Economic growth is slowing in several regions of the US but energy-fuelled inflation is on the rise, the Federal Reserve said in its latest 'Beige Book' report last night.
'Reports from all 12 Federal Reserve Districts indicate that economic activity continued to expand from mid-April to early June, but there were some signs of deceleration,' the report said.
Labour markets continued to tighten, with more of the Fed Districts reporting employers having problems finding skilled workers, it said. Still, wage pressures 'remained moderate overall' except among workers with sought-after skills.
However, the report added that high energy costs were fueling price increases in manufacturing and, to a much lesser extent, retail.
'Reports of costs being passed forward varied considerably but were more prevalent than in the last Beige Book (in April),' it said.
The latest US inflation indicators have shown price pressures building on the back of sky-high energy prices. That has sparked alarm at the Fed heading into the central bank's next meeting on June 28-29, even if economic growth is showing signs of a slowdown.
'Consumer spending continued to increase, but District reports suggest that the growth rate slowed,' the Beige Book said.
'Manufacturing activity still expanded quite strongly, but reports indicate more areas of weakness than in March and early April,' it said. 'Residential real estate markets continued to cool across the country, with slower homebuilding and sales of existing homes,' it added.
