The U.S. economy continued to expand from late February to early April and low unemployment appears to be spurring an uptick in wage growth, the Federal Reserve said on Wednesday.
Pay increased in all but one of the Fed’s 12 regional bank districts and several reported signs of a pickup in wage growth, the U.S. central bank said in its Beige Book report of anecdotal information collected from business contacts nationwide.
The Fed has signaled caution in lifting interest rates this year as it waits to see if the nation’s economy can shrug off slowing global growth and risks posed by a strong dollar and sustained period of low oil prices.
Stagnant wages have also hindered inflation, which is running below the 2-percent rate policymakers would like to see.
The report gave cause for both optimism and caution on the U.S. economic outlook. Consumer spending increased only modestly in most districts and while capital spending increased on balance, there was only scattered reports of spending for capacity expansion.
Manufacturing increased in most districts but expectations for future growth were mixed. One particular bright spot in the employment picture was the healthcare sector, which grew at a solid pace in a number of districts, the Fed said.
Boston, Cleveland and St. Louis Fed districts cited “sizeable” wage increases for jobs in information technology services, skilled construction and manufacturing.
In Philadelphia, firms “indicated they had raised their starting wages in order to attract higher-quality workers” while in Chicago more contacts had increased wages for low-skilled, entry-level workers, the Fed said.
Several districts also reported difficulties filling certain low- and high-skilled jobs, including retail positions in Boston and construction work in Cleveland, Richmond, Atlanta and San Francisco.
Fed policymakers next meet on April 26-27. The Fed dialed back expectations on further hikes this year, after it raised interest rates by a quarter percentage point from near zero last December.
Policymakers on the whole now predict two hikes this year while investors currently see little prospect of a rate increase before December.
The Beige Book was compiled by the Chicago Fed with information collected on or before April 7, 2016.
