WASHINGTON – The economy continued to grow in April until the end of May, with more regions citing worker shortages across a wide range of professions, the Federal Reserve Wednesday reported.
In its most recent examination of the economic conditions, nationally, the Fed revealed that the majority of the 12 regions viewed from the economic growth moderate to modest rates. Two districts of Boston and Chicago said growth had slowed, while New York said activity had “levelled off.”
Companies reported that labor markets continued to tighten, and many companies were offering higher wages where shortages are most severe. A company in the district of the Fed’s Chicago regional bank, said it had been able to attract better applicants and improve the retention of unskilled workers by increasing the wages by 10 percent.
The information in the Fed survey, known as the Beige Book, will be used when Fed officials meet June 13-14. The Fed is expected to make a of the base rate at the meeting.
The Fed’s lowering of the policy rate to a record low near zero in December 2008 and left it there for seven years as it tried to stimulate lending and economic activity to lift the country out of the worst economic crisis since the 1930s.
The Fed raised rates for the first time in December 2015, and then again a year later, in December 2016. After two rate hikes, increased rates for the third time in March. The Fed has indicated that he expects to raise rates by a total of three times this year to ensure that the tighter labour market does not lead to unwanted inflation pressure.
The unemployment rate in April fell to a decade low of 4.4 percent below the level the Fed considers full employment.
Even with the tightening of the labour market and more companies with higher salaries, the Fed said that business contacts noted little change to the broader trend of modest to moderate growth of wages.
In terms of the overall rate of inflation, the Fed report said that price pressures were little changed from the previous report. However, noted “the fast-rising costs for wood, steel and other raw materials,” which tend to push up supply costs for a number of manufacturers and the construction industry. In contrast, the report said that some districts reported falling prices for certain consumer goods, such as groceries, clothes and cars.
The prices of energy and farm prices were reported as mixed, but low inventories of available homes to purchase were pushing up the prices of real estate in many markets.
This story has been corrected to show that unemployment has fallen to a decade low in April, not May.