The Federal Reserve reported Wednesday that the U.S. economy was expanding “modestly” in September, supported by improvements in housing and auto sales, even as the labor market showed little change.
“Consumer spending was generally reported to be flat to up slightly since the last report,” the Fed said in what is called its “Beige Book” business survey, which is based on accounts from the 12 district Fed banks, including Cleveland. Conditions in manufacturing were “somewhat improved,” according to the report, which provides anecdotal evidence on the health of the economy two weeks before the Federal Open Market Committee meets in Washington on Oct. 23-24.
Echoing the national report, the economy in Ohio and parts of neighboring states grew modestly as hiring remained weak over the past six weeks, the Federal Reserve Bank of Cleveland reported.
The greatest number of job vacancies in the Cleveland Fed’s district were in health care and manufacturing. Some employers said they continued to find it difficult to recruit qualified workers for open positions.
Other findings in the Cleveland Fed’s district:
• Manufacturing output rose. Rising production was mainly limited to goods sold to construction, energy and transportation companies. Capital spending remained on track, but several producers said they intend to delay some projects in upcoming months.
• Nonresidential construction picked up, while reports on single-family housing starts were mixed. Overall construction was about the same as a year ago. Existing family home sales increased from a year ago. Some builders said that they would like to hire more workers but hesitated because of economic uncertainty.
• Retailer and auto sales rose modestly during August and September compared to a year ago. Consumers responded positively to new lines of fall merchandise; back-to-school sales were characterized as good.
• Business credit demand moved slightly higher since the last report; requests were mainly for commercial loans and refinancings. Several small business owners said it remains difficult for them to obtain credit. Consumer loan delinquency rates continued to improve. Several bankers reported an uptick in commercial loan delinquencies.
• Shale gas activity grew robustly while coal production fell below levels from a year ago. Drilling rigs are being moved from other states to Ohio to take advantage of the higher-priced wet gas found in the Utica shale. To date, 375 permits have been issued in Ohio for drilling horizontal shale gas wells. Thirty wells are now producing, with 50 expected to be in production by year’s end.
• The slowdown in freight transport volume, which began in the second quarter, has abated. Freight transport volume is returning to normal trends after a second-quarter slowdown.
Industries that contributed to the pickup include automotive, construction, and shale gas.
Lower-than-expected harvests have hurt revenues for some carriers. Most contacts believe that they will meet their growth objectives for 2012.
The national report appeared to provide support for Fed Chairman Ben S. Bernanke’s view that economic growth isn’t strong enough to bring about a quick healing of the labor market.
A Labor Department report last week showed that while the unemployment rate unexpectedly declined in September, payroll growth slowed.
Beacon Journal business writer Jim Mackinnon contributed to this report.