US businesses saw a modest increase in activity and employment generally increased through late August, a Federal Reserve report showed, but economic growth remained sluggish in some parts of the country.

The report highlighted the uneven economic rebound taking place in the US economy, with some areas such as residential real estate surging with the help of low interest rates, but other sectors struggling to rebound.

“Economic activity increased among most districts, but gains were generally modest and activity remained well below levels prior to the COVID-19 pandemic,” the Fed said in its “Beige Book” report, which is based on anecdotal information collected from business contacts across the country.

The Fed’s survey was conducted in its 12 districts from July through late August.

The report showed economic progress was not spread equally across the nation, with the New York Fed district reporting that economic activity had stalled, the Chicago Fed district reporting it had increased strongly, the Atlanta Fed district seeing mixed signals, and the San Francisco Fed saying activity expanded slightly.

That dovetails with what a variety of new high-frequency indicators have been indicating for weeks: After an initial early surge off the bottom in May and June, the US recovery has entered a much lumpier stage as COVID-19 hot spots force regional retrenchments.

Nationally, the number of new coronavirus infections is down to about 41,000 a day, from 77,000 in July, but some states are still struggling to contain the virus. Households and businesses also received less federal support in August, which marked the end of a $600 weekly supplement to unemployment benefits and the expiration of the Paycheck Protection Program, which offered forgivable loans to small businesses.

Some businesses continued to struggle to find needed workers, an issue made more severe by a shortage of child care services, as well as uncertainty over the coming school year and jobless benefits.

Companies are taking different approaches for how they pay workers during the crisis. While some firms looked into rolling back hazard pay for jobs with high exposure to the coronavirus, others decided not to do so to boost staff morale and help recruitment.

Overall, the report found wages were flat to slightly higher in most of the Fed districts, with greater pressure showing among lower-paying positions.

Uncertainty weighed heavily, but firms in many regions saw at least some improvement coming, the report showed. In the Chicago Fed district, most firms forecast growth ahead but did not expect a recovery until at least the second half of 2021.

In the Fed’s St. Louis district, for example, about half of contacts expected sales to return to pre-crisis levels, while a third thought it would take more than 12 months. In the Dallas district, expectations for future activity fell, even as uncertainty rose sharply.

US private employers hired fewer workers than expected for a second straight month in August, suggesting that the labor market recovery was slowing as the COVID-19 pandemic persists and government money to support workers and employers dries up.

The moderation in job growth was also flagged by another report from the Federal Reserve on Wednesday showing furloughed workers increasingly being laid off permanently in some parts of the country. The bulk of hiring last month was by large businesses, with small enterprises posting a modest increase. A $600 weekly unemployment supplement expired on July 31, while a program that gave businesses loans that can be partially forgiven if used for employee pay has also lapsed.

“The recovery in jobs lost in this pandemic recession was always a weak one,” said Chris Rupkey, chief economist at MUFG in New York. “But for a second month in a row it is looking like the jobs are not going to come back unless there is more stimulus from Washington to bolster economic demand and keep business activity and consumer spending growing.”

Private payrolls increased by 428,000 jobs last month, the ADP National Employment Report showed. Data for July was revised higher to show hiring up by 212,000 jobs instead of the initially reported 167,000. The revision still left the July tally out of alignment with the 1.462 million rise in private employment reported by the government last month.

Economists polled by Reuters had forecast private payrolls would increase by 950,000 in August.

Reuters