Fed sees modest growth amid inflation concerns in US

The US economy continues to expand at a modest pace as employment rises slightly and prices increase moderately across most districts, according to the Fed's Beige Book on Wednesday.

A total of 10 out of the 12 Federal Reserve districts reported slight to moderate economic growth since early July while two districts saw no change.

Overall employment rose very slightly, with three districts showing modest job gains and five experiencing flat labor markets.

Wage growth remained modest to moderate in most regions as significant pay increases primarily occurred in construction and manufacturing sectors demanding skilled workers.

Businesses raised their selling prices moderately in eight districts while input cost pressures stayed elevated for manufacturing and construction firms.

Consumer spending grew slightly on balance as shoppers demonstrated heightened price sensitivity alongside solid purchases of high-end goods.

Auto sales remained mostly subdued because downbeat consumer confidence, high fuel prices and rising financing costs deterred buyers.

The tourism sector experienced increased activity as airlines saw strong demand despite higher ticket prices.

Manufacturing activity picked up across most areas with companies highlighting ongoing strength in orders related to defense and data centers.

Financial conditions improved slightly because loan volumes stayed solid or increased across most parts of the country.

Residential construction declined while nonresidential construction increased, driven heavily by new data center projects.

Agricultural conditions showed slight improvement but stayed strained as crop producers faced stress while the livestock sector performed strongly.

Energy and transportation costs broadly increased, which prompted retail and manufacturing contacts to note ongoing impacts from tariffs in multiple districts.

Firms broadly reported significant pressures from rising health care and insurance costs.

Business contacts expressed a positive general outlook for the coming months but reported heightened uncertainty surrounding international conflicts, policy shifts and energy prices.