A Federal Reserve survey of US trade conditions found modest economic gains at the beginning of the year, although parts of the country saw a renewed increase of COVID-19 cases due to the recession.
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The Fed report released on Wednesday said that the bulk of the Fed’s 12 sectors showed modest growth in economic activity in recent weeks.
But three districts – New York, Philadelphia and Cleveland – said activity was weakened. Two districts – St. Louis and Kansas City – said activity generally was unchanged since the last Fed meeting in mid-December.
The Fed said that the report on consumer spending driving 70% of economic activity was mixed. Some districts reported declining retail sales and demand for hospitality and leisure services as local governments took drastic measures in an effort to curb the rise in virus cases.
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“While the prospect of COVID-19 vaccines has increased business optimism for the 2021 increase, it has recently been tempered by concern over the resurgence of the virus and implications for near-term business conditions,” the Fed said.
The Fed’s report, known as the Beige Book, will form the basis of discussions when central bank officials hold their next meeting on interest rates on January 26-27.
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The Beige Book said that the demand for workers was strongest in manufacturing, construction and transportation, but employers in those industries were reporting difficulties filling open positions.
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The report noted that the recent resurgence of COVID-19 cases and workplace disturbances in some districts were exacerbated by these hiring difficulties.
The leisure and hospitality sectors reported further layoffs due to strict prevention measures in response to the rise in virus cases.