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A Federal Reserve survey of US business conditions found modest economic gains earlier in the year, although parts of the country have seen slowdowns due to a further increase in COVID-19 cases.
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The Fed report released on Wednesday said that most of the Fed’s 12 regions have reported modest gains in economic activity in recent weeks.
But three districts – New York, Philadelphia and Cleveland – said the activity had weakened. Two districts – St. Louis and Kansas City – said activity has generally not changed since the last Fed meeting in mid-December.
The Fed said reports on consumer spending, which boost 70% of economic activity, were mixed. Some districts have reported declines in retail sales and demand for hospitality and leisure services, as local governments have imposed stricter measures in an effort to stem the increase in virus cases.
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“While the prospect of COVID-19 vaccines has reinforced business optimism for growth in 2021, this has been tempered by concerns about the recent resurgence of the virus and the implications for short-term business conditions,” said the Fed.
The Fed’s report, known as the beige book, will form the basis for discussions when central bank officials hold their next meeting on interest rates from 26 to 27 January.
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The Fed pushed interest rates to a record low of zero to 0.25% last March. The expectation is that rates will remain at very low levels throughout this year and for years to come.
The beige book said that the demand for workers was greater in manufacturing, construction and transportation, but employers in these industries reported difficulties in filling job vacancies.
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“These hiring difficulties were exacerbated by the recent resurgence of COVID-19 cases and the resulting workplace disruptions in some districts,” said the report.
The leisure and hospitality sectors reported more layoffs due to stricter containment measures in response to an increase in virus cases.