Fed sees continued economic improvement

NEW YORK (CNNMoney.com) -- The economy continued to show modest signs of improvement in recent weeks, although growth was hindered somewhat by bad weather, according to the latest Federal Reserve snapshot of regional economic conditions.

Economic activity improved in nine of the central bank's 12 districts, the Fed said Wednesday in the March edition its Beige Book. But activity was hampered in several districts, most notably Richmond, due to severe snowstorms in early February.

"The stabilization of the economy continues," said Doug Roberts, chief investment strategist for Channel Capital Research. "However, the recovery seems to be tenuous."

The Fed said that consumer spending improved slightly in many districts since the last survey, which was published in January.

The services sector also improved, led by health-care and information technology firms. Manufacturing activity strengthened in most regions, with gains in the high-tech equipment, automobile, and metal industries.

Real estate: Residential real estate continued to improve in many regions, although several districts said activity was hurt by extreme winter weather.

Commercial real estate and construction activity was weak or declined in many parts of the country, but some districts reported slight stabilization and a few signs of modest improvement.

The snow storms that crippled much of the Northeast and parts of the South in February also took a toll on agricultural activity, according to the report.

The Fed said demand for loans remained weak, and lending standards continue to be tight across the country. Consumer prices were tame, despite some increases in the costs of raw materials.

Jobs: The job market remained sluggish throughout the nation, the Fed said. But some districts reported an uptick in hiring or a slowdown in layoffs. In Dallas, for example, staff levels ticked up at some energy service, food, high-tech and transportation manufacturing firms.

On Friday, the government is expected to report that employers cut another 20,000 workers in February after cutting the same number in January. The unemployment rate is forecast to rebound to 9.8% after slipping to 9.7% at the beginning of the year.

The Beige Book, published 8 times a year, is a summary of economic conditions across all of the Fed's 12 districts. It precedes, by about two weeks, the central bank's scheduled policy meeting when interest rate levels are discussed. The next meeting is scheduled for March 16.

Economic growth: At its last meeting in January, the Fed left its key interest rate, the federal funds rate, near zero percent. The rate has been at that level since December 2008, as part of the Fed's efforts to boost economic activity.

The U.S. economy grew at an annual rate of 5.9% in the last three months of 2009, government data showed last week.

That solid growth, which was the most improvement that the U.S. economy has shown in more than six years, follows a 2.2% annualized increase in the third quarter.

Most economists now agree that the economy pulled out of recession at some point last summer.