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US economy growing steadily: Federal Reserve survey

WASHINGTON -- A Federal Reserve survey showed Wednesday that the U.S. economy continues to grow steadily, with gains in all regions and most industries.

The Fed's regular Beige Book report, which will feed into its policy meeting on Dec. 17-18, painted a generally good picture of the economy in the wake of October's government shutdown.

Even so, growth was described as still just “modest to moderate,” shy of the robust pace policymakers have been aiming for with their huge stimulus program.

And the pace of job creation, a key focus of Fed policy, remained dull: a “modest” increase in five of the Fed's 12 regions and flat in the rest.

Businesses across the United States said manufacturers were generally optimistic about near-term growth prospects, the survey showed.

Retailers had also been hopeful ahead of the holiday shopping season that began last week.

Tourism, real estate and transportation industries were experiencing firm growth, and auto industry sales were mostly strong.

Banking conditions were generally stable, the report said, with some pickup in loan demand and banks in some areas feeling comfortable enough to ease loan standards.

Price and wage pressures remained under control, although the survey said businesses increasingly cited problems hiring people with adequate skills.

“Difficulty with finding qualified workers, especially for high-skilled positions, was frequently reported,” it said.

There was little lingering impact from the partial government shutdown in the first half of October, which had sparked worries at the time that consumers and businesses would freeze spending.

But some respondents expressed worries about another round of sharp government spending cuts mandated for January, if Democrats and Republicans in Congress cannot come up with an alternative budget program before then.

The report is just one of the inputs that will inform the Federal Open Market Committee's (FOMC) policy review process at its meeting.

Economists and investors are eyeing it and other data to see if the economy is strong enough for the Fed to begin cutting its US$85 billion a month bond-buying program, aimed at holding down long-term interest rates to stimulate investment and growth.

Other data has been mostly positive: Wednesday saw solid reports on private-sector job creation and new-home sales in November.

On the other hand, the ISM purchasing managers survey for the huge services sector of the economy showed a slowdown last month.

Considered together, the data served as no clear indicator of whether the FOMC could begin tapering the stimulus program at its coming meeting, or wait, as it has over the past three policy meetings, for more signs of strength in growth and the jobs market.

“This report told us nothing we didn't already know; the economy continues to expand moderately in spite of fiscal and other headwinds,” said Erik Johnson, senior U.S. economist at IHS Global Insight.

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