U.S. economic activity grew at a modest to moderate pace during October and early November, according to the Federal Reserve's Beige Book.
The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, was released Wednesday afternoon, two weeks ahead of the next monetary policy meeting.
The Fed noted that several districts experienced strong demand, but growth was constrained by supply chain disruptions and labor shortages.
Fed Chair Jerome Powell noted during Congressional testimony that the emergence of the Omicron variant of the coronavirus could slow progress in the labor market and further intensify supply-chain disruptions.
The Beige Book said consumer spending increased modestly during the period, although low inventories held back sales of some items, notably light vehicles.
Meanwhile, the report said leisure and hospitality activity picked up in most districts as the spread of the Delta variant ebbed in many areas.
While materials and labor shortages limited expansion, the Fed said manufacturing growth was also solid across the districts.
The Beige Book also said employment growth ranged from modest to strong across, as contacts reported robust demand for labor but persistent difficulty in hiring and retaining employees.
With regard to inflation, the Fed said wide-ranging input cost increases stemming from strong demand for raw materials, logistical challenges, and labor market tightness led to widespread price hikes.