Economic conditions in the United States showed "modest" improvement, with residential real estate and manufacturing leading the early stages of the economic recovery, the Federal Reserve (Fed) said on Wednesday in its latest survey on business conditions around the nation.

The snapshot of economic conditions found that most Federal Reserve districts "indicated either stabilization or modest improvements in many sectors since the last report," although the improvements were "often from depressed levels."

"Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered," the Fed said.

Both housing and manufacturing sectors "continued a pattern of improvement that emerged over the summer."

An US$8,000 tax credit for first time home buyers boosted the residential housing market. But economists worry that the fledgling housing revival could be derailed by continued soaring unemployment and the expiration on Nov. 30 of the tax credit policy.

"Most Districts reported that manufacturing activity was generally stronger since the last report," the Fed noted.

However, consumer spending remained weak and commercial real estate was also reported to be one of the weakest sectors, the Fed said.

Consumers, whose spending accounts for about 70 percent of economic activity, are expected to stay cautious given rising job losses, stagnant incomes and hard-to-get credit.

The nation's unemployment rate climbed to a 26-year high of 9.8percent in September, and is not expected to fall below 9 percent in 2010.

The weakest sector was commercial real estate, with conditions described as either weak or deteriorating across all districts.

The Fed said that districts generally reported little or no increase to either price or wage pressures, but references to downward pressures were occasionally noted. Inflation pressures were generally subdued in most districts.

The survey, known as the Beige Book, was based on economic information supplied by the Fed's 12 regional banks and collected before October 13, and struck a more positive tone than the last report, which was released in early September.

The survey summarizes comments received from business and other contacts outside the Fed and is not a commentary on the views of Fed officials.

But its findings will figure into discussions when Fed policymakers meet to consider their stance on interest rates and other monetary issues on November 3-4.

The central bank is expected to keep interest rates at record low at that time to help foster the still fragile recovery.

(Xinhua News Agency October 22, 2009)