(Bloomberg) — The U.S. economy grew at a modest pace through much of July and August, with companies remaining upbeat despite disruption caused by international trade disputes, a Federal Reserve survey found.
“Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook,” according to the report released Wednesday in Washington.
The Federal Reserve is expected to cut interest rates again at its meeting this month amid slowing global growth stemming from President Donald Trump’s ongoing trade battles. Some policy makers, however, are likely to oppose the move, pointing to robust consumer spending that is keeping growth in the U.S. around a solid 2% pace.
Wednesday’s report, based on anecdotal information collected by the 12 regional Fed banks through August 23, described consumer spending as “mixed,” offering something for both camps in that debate.
Auto sales grew modestly and tourism was generally solid. Overall manufacturing was down slightly while housing sales remained constrained. And transportation activity, which includes trucking, softened, which some districts attributed to “slowing global demand and heightened trade tensions.”
The Beige Book, as the survey is known, follows the release of weak data on U.S. manufacturing this week. The Institute for Supply Management’s purchasing managers index showed factory activity contracted in August for the first time since 2016. The group’s gauge of new orders dropped to a more than seven-year low, while the production index hit the lowest since late 2015.
Little changed with regard to the labor market or prices. Employment grew at a “modest pace on par with the previous reporting period,” and staffing agencies “universally cited tightness across various labor market segments and skill levels, which continued to constrain growth.”
With the Fed focused on muted inflation, the report showed that firms see only modest price increases.
“Although firms in some districts noted an ability to pass along price increases, manufacturers relayed limited ability to raise prices,” the report said. “District reports on the impact of tariffs on pricing were mixed, with some districts anticipating that the effects would not be felt for a few months.”
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