The Fed's recent Beige Book for February shows that economic activity in most of the Federal Reserve Districts increased. In Dallas and New York Districts, activity changed slightly, whereas it fell moderately across the Kansas City District. However, businesses are still positive regarding the future outlook. Except for Kansas City and Dallas, consumption grew in most Districts. There were reports that lower gas prices are increasing consumption in certain Districts. Most districts recorded higher auto sales and bolstering tourism activity.

Manufacturing activity varied significantly; however, on the whole it was flat. Weakening of demand in the energy sector depressed activity through several Districts. It more than countered any advantages of low energy costs for manufacturers. Dollar's appreciation and slowing global growth were limiting international exports. Still, expectations for the future are positive in manufacturing.

In most of the Districts, housing rebounded. Also, some reported low inventories of homes for sale. New home construction also improved, but the multifamily segment continued to be strong. Meanwhile, moderate improvements in labor market continued. There were reports of shortages of engineering, skilled IT, construction, healthcare, transportation and manufacturing employees. Moreover, certain Districts stated that lower skilled jobs are becoming very difficult to fill.

Meanwhile, wages grew, with many Districts reporting slight to strong pace of gains. Most districts reported that consumer goods prices changed slightly, with fuel, oil and transportation costs being very low.

The February's Beige Book gives a picture of broad-based rebound throughout most of the US, with any sign of weakness mainly focused in the oil and gas exposed Kansas and Dallas City Districts. The weakness in that sector seems to be spreading to other sectors of the Districts' economy; however, it looks restricted to the transport, manufacturing sectors elsewhere in the US.

Challenges from dollar's appreciation, weakening oil and gas investment and weal global growth continue to weigh of the country's manufacturing. However, the sector seems to be shaking it off, which is also being helped by strong domestic demand.

The domestic economic strength was seen in the persistent rebound in the labor market. The falling slack in labor market is seen in shortages throughout low and higher skilled professions, which is resulting in higher wages and incomes. These developments will make sure that the rebound in the US economy continues to be on track. Even if it is doubtful if the US Fed will raise rates in two weeks' time, it is expected that the central bank will hike in June.