NEW YORK -- In yet another sign that the economy might be moving ahead, a periodic survey of business conditions by regional Federal Reserve Banks replaced "sluggish" -- the descriptive term of choice for more than a year -- with "some improvement."
While the tone was muted in typical Fed fashion, the results released yesterday were received enthusiastically.
"A slight amount of upturn here is not to be ignored," said Ray Owens, economist with the Federal Reserve Bank of Richmond. "The anecdotal evidence in the survey results corresponds to the hard data pointing to brighter days ahead."
The survey, known as the "beige book" for the color of its jacket, is conducted approximately every other month and released the week before meetings of the pivotal Federal Reserve Board's Open Market Committee, where monetary policy is set. Rather than the statistical summaries collected by federal agencies, the survey asks for opinions and expectations, then produces a bland composite that readers view more for direction than magnitude.
"The beige book never gets too excited, so it never describes the economy as horrible or fantastic, just disappointing and encouraging. And it's encouraging what we are hearing now," said David Donabedian, an economist at Mercantile Bankshares in Baltimore. "If they had taken the same tone as the beige books of the recent past, which were all cast in a negative die, it would have been a surprise."
A barrage of figures on retail sales, housing starts and manufacturing released in the past two weeks has portrayed an economy beginning to recover from a slump.
While the general tone of the beige book was positive, conditions varied throughout the country. Segments of the survey in the Richmond Fed district, a region stretching from Maryland to South Carolina, and unpublished data concerning just Maryland, were broadly consistent with the national picture of an economy that certainly is getting no worse and in many ways is improving. But Maryland retailers were a little more pessimistic about conditions and more restrained in hiring plans for the next six months.
Optimism about better business conditions ahead, however, was rife, with most retailers, manufacturers and shippers expecting higher sales. The unpublished information for Maryland indicates manufacturers have cut employment slightly in recent months but did not, on average, foresee more layoffs, Mr. Owens said. Retailers reported fewer bodies in their stores but more sales.
Hours worked per week, often a more sensitive bellwether of conditions than hirings and firings, rose in February and were expected to increase in the months ahead. Manufacturers said that, even though shipments had slowed, orders were on the rise.
"These are positive for the next six months," Mr. Owens said.
On average in the Richmond Fed district, employment is expected to rise. But in Maryland, Washington and northern Virginia, employment is expected to remain flat.
That, Mr. Owens said, suggests that after unusually fast growth during the 1980s, the northern part of the region had been more deeply affected by the recession than the southern half.