The U.S. economy grew at a moderate pace from mid-February through the end of March although the harsh winter, the rising value of the dollar and a big plunge in oil prices were having adverse effects on some industries, the Federal Reserve said Wednesday.
In its latest survey of business conditions around the country, the Fed said eight of its 12 banking regions described the economy as growing at either a moderate or modest pace, with two others — Atlanta and Kansas City — describing conditions as “little changed” for the month.
In particular, the Federal Reserve Bank of Kansas City reported that “on the positive side, district real estate activity increased modestly for both residential and commercial activity.” Bankers in the KC Fed’s seven-state district also reported solid loan demand, stable loan quality and steady deposits.
Nationwide, the report said demand for manufactured goods was mixed, with the strong dollar cutting into demand for exports.
The information included in the report, known as the beige book, will be used by Fed policymakers when they next meet April 28-29.
In the new survey compiled by the Fed’s 12 regional banks, the Fed found that the big rise in the value of the dollar in recent months was having an effect, especially on manufacturing companies with overseas markets.
The report said that a slowdown in the chemical industry had been reported by contacts in St. Louis and Kansas City while chemical companies in the Dallas region talked about a drop in export demand, which they blamed on the rising value of the dollar. A stronger dollar makes U.S. products more expensive in foreign markets.
The Boston, Cleveland, Chicago and Dallas districts all reported some weakening in manufacturing that could be attributed to the rise in value of the dollar.
The report found that falling oil prices were giving consumers more money to spend on other products outside energy but were having a dampening effect on energy companies, cutting investments in oil and gas drilling. Multiple districts reported increased job layoffs at energy companies because of falling oil prices.