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The Boston Globe

Business

N.E.’s economy improves slowly, Fed says

The New England economy continued to improve in recent weeks, but showed signs of slowing as uncertainties about the recession in Europe and the strength of the US recovery weighed on business activity and hiring, according to a survey of businesses released by the Federal Reserve Wednesday.

Growth was sluggish in software and information technology services, which have spearheaded the region’s recovery, the Fed reported. Most New England companies said they were limiting hiring to replacing workers, rather than creating new jobs.

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Still, many businesses reported that sales were running ahead of a year ago and viewed the slowdown as temporary. In the technology industry, for example, “software and IT firms in New England remain cautiously optimistic, with most expecting more robust growth in the second half of 2013,” the Fed reported.

The report, known as the Beige Book, collects anecdotal information about economic conditions and is issued by the Federal Reserve eight times a year in advance of its policy making meetings. Policy makers next meet June 18-19.

Nationally, the Fed said, the results of the survey indicated a “modest to moderate” increase in economic activity. The report described the outlook for the New England economy as “fairly positive,” with most companies surveyed expecting the current pace of business to continue or pick up.

The commercial real estate market was improving in urban areas, including Boston, where office rents are up and vacancies down.

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New England retailers are rebounding from a harsh and prolonged winter, which dampened sales, the report said. They are finding overall consumer sentiment “a bit more positive,” particularly in the past month.

Greater Boston tourism revenues were up, with restaurant revenues running 1.5 percent ahead of a year ago, according to the Fed. The increases were partly due to an increase in domestic and foreign business travelers. Attendance at museums and attractions was down, a possible side effect of the Marathon day bombings.

Most regional manufacturers reported they were hiring and that sales had improved from a year ago. They were reasonably optimistic about the future, the report said. One electrical equipment manufacturer reported tepid sales growth — except for products used in residential construction, which was growing by double digits.

Only one manufacturing firm surveyed, a machinery parts maker, said it was planning to lay off workers.

The commercial real estate market was improving in urban areas, including Boston, where office rents are up and vacancies down. “Investors are purchasing empty retail space in Boston for the first time since the onset of the Great Recession,” the report said, noting that some commercial real estate officials raised concerns about an overheated market.

Sales of single-family homes continued to rise in March and April from a year ago. Low interest rates, relatively low prices, and improving confidence among buyers propelled demand. Median sale prices for single-family homes and condos also rose.

Megan Woolhouse can be reached at mwoolhouse@globe.com.

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