Fed: Labor Market Slowly Starting to Heal

The Federal Reserve offered a muted hint of optimism about the economy today.

The central bank's Beige Book report, a survey of regional economic conditions, noted improved manufacturing and retail conditions across the country. "Economic activity continued to expand moderately from November through December,'' the central bank said in a statement.

There was little worry about inflation, however. "Most District reports cited comments by both retailers and manufacturers that costs were rising, but indicated that competitive pressures had led to only modest pass-through into final prices," the Fed said.

The Fed's Beige Book also had some modestly upbeat comments about the job market, but they were tempered by continued concern about the housing market. "Labor markets appeared to be firming somewhat in most Districts, as some modest hiring beyond replacement was said to have occurred,” the central bank said in its report, but housing was "weak and sluggish" in many regions.

The Beige Book is released two weeks ahead of the next Federal Open Market Committee meeting, which is scheduled for January 25-26.