Economic recovery on track, Fed says

WASHINGTON -- The U.S. economic recovery from the recession is on track.

Solid retail sales, brisk housing activity and improvements for some of the nation's factories gave the economy more momentum in March and early April, the Federal Reserve said Wednesday.

"The overall tone was positive," the Fed said in its latest survey of business conditions around the country. A few Fed regions, however, "expressed qualifications about the pace of the recovery or the strength" in their economies.

For instance, Boston described economic activity as mixed.

Cleveland said its economy was improving at a much slower pace than earlier in the year. Kansas City, Mo., and Dallas said their economies remained weak despite some signs of a turnaround.

The survey, based on information supplied by the Fed's 12 regional bank districts, will be used by Fed policy-makers when they meet on May 7 to discuss interest rate policy.

Most economists predict the Fed will not change interest rates -- now at 40-year lows -- given the fledgling recovery.

For the better

For most regions, retail sales rose moderately or held steady, the Fed said in the survey.

Sales of home furnishings did especially well. Car sales were mixed. Tourism activity improved.

Home sales and construction activity increased in most areas, but commercial real-estate market largely still was weak, especially in San Francisco, Dallas and Atlanta.

Manufacturing either stabilized or showed signs of improving, with some plants hiring back laid-off workers.

Manufacturers' capital spending plans remained limited.

Producers of auto parts, steel, residential building materials and furniture reported the strongest activity, the Fed said.

A second economic report Wednesday suggested that for manufacturers, the recovery is in low gear.

Orders to U.S. factories for big-ticket goods, including cars and computers, edged down 0.6 percent last month after a solid 2.7 percent gain in February, the Commerce Department said.

The decline was the first in the past four months.

Manufacturing slows

The report "suggests a strong and broad-based recovery has yet to take hold in manufacturing," said Jerry Jasinowski, president of the National Association of Manufacturers.

On Wall Street, stocks moved lower. The Dow Jones industrial average closed down 58.81 points at 10,030.43.

Economists did not believe the drop in orders was a sign that the manufacturing sector was headed for a serious backslide. They saw it as a temporary rough path along the comeback trail.