Meanwhile, America's business executives are hopeful about the economic recovery's staying power, with many expecting sales to increase in the next six months, according to the Business Roundtable's quarterly survey released Wednesday.

The Fed report, called the Beige Book because of the color of the cover, was released Wednesday in advance of the Federal Reserve's next meeting, later this month.

The report said the service sector in the Federal Reserve Bank of Richmond's district -- South Carolina, Washington, D.C., Maryland, North Carolina, Virginia and West Virginia -- was expanding and factory output was up, even in the beleaguered textile industry.

The growth in output, however, was not matched by an increase in hiring, the Fed said.

Retailers reported stronger sales growth despite inclement weather. The main sellers were electronics and spring apparel. The Fed said shoppers who redeemed gift cards typically spent more than the card amount.

Department stores along the South Carolina coast didn't see that big an improvement, though. The report said their sales were unchanged over the past six weeks.

One of the bright spots was the housing sector, which continued to be strong, though leasing activity in the district was flat, the Fed said. It said rents were stable and vacancies generally unchanged.

District bankers reported only slightly higher loan demand. Demand for commercial loans picked up somewhat, but bankers noted that because of lackluster capital spending, businesses have no need to borrow any money.

Wages increased only slightly, according to the report.

Tourism continued to be strong. The report noted that hotels in Myrtle Beach had a 90 percent occupancy rate despite the wet, cold weather of the past few months and that its airport had its busiest January ever.

The Business Roundtable's quarterly survey found that 88 percent of the chief executive officers polled were predicting an increase in sales in the next six months, while 11 percent said they expected no change in sales and 1 percent thought sales would go down.

"America's CEOs believe that the U.S. economy is on course for continued steady improvement over the next six months," said Hank McKinnell, the chairman of the Business Roundtable and chairman and CEO of pharmaceutical maker Pfizer Inc.

On capital spending, a key ingredient for a lasting recovery, 43 percent of the executives said they planned to boost such investment over the next six months. That marked an improvement from the previous survey, in December, when 35 percent said they expected to increase capital spending.

Still, 50 percent in the new survey said they didn't expect any change in capital spending in the months ahead and 7 percent were projecting a cutback.

Addressing the jobs situation, 33 percent polled said they expected to step up hiring in the next six months. That's up from 25 percent in the last survey. Forty-five percent in the new survey didn't expect any change in their company's employment, however, and 22 percent expected a decrease.

Job growth in the United States has been slow of late. In terms of more robust job creation, in the range of a net 200,000 to 300,000 jobs a month that analysts are looking for, McKinnell said, "We're not quite that bullish at this point."

McKinnell said job losses in the United States are tied to strong productivity gains by companies, which have been able to produce more goods with fewer workers, and not the "outsourcing" of U.S. jobs to other countries, as many observers have asserted.

The survey was based on 122 responses of top CEOs who are members of the Business Roundtable, an association of chief executive officers at large corporations.

The survey was taken from Feb. 17 through Monday.

Click here to return to story:
http://www.charleston.net/stories/030404/bus_04outlook.shtml