Federal Reserve finds moderate growth in district
The economy in the Federal Reserve district that includes Pittsburgh continued to grow at a moderate pace from late May through early July, as manufacturing and commercial construction improved.
“What's going on here is what we are seeing nationally, but a little slower,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. “Retail sales are soft, but that's what we're seeing nationally, as tax increases and government layoffs have an impact.”
Western Pennsylvania is part of the Fed's Fourth District, which includes West Virginia's northern panhandle, Ohio and eastern Kentucky. Pittsburgh is the largest metropolitan area in the district, while eight of the 10 largest are in Ohio.
The broader Fed survey issued on Wednesday showed that 11 Fed banking districts reported “modest to moderate” growth, while Dallas reported “strong” growth for the second straight survey.
The Fed's Beige Book survey is based on anecdotal reports from businesses. The report said hiring held steady or increased in most districts. But employers in some districts were reluctant to hire permanent or full-time workers.
The survey hinted that some business sectors are contributing to slower job growth in the Pittsburgh region. Residential construction has slowed since the beginning of the year but remains above year-ago levels. Natural gas and oil production is stable, but drilling has declined since the start of the year. Output at coal mines trended lower, the survey said of the district.
“In the district, we're seeing below-average job growth,” said Faucher. “I do see a strong pickup later in the year” as the impact of the tax increase and government spending cuts fade, he said.
Europe's economy will pick up during the second half, which will result in a pickup in the Fourth District as well.
A positive is a moderate increase in new motor vehicle sales, and “purchases of large pickup trucks trended higher, especially in the eastern half of the district,” the survey said.
Five districts reported strong auto sales, up from just three in the previous report. Auto production is strong in Ohio but relatively weak in the Pittsburgh region.
Overall, the Beige Book survey report painted an optimistic picture of an national economy growing at a steady pace. Job gains have picked up this year, bolstering incomes and enabling consumers to spend more.
Employers have added an average of 202,000 jobs a month this year, up from about 180,000 a month in the previous six months.
Still, growth has been weak. Most economists expect growth slowed in the April-June quarter to an annual rate of 1 percent or less, down from a tepid 1.8 percent rate at the start of the year. That would mark the third straight quarter of growth below 2 percent.
Many economists are hopeful that growth will rebound in the second half of the year.
The Associated Press contributed to this report. John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.