Latest Fed Survey: Economy Gaining Ground

The U.S. economy continued to improve in July and August, the Federal Reserve reported yesterday in its latest nationwide survey, bolstering recent reports that suggest economic recovery is gaining momentum.

Eleven of the Fed's 12 regional banks reported that business activity had increased. Consumer activity improved in most districts, and manufacturing rose in 10 districts.

The surveys are conducted by the Fed's regional banks eight times a year, and Fed policymakers use the results, among other factors, to determine whether interest rates should be changed.

Also yesterday, the Commerce Department reported that construction spending rose in July for a second consecutive month, and economists attributed that increase at least in part to low interest rates.

The Fed's survey said few labor markets reported job shortages. Employers in several districts said that wage increases, when they occur, are usually modest and that the increasing costs of benefits such as health insurance have further raised compensation costs.

These are positive signs for economic development, although employment continues to limp along.

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