of improvement while others softened or remain weak," it said.

Such comments make it unlikely that the US Federal Reserve will move to raise interest rates to temper growth at its next meeting on 25-26 June.

'Soft spot'

The meeting - two days instead of the usual one - is likely to set out the central bank's view of prospects for the next six months.

The US economy was said last week to be going through a "soft spot" by Federal Reserve chairman Alan Greenspan.

Mr Greenspan added he was certain that the economy was recovering, though growth was set to slow down from the 5.6% seen in the first three months of 2002.

The Beige Book's observations were in line with this view.

Sluggish sales

It reported retail sales were flat in most regions of the country and vehicle sales were "mixed". Consumer spending accounts for two thirds of the US economy.

The report confirmed that the picture has brightened for industry.

"Factory production, shipments and orders were higher in most districts but the gains were uneven across industries," it said.

Recent surveys have found that manufacturing activity has risen, along with new orders for goods as stockpiles are no longer being run down.

But US workers employment prospects are improving only slowly and wages are stagnant.

"Labor market conditions improved marginally but remained slack overall," the report said. "As a consequence, reports cited little upward pressure on wages."

Joblessness in May was 5.8%, marginally lower than the previous month.

"The Beige Book didn't reveal any surprises and we don't expect the (central bank's) Federal Open Market Committee to act until September" on raising interest rates, said Sean Callow, an analyst at Ideaglobal.com.

The Beige Book is compiled eight times a year from surveys carried out by the Federal Reserve's 12 districts.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

28 May 02 | Business
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18 Apr 02 | Business
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