July 18 (Bloomberg) -- The Federal Reserve said the economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions.
“Manufacturing activity continued to expand slowly in most districts,” the Fed said today in its Beige Book business survey, which is based on reports from its 12 district banks. “Employment levels improved at a tepid pace.”
The New York, Philadelphia, and Cleveland districts “noted that activity continued to expand, but at a slower pace since the last report, while Richmond cited mixed activity.”
The report, which gives central bankers anecdotal evidence on the economy two weeks before they meet in Washington, supports Fed Chairman Ben S. Bernanke’s view that the U.S. lost momentum in the first half of 2012. Bernanke, in a second day of congressional testimony today, repeated that progress on unemployment may be “frustratingly slow” and the Fed is ready to take further action to boost the recovery if necessary.
The Atlanta, St. Louis, and San Francisco districts were described as having “modest growth,” while Boston, Chicago, Minneapolis, Kansas City, and Dallas were “advancing moderately.” By comparison, in the June 6 report, seven districts were growing “moderately” and just one was reported to have slowed.
Stocks held gains after the report. The Standard & Poor’s 500 Index advanced 0.7 percent to 1,372.79 at 2:07 p.m. in New York after housing starts increased at the fastest rate in almost four years and companies from Intel Corp. to Honeywell International Inc. reported profit that beat estimates. The benchmark 10-year Treasury yield declined three basis points, or 0.03 percentage point, to 1.48 percent.
Today’s Beige Book reflects information collected on or before July 9 and summarized by the Atlanta Fed.
“Retail sales increased slightly in all reporting Districts except Boston and Cleveland, where sales were categorized as flat, and New York, where sales softened,” the report said.
The policy-making Federal Open Market Committee meets for two days starting July 31. The group voted last month to extend Operation Twist, a program intended to push down long-term borrowing costs by extending the maturities of assets on the Fed’s balance sheet. As many as four policy makers were “quite receptive at this time” to more asset purchases, Atlanta Fed President Dennis Lockhart said July 13, citing minutes of the June meeting.