Investing.com – Economic growth in recent weeks expanded at a modest-to-moderate rate across the U.S. central bank’s regional districts, but business optimism has taken a hit from increased financial market volatility, falling energy prices, and the ongoing trade dispute between the U.S. and China, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Jan. 7, also highlighted that labor markets remain "tight," raising the difficulty of finding workers, prompting wage increases across skill levels.
"Wages grew throughout the country, with the majority of Districts reporting moderate gains. Wages increased across skill levels, and numerous Districts highlighted rising entry-level wages as firms sought to attract and retain workers and as new minimum wage laws came into effect, the report showed."
Inflation grew at a moderate pace, with "the majority of Districts reported modest to moderate increases in prices," according to the report. "Most Districts indicated that firms' input costs had risen, but reports were mixed on whether they could pass the higher costs on to customers. "
The months-long U.S.-China trade dispute appeared to be taking its toll on businesses. "Reports cited rising materials and freight prices as sources of cost increases, and a number of Districts said that higher tariffs were also a factor," according to the Beige book.