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Fed beige book says US business activity increased
Wed Oct 19, 2005 02:50 PM ET


WASHINGTON, Oct 19 (Reuters) - U.S. business activity increased across the country in September and through early October, but hurricane damage weighed on some regions and higher energy costs pushed prices up, the Federal Reserve said on Wednesday.

"All Districts reported cost increases for energy, petroleum-based products, building materials, and shipping," the Fed's "beige book" summary of economic conditions said.

Several districts reported that input cost increases were being passed through to retail prices, the Fed said.

Most Fed districts reported the pace of expansion as gradual or moderate, with New York noticing a slowdown. The storms that pounded the Gulf Coast had "significantly negative" effects on the Atlanta region's economy and caused disruptions to economic activity in the Dallas area, the Fed added.

The Fed said price increases were largely the result of the hurricanes, which disrupted oil and natural gas supply and boosted demand for construction products.

"Nevertheless, many business firms indicated to the District Banks that they expect high prices for energy and construction materials to persist," the Fed said.

Car sales dipped as manufacturers' discount offers expired. Meanwhile, light trucks and sport-utility vehicles declined sharply while fuel-efficient car sales picked up in the Atlanta and Dallas regions, the Fed said.

Manufacturing activity rose in all Fed districts except St. Louis, where reports were mixed, and Atlanta, where companies were still recovering from Hurricane damage.

Housing market demand was slowing in some regions, the Fed said.

Residential real estate activity expanded in Chicago, St. Louis, Dallas and San Francisco. Richmond reported slowing demand in some areas, Meanwhile, Minneapolis reported slowing home sales in some places, and Boston and New York reported homes were taking longer to sell.

Labor market conditions tightened in some regions, with increased hiring in a range of industries, the Fed said. Wage increases have been moderate, however, Fed banks said.

The report was prepared by the Philadelphia Fed with information up to Oct. 11.