Fed: Housing and auto sales boost economy

WASHINGTON - A strengthening housing recovery and robust auto sales contributed to moderate growth across the United States in late February and March, according to a Federal Reserve survey released Wednesday.

All of the Fed's 12 banking districts grew moderately and growth accelerated in two districts - New York and Dallas - from January and early February.

In the Philadelphia region, the Fed said business activity maintained a "modest pace of growth" evident earlier. "In particular, general services, staffing, tourism, and commercial real estate leasing continued to expand at modest rates," the survey said, while retail activity and residential construction in the area appeared to be slowing. Manufacturing improved slightly, meanwhile.

The survey suggests the economy performed better in March than recent government data on hiring and consumer spending indicated. That could mean the weakness may be temporary.

The Fed survey, which is based on anecdotal reports, found that hiring was unchanged or improved slightly compared with the previous report. And it noted that consumer spending grew modestly. But the report also said higher taxes and a spike in gas prices slowed sales.

By contrast, the Labor Department said earlier this month that hiring slowed sharply in March. And retail sales declined last month by the most in nine months, a separate report said last week.

The survey said the recovery in home construction was gaining momentum and creating more construction jobs. It is also boosting factory output of housing-related goods, such as lumber.

There were some weak spots. Several districts said manufacturers of defense-related goods had cut jobs, in response to steep government spending cuts that took effect March 1.

The report, called the Beige Book, provides an overview of economic conditions that existed from Feb. 22 through April 5. The information will be discussed along with other economic data during the Fed's next policy meeting April 30-May 1.