Uncertainty in advance of next month’s US election is weighing on some business sectors in the country, the Federal Reserve’s Beige Book survey said on Wednesday. The survey which collects the views of economists, business contacts and others in the 12 Federal Reserve districts, said most regions in the world’s largest economy continued to expand at a “modest or moderate pace.”
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Labor market conditions remained “tight,” with “modest” employment and wage gains, according to the survey, which is prepared in advance of a November 1-2 monetary policy meeting. The strength of the US dollar also held back exports of manufactured goods, it said.
The report noted improving conditions in the St. Louis, Kansas City and Dallas districts while economic activity in the New York region was unchanged.
“Outlooks were mostly optimistic, although contacts in a few districts expressed concern about economic uncertainty surrounding the upcoming presidential elections,” according to the report.
Reporting collected in the Boston region found election uncertainty is “delaying some business decisions,” and caused some “subdued” demand for loans and leasing, while Dallas said there are concerns it “will impact consumer spending,” according to the report.
The Federal Reserve policymakers are next due to meet at the start of November, a week before the presidential and congressional elections. Most forecast models give Democratic presidential nominee Hillary Clinton a strong advantage over Republican Donald Trump.
However polls show high levels of voter discontent and in public remarks Trump already has called the election results into question, creating the possibility of an unsettled outcome.
In other comments, the Beige Book said, “Manufacturing activity was mixed, and the strong dollar continued to dampen exports of manufactured goods, according to a few district reports.”
The release of the report follows closely watched Labor Department figures earlier this month, which showed steady but slowing job creation, with 156,000 jobs added in September and the unemployment rate moving upward a tenth of a point to 5.0 percent as more people joined the ranks of those seeking work — a possible sign of optimism in labor markets.
After raising the key federal funds rate for the first time in nearly a decade in December, the US Federal Reserve has refrained from doing so throughout 2016 to avoid interrupting a fragile recovery.
In advance of the November vote, the Fed is not expected to change rates. Observers say a rate increase is more likely at the Federal Open Market Committee’s final meeting of the year in December.