WASHINGTON - The economic recovery is spreading to most parts of the country - as merchants report better sales and factories boost production, the Federal Reserve reported Wednesday.
But the central bank's survey of business conditions in March also found that many companies are still wary of ramping up hiring.
Eleven of the Fed's 12 regions - the exception was St. Louis - said "economic activity increased somewhat." That was an improvement from the February Fed survey, in which nine regions reported modest economic advances. Snowstorms had crimped activity along the East Coast.
In the new survey, the St. Louis region said economic conditions had "softened." That was a downgrade from the previous report, when the region reported mixed economic conditions.
The Federal Reserve Bank of Philadelphia agreed that business had picked up somewhat since the previous report, but it added a caveat: "The advance did not include all sectors" of the economy.
It noted that while manufacturing, retailing, and residential real estate in the Philadelphia area improved, nonresidential real estate was weak, and some local banks reported decreased lending. Also, there were reports from businesses of rising prices for raw materials and construction-related products, such as lumber, drywall, oil-based goods, and some glass products.
The nationwide Fed report, known as the Beige Book for the color of its cover, will figure prominently when Bernanke and his colleagues meet April 27 and 28 to decide the future course of interest-rate policy. Economists predict that the Fed will continue to hold rates at record lows to nurture the recovery. It has kept rates at superlow levels since December 2008.
The new survey suggested that consumers - whose spending accounts for 70 percent of national economic activity - are doing their part to keep the recovery going. Retailers in most parts of the country reported sales increases, and merchants were "cautiously optimistic regarding future sales," the report said. Sales of home furnishings and electronic goods rose in a number of regions. So did sales of spring clothing. Car sales were up in many places, as well as tourism spending.
Conditions improved at factories, too. Orders, shipments, and production were up in all parts of the country except St. Louis.
Trouble spots for the economy remain. The housing market is still fragile, and commercial real estate activity stayed "very weak" in most parts of the country, the Fed said.
And, job prospects are still rather bleak for the nation's 15 million unemployed. The Fed report noted that some hiring was evident, mostly for temporary workers. Overall, though, "labor markets remained weak," the Fed report concluded.
Highlights from Wednesday's Federal Reserve report on the region's economy in March.
Overall economic activity increased "somewhat" locally, but not for all business sectors. The outlook for the next six months is for continued slow improvement.
Manufacturers again saw rising new orders and shipments, though the number reporting gains was less than in February. "Business is better than a year ago, but not exciting," one area manufacturer said.
Retailers reported slight sales gains compared with February and with March 2009, though they cautioned that sales a year ago were at a low level.
Banks said loan volume was steady or down slightly since February. There was a small rise in commercial lending, but most other types of lending fell.