A Federal Reserve study of U.S. business conditions has found modest economic gains at the start of the year, although some parts of the country experienced slowdowns as a result of a renewed rise in COVID-19 cases.
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The Fed report, released on Wednesday, said the majority of the Fed’s 12 regions reported modest gains in economic activity in recent weeks.
But three districts ̵
The Fed said consumption spending reports, which account for 70% of economic activity, were mixed. Some districts reported declines in retail sales and demand for hospitality and leisure services as local governments introduced stricter measures in an effort to curb the rise in virus cases.
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“While the outlook for COVID-19 vaccines has boosted business optimism for growth in 2021, this has been dampened by concerns about the recent virus resurgence and the implications for short-term business relationships,” the Fed said.
The Fed’s report, known as the Beige Book, will form the basis for discussions when central bank officials hold their next meeting on interest rates on January 26-27.
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The Fed pushed interest rates down to a record-breaking low of zero to 0.25% in March last year. The expectation is that rates will remain at ultra-low levels through this year and beyond.
The beige book said the demand for workers was strongest in manufacturing, construction and transportation, but employers in these industries reported problems filling job openings.
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“These employment difficulties were exacerbated by the recent resurgence of COVID-19 cases and the consequent disruption of the workplace in some districts,” the report said.
The leisure and hospitality sector reported further layoffs due to stricter containment measures in response to an increase in virus cases.