Washington, DC, Nov. 27--The economy continued to steam ahead in October, the Federal Reserve said Wednesday in its most optimistic assessment of business conditions since before the 2001 recession.
Economic improvements in the central bank's 12 districts appear to be "reasonably broadly based," with most noting growth in a number of industries, the Fed said in its so-called beige book, a report named for the color of its cover.
Most notably, labor markets "across the nation generally improved or remained stable, with several districts noting a slowing in layoffs," the Fed said.
The Boston, Richmond, Minneapolis and Chicago districts noted greater demand for temporary workers, an encouraging sign for the struggling labor market. Firms are waiting for sustained increases in orders before hiring permanent workers, several districts said.
The nation's battered factories also saw promising signs of a rebound, although few districts noted employment gains in manufacturing. Factory activity improved in most districts, with Dallas, Boston, San Francisco and Minneapolis reporting rising demand for high-tech products. Atlanta and San Francisco reported higher demand for building materials, and Richmond indicated firms in "almost all sectors" reported higher shipments.
In terms of consumer spending, which accounts for two-thirds of total economic activity, many districts reported demand for new fall clothing was held back by unseasonably warm weather in many parts of the country. However, most retailers were optimistic that holiday sales will turn out to be an improvement over the disappointing results of 2002.
Tourism, which has been hard hit since the 2001 terrorist attacks, showed moderate improvements this fall with early snows and cold conditions helping boost demand in ski areas in the San Francisco district. New York reported that occupancy rates in Manhattan hotels were up "noticeably" over a year earlier.
Richmond reported that coastal areas were still recovering from the damage caused by Hurricane Isabel but that hotels and motels in mountain areas were booked almost to capacity for the Thanksgiving holiday. The Atlanta Fed reported strong demand in that region, with Florida cruise ships and amusement parks both reporting an uptick in activity.
The beige book is a summary of economic activity prepared for use at the Federal Open Market Committee meeting on Dec. 9, the last time policy makers will meet this year. The Fed is widely expected to hold a key interest rate at a 45-year low of 1%. This report was prepared by the Federal Reserve Bank of Atlanta and reflects information gathered before Nov. 17.
