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Fed's Beige Book: Economic activity increased at modest pace

The U.S. labor market tightened modestly in recent weeks with some upward pressure on wages as employers found it increasingly difficult to fill jobs across skill levels, the Federal Reserve said on Wednesday.

U.S. economic activity continued to expand at a modest pace in most regions from early-October through mid-November, the Fed said in its Beige Book report of anecdotal information on business activity collected from contacts nationwide.

Most districts said such wage pressures increased only for skilled occupations and workers in short supply but a few saw broader pressures. Overall wage pressures were "generally stable to increasing," the Fed said.

A cyclist passes the Federal Reserve headquarters in Washington.
Kevin Lamarque | Reuters
A cyclist passes the Federal Reserve headquarters in Washington.

For example, the Cleveland Fed reported wage pressures were "widespread" and Atlanta said there were signs of emerging pressure to raise starting pay, even among low-skilled jobs.

Atlanta was joined by the Minneapolis, Kansas City and San Francisco districts in reporting difficulties finding hires for lower-skilled and entry-level positions.

Fed policymakers are widely seen raising interest rates for the first time in almost a decade at their next meeting on Dec. 15-16, but continue to parse data and trends carefully given the uneven nature of the U.S. recovery.

Many districts indicated increased hiring was "driven by temporary and entry-level positions that were being fulfilled by staffing firms," the Beige Book noted.

The Fed said consumer spending increased in nearly all districts. Manufacturing remained mixed, the Fed added, with exports continuing to fall on the strong dollar, low commodity prices and weak global demand. However, manufacturers in most districts said they looked for improved business conditions over the next six months.

The report was compiled by the Federal Reserve Bank of Richmond with information collected before Nov. 20, 2015.