US growth 'modest', strong dollar weighs: Fed report

The strong dollar weighed on manufacturing and tourism spending in the US while the economy continued "modest expansion" in recent weeks, the Federal Reserve said in a report Oct. 14.

Eleven of the central bank's 12 districts reported growth, according to the Beige Book survey of economic conditions from mid-August through early October.
 
One district hit hard by the fall in oil prices, the Kansas City region, reported a slight dip in economic activity.
 
The Beige Book, a collection of anecdotal information, said that a number of districts cited the strong dollar "as restraining manufacturing activity as well as tourism spending."    

However, consumer spending, driver of two thirds of the US output, grew moderately, led by sharper gains in auto sales.
 
Nonfinancial services activity mostly strengthened and the housing market, which has been a bright spot in the economy, improved.    

Overall, the report was upbeat about the economy. "Business contacts across the nation were generally optimistic about the near-term outlook," the Beige Book said.
 
But there were pockets of concern. Manufacturing generally weakened, in part due tot he downturn in energy sector activity in a number of districts.
 
Though there was some strength in the auto, aerospace and transportation equipment industries, metals industries were hit by the strong dollar and competition from China.
         
The Fed report was sprinkled with references to the strong dollar's negative impact, whether in manufacturing, ports or in New York, where it "has adversely affected sales, particularly in areas frequented by foreign shoppers."  

In Montana, on the border with Canada, Canadian tourist spending fell...