Pittsburgh district's economy improving, Federal Reserve's Beige Book reveals
The economy in the Federal Reserve district that includes Pittsburgh expanded at a moderate pace from late November to the end of the year — but with more positive indicators and fewer red flags — suggesting stronger growth in the new year.
The Federal Reserve said Wednesday in its periodic Beige Book report that economic growth remained healthy in most regions of the country, helped by gains in consumer spending and factory output.
Nine of the Fed's 12 banking districts described growth as moderate. That's up from seven districts in October through early November. Atlanta and Chicago districts said growth had improved since the previous report.
In the Fourth District that includes Pittsburgh, manufacturing performed at a higher level, housing was strong, commercial construction picked up, and retail sales during the holiday season were above year-ago levels. New vehicle sales had gains, and natural gas production was stable, the report said.
Red flags included sluggish hiring overall, despite a pickup in staffing and construction jobs, and slowing coal production.
Western Pennsylvania is part of the district based in Cleveland, 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 report is consistent with what we've been seeing in Pittsburgh and nationally,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh.
“The report was more upbeat than recent reports, consistent with stronger economic growth in 2014 and fewer red flags. That's a positive indicator and suggests most of the district's economy is expanding.”
Sluggish overall hiring mentioned in the report was consistent with the region's lower unemployment rate in November, which moved lower only because workers continued to leave the workforce. The seasonally adjusted rate slipped to 6.6 percent, down 0.1 of a percentage point — as 1,700 people stopped looking for work, economists said.
The Beige Book survey is based on anecdotal reports from businesses and will be considered along with other data when the Fed meets next on Jan. 28 and 29.
Only two districts — Boston and Philadelphia — said growth was modest, while Kansas City said it “held steady.” Three-quarters of the districts said shoppers spent more during the winter holidays. And all but Kansas City said manufacturing production grew.
The report showed little signs of the slowdown in hiring that the government reported last week. The Labor Department said Friday that employers added only 74,000 jobs last month, down from an average of 214,000 in the preceding four months.
The Fed survey, however, said two-thirds of the districts reported increases in hiring. That may bolster the view among many economists that December's hiring slowdown was temporary and partly the result of bad weather.
Still, weaker December job gains could lead the Fed to rethink its recent decision to pull back on some of its stimulus.
Fed policy makers decided last month to cut the monthly purchases to $75 billion from $85 billion and suggested it would further trim its buying in future meetings. The bond purchases are intended to spur more borrowing and spending.
Dana Saporta, an economist at Credit Suisse, said the report was positive enough to suggest that the Fed will continue reducing its purchases.
“We find nothing that threatens to divert the Fed from its current tapering path,” she said.
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.