Weakness in manufacturing and the housing market are behind modest overall growth in the US economy, a key snapshot of activity has indicated.

The Federal Reserve's Beige Book, a summary of business views about current economic conditions, found most areas were seeing only moderate growth.

Weakness in the housing market has led to fears of a sharp economic slowdown.

While consumer spending is holding up and labour markets remain tight, fuel and raw material prices have risen.
Former Federal Reserve chairman Alan Greenspan said earlier this year that there was a risk of a recession if conditions in the housing and manufacturing sectors deteriorated further.

Recent indicators have shown a worsening in the housing market, with sales of existing homes last month falling by the largest amount in 18 years.

Some analysts have called for the Fed to cut interest rates - which have been on hold for about six months - to give a spur to the economy.

Although the Beige Book gives no real insight into the Fed's thinking, it provides vital evidence about how conditions are changing across the central bank's 12 regional districts.

The report - based on information compiled in March and the first half of April - identified widespread weakness in manufacturing, particularly in residential construction.

Homebuilding lagged in most districts while demand for mortgages eased.

But although some areas saw an increasing number of defaults on mortgages and other loans the report concluded that credit quality remained at "favourable levels" in many areas.

"The general economic outlook remains precarious," Cliff Waldman, an economist with the Manufacturers Alliance, said in response to the report.

Source: BBC