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Last Updated: Wednesday, 26 April 2006, 19:00 GMT 20:00 UK
US economy kept growing, Fed says
US shoppers
Consumer spending has been keeping the US economy moving
The US economy has continued to expand in March and the first half of April, says a report by the Federal Reserve.

In its Beige Book, a survey of economic conditions, growth was called "solid" by three regional Fed banks, and "modest, moderate or steady" by others.

However, the labour market was tighter in many places as companies dealt with higher energy costs, the Fed said.

Firms were also finding it hard to raise their prices, and there were signs the housing market was cooling.

Better times?

"Reports from all 12 Federal Reserve Districts indicate that economic activity continued to expand in March and the first half of April," the Fed said in its report.

"Most districts report that orders or revenues in the manufacturing sector continue to come in ahead of year-earlier levels."

Even so, the recent record-setting surge in oil prices is starting to have an effect.

"High energy prices were at the forefront of most districts' mention of cost pressures," the Fed explained.

The bank also said that it had noted declining demand for mortgages, while price growth had slowed.

"In general, year-on-year price appreciation seems to be lower than in quarters past," the Fed said.

Spending power

The central bank will meet to set interest rate levels next month and many investors are voicing concerns that borrowing costs may rise again as there are increasing signs of improving economic growth and inflation.

A government report on Wednesday showed that US durable goods orders jumped 6.1% in March.

According to the Fed, the majority of districts cited improving retail sales overall, a sign that consumer spending - the main driver of the world's largest economy - was bearing up.

It added that "auto sales were mixed across the districts" and that "most of the reports on travel and tourism are positive".

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