Fed's Lockhart says small business key to recovery

Pedestrians walk across 5th Avenue while shopping in New York December 22, 2010.

WASHINGTON (Reuters) - A top Federal Reserve official said on Thursday the U.S. economy needs more start-up firms to remain competitive.

Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said the pace of small business creation had not recovered as might have been expected despite a return to economic growth following the deep recession.

He did not touch directly on the outlook for the economy or monetary policy.

"The rate of new business formation fell sharply during the recession and seems to have been slow to recover," Lockhart said.

(Reporting by Pedro Nicolaci da Costa; Editing by James Dalgleish)