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Inventories Level Off, But Economic Growth Continues, Fed Says

The economy continues to improve according to the Federal Reserve's Beige Book released today. Business spending, manufacturing, and transportation all increased, but several districts called the pace of growth "modest."

In Dallas, manufacturing inventories leveled off, while retail inventories in Boston, Atlanta, and St. Louis fared similarly. In several districts, auto production failed to keep pace with demand, straining auto dealer stocks.

Manufacturing and transportation continues to improve across all 12 districts. Dallas saw an increase in oil refinery capacity utilization. Medical and pharmaceutical sectors are growing in Boston and Chicago, while high-tech manufacturing is giving Boston, St. Louis, Kansas City, and San Francisco a boost. Dallas and San Francisco saw gains in food processing.

Commercial real estate vacancy rates rose, driving down the price of rents. Lower rents spurred leasing in New York, Philadelphia, Richmond, Kansas City, Dallas, and San Francisco.

Consumer spending and tourism saw modest gains. Consumers are buying necessities but are holding off on big-ticket purchases. Vehicle sales increased, but slowed last month in New York, Cleveland, and San Francisco. And the Gulf Oil spill is already dampening travelers' spirits in the South. Atlanta reported some vacation lodging cancellations due to the spill, as well as floods in Tennessee.

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