Aug. 29, 2012 at 2:11 PM ET
WASHINGTON -- The U.S. economy continued to grow gradually in July and early August, but manufacturing activity was softening in many areas of the country, the Federal Reserve said on Wednesday.
In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the U.S. central bank said retail activity, including auto sales, had picked up since the last report.
"Reports from the twelve Federal Reserve districts suggest economic activity continued to expand gradually in July and early August across most regions and sectors," the Beige Book said.
The economic snapshot was prepared for use by Fed officials at their upcoming policy meeting on Sept. 12-13, when policymakers will debate whether further central bank bond purchases are warranted to spark a stronger recovery.
The economy grew at a 1.7 percent annual rate in the second quarter, supported by exports and investment in the construction of nonresidential structures. The pace was a slowdown from the 2.0 percent rate set in the first quarter.
The Beige Book captured the beginning of the third quarter and suggested the speed of the recovery was falling short of what was needed to spur faster hiring. "Most districts reported that employment was holding steady or growing only slightly," the Fed said.
It also noted that manufacturing was softening in many districts, matching findings from recent regional factory surveys. Much of the slowdown is blamed on weak demand overseas, especially in Asia.
"Many districts reported some softening in manufacturing, either a slowdown in the rate of growth or a decline in the level of sales, output or orders," the Fed said. "Across the districts, few manufacturing firms reported any major hiring or layoffs."
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