Americans spending more on cars and housing helped the economy maintain a “modest to moderate” pace of expansion from early July through late August, even as borrowing costs increased, the Federal Reserve said in a Wednesday report.
Consumers spent more on travel and tourism while manufacturing expanded “modestly,” the Fed said in what is called its Beige Book business survey, based on anecdotal reports from 12 regional banks, including Cleveland. Hiring “held steady or increased modestly.”
The Ohio economy over the past six weeks continued to get a moderate boost by pickups in manufacturing, housing, car sales and shale energy even as hiring remained sluggish, the report said.
Business activity in the Cleveland Fed’s Fourth District, which includes Ohio and parts of neighboring states, expanded moderately since the previous report.
The Cleveland Fed reported:
• Demand for manufactured products grew moderately. Suppliers to energy, housing, medical device and transportation industries grew the most. Motor vehicle parts suppliers and assembly plants expected to expand capacity to meet demand. An inability to find skilled production workers hindered some expansion plans.
• Housing market activity leveled out after six months of strong growth. Sales of new and existing homes were higher than a year ago. Shale gas work boosted industrial and commercial building.
• Retailers had disappointing June and July sales. New motor vehicle sales were robust.
• Shale drilling picked up in regions rich in so-called wet gas. Coal mine output was lower. Utilities worked to convert some coal plants to run on natural gas.
• Freight transport volume remained strong. Some freight haulers have looked into using tractors that run on compressed natural gas, initially for short-haul situations.
• Applications for business credit were flat. Consumer credit demand rose slightly.
• Overall hiring was sluggish. Staffing firms reported job vacancies were primarily in health care and manufacturing.
Nationally, the Federal Open Market Committee is debating whether growth is sufficient to fuel steady improvement in the job market and warrant cutting down on the Fed’s $85 billion in monthly bond buying. The committee will meet Sept. 17-18.