Tight labor markets, very high levels of factory activity and fierce competition among business lenders characterize economic conditions across the nation, the Federal Reserve said Wednesday.
The survey of regional economic conditions, issued less than two weeks before a key policy meeting, supports but doesn’t guarantee a central bank decision to raise short-term interest rates for the second time this year, economists said.
“It’s 50-50 or perhaps slightly better that we’ll get another quarter-point tightening move,” said economist David Jones of Aubrey G. Lanston & Co. in New York. “If we don’t get it in May, then we’ll get it in July.”
The central bank’s policy-setting Federal Open Market Committee is scheduled to meet May 20 and July 1-2.
Separate economic reports on Wednesday showed a pickup in labor costs in the first quarter along with the best productivity growth in three years and a deceleration of consumer borrowing in March.
The Labor Department’s productivity report showed unit-labor costs advanced at a 2.7 percent annual rate, compared with a 2.5 percent rate in the fourth quarter. That could translate into higher product prices.
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