Fed reports signs of recovery across US

Almost all areas of the United States enjoyed an economic recovery or saw signs of improvement, according to the Federal Reserve's key Beige Book survey published last night.

The report, which was prepared for the Fed's interest rate committee ahead of its 7 May policy decision, said the overall tone was "positive".

However, it added that a few districts expressed "qualifications" about the pace of the recovery or the strength of their regional economies.

Retail sales increased or held steady in most districts, and all districts reported stable or improved manufacturing conditions. There was little sign of a slowdown in consumer spending, while residential real estate activity was also "strong" in most districts as home sales and construction rose.

However, manufacturers' plans to invest in new equipment, something policymakers are watching closely, "remained limited", while labour markets remained slack and wage and price pressures generally stayed in check.

The report – a collection of anecdotes reported to the regional Federal Reserve banks from local businesses – gives central bankers an idea of economic development beyond what statistics show.

Most analysts expect the Fed to leave rates on hold at 1.75 per cent next month. Last week, the Fed's chairman Alan Greenspan played down the chances of a interest rate increase.

Last night Alan Ruskin, research director of 4castweb.com, said: "There is no smoking gun that might suggest Greenspan is about to change his assessment on the economy."

Meanwhile Alfred Broaddus, the head of the Richmond Fed, said yesterday stronger evidence of a real turn in business spending would boost his optimism about the outlook.