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New England economy growing moderately, Fed says

The New England economy continues to expand moderately as the housing market strengthens and many businesses report increased sales, but companies remain cautious in their hiring, according to a report released Wednesday by the Federal Reserve.

“Very few firms outside of advertising and consulting are adding to head counts,” according to the report, which is published eight times a year. “The [overall] outlook is somewhat mixed, but mostly positive.”

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The report, known as the Beige Book, collects anecdotal evidence from businesses around the country in advance of Fed meetings that determine interest rates and other economic policies. Policy makers next meet April 29-30.

The report said that economic activity increased in most parts of country over the past month but only moderately. Improving weather brought out shoppers and some tourists, orders increased, and manufacturing picked up in several areas, including New England.

Many New England retailers reported an increase in business despite the bad weather that “cut into some stores’ sales,” the report said. Manufacturers generally reported higher sales and some increased spending, although several noted that poor weather had hurt business.

One auto parts manufacturer worried that slow auto sales in recent months could mean plant shutdowns this summer unless business picks up soon, the report said.

The real estate sector was strong, but the inventory of commercial and residential properties on the market remained tight.

“Brisk demand for and tight supply of office space in portions of the city, including the Seaport District and the Back Bay, have pushed asking rents up,” the report said.

Tight inventories also contributed to rising home prices, but the shortage of homes on the market was blamed for a decline in sales in Massachusetts.

“There is just not enough supply to meet demand,” one real estate professional said.

Year-over-year sales of single-family homes also fell in Rhode Island and Connecticut.

Erin Ailworth can be reached at Follow her on Twitter @ailworth.
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