The pace of economic activity in the US remained "lacklustre" during March and the first two weeks of April, according to the Federal Reserve. In its Beige Book, it said that most of the 12 Federal Reserve districts reported economic conditions that were mixed or soft. The onset of the war with Iraq appeared to have some effect on sales and spending, the Fed said, although it noted that was too early to ascertain the full effect of the war on both consumer and business confidence.
"Reports on consumer spending were generally weak in March, but respondents attributed part of the weakness to poor weather and the onset of war," it said. The Fed said year-on-year comparisons of retail sales for March were difficult because Easter fell in late March in 2002 last year but fell in the third week of April this year. "Optimism remained that the retail environment would improve within the next six months," it added. Nine of the twelve districts reported slowing activity in manufacturing, while most districts indicated continued weakness in labour markets, with several noting "substantial layoffs" in the sector. //www.fxcentre.com