Skip to main content

U.S. factories ramped up production in late April and early May despite the risk of a global trade war, but soft consumer spending kept the economy growing at a moderate rate, the Federal Reserve reported on Wednesday.

In its periodic “Beige Book” summary of contacts with businesses in its 12 regional districts, the U.S. central bank pointed to strong output in fabricated metals, heavy machinery and electronics equipment.

The assessment of growth across the economy represented a slight upgrade from the Fed’s prior Beige Book report, which said economic activity was expanding at a “modest to moderate pace.”

Story continues below advertisement

“Manufacturing shifted into higher gear,” the Fed said in its latest report.

More than half of the Fed’s districts reported a pickup in industrial activity, and a third of them reported the activity as “strong.”

Still, manufacturers worried that tensions between the United States and its trading partners, notably China, could lead to higher tariffs across the world.

“The major concern manufacturers expressed was trade policy,” the Fed said, referring to comments from business contacts in its Boston district, where a maker of testing equipment said it might move some production to Europe to avoid Chinese retaliation for increases in U.S. tariffs.

The Minneapolis Fed’s contacts said they were worried about how recent tariff announcements on steel and aluminum could affect supply chains. The Trump administration has announced tariffs on steel imports from many countries including China while Beijing has targeted U.S. aluminum and other goods.

Only the Dallas Fed found overall economic activity had “sped up to a solid pace,” according to the report. Across the country, growth in auto sales was flat and retail sales excluding autos eased.

The Fed’s districts reported modest-to-moderate growth in employment while contacts said the labor market remained tight. Wage increases, however, were reported to be modest.

Story continues below advertisement

The Beige Book was prepared by the Federal Reserve Bank of Cleveland based on information collected on or before May 21.


Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter