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Fed report gives good news on U.S. economic, jobs growth

The U.S. economy grew moderately in most regions of the country this spring, and companies kept hiring, according to a Federal Reserve survey released Wednesday.

The mostly upbeat survey offered a hopeful sign after last week's more dismal data on hiring and manufacturing. Those reports sketched a picture of an economy that is slumping after a promising winter.

The positive survey, which is anecdotal, also makes it less likely that Fed policymakers will take further action in the coming months to lift the economy.

The survey doesn't suggest the economy is in dire need of help, many economists said.

"This report was more upbeat than probably anyone expected," said Jennifer Lee, an economist at BMO Capital Markets. That suggests that "some of the soft reports on payrolls, auto sales and manufacturing may be temporary."

The Fed survey shows growth in each of its 12 bank districts from April 3 through May 25. Growth picked up in 10 districts. It was steady in the Boston district and slowed in the Philadelphia region.

Hiring was steady or rose modestly, according to the Fed's report, known as the "Beige Book." That's in stark contrast to the government's jobs report last week, which said that employers added the fewest jobs in a year in May and that the unemployment rate ticked up to 8.2 percent from 8.1 percent in April.

"We are encouraged by the overall tone because it suggests that business contacts are not experiencing a sharp drop-off in activity amid the heightened economic uncertainty of late," Joseph LaVorgna, an economist at Deutsche Bank, said in a note to clients.

Fed Chairman Ben Bernanke is expected to update his views on the economy and the Fed's policies during a congressional hearing today.

It was the second positive reading on the economy this week. Tuesday, a private survey found that the service sector expanded at a slightly faster pace than the previous month.

The industries surveyed cover about 90 percent of the economy and include health care, retail, construction and financial services.

But the survey also pointed to some weakness in the economy.

Consumer spending was flat or increased only slightly in almost all districts. That could restrain growth because consumer spending drives 70 percent of economic activity.

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