Fed report says U.S. growth slowed in early 2008

By Mark Felsenthal

WASHINGTON (Reuters) - Federal Reserve districts all saw decelerating economic growth in early 2008, even as prices pressed upward almost everywhere, the central bank's "Beige Book" report on economic conditions said on Wednesday.

"Reports from the twelve Federal Reserve Districts suggest that economic growth has slowed since the beginning of the year," the Fed said in its anecdotal summary.

The Beige Book was compiled with information collected through February 25.

The Fed's survey found service industries slowing in most Fed districts, while manufacturing was sluggish in half of the Fed's 12 regions. Residential real estate markets were generally weak, and reports on retail spending were downbeat, the report said.

At the same time, upward pressure on prices from rising materials and energy costs showed up in almost all the district reports, the Fed said. Businesses in many regions said they had only mixed success in raising their prices to recoup increased costs.

Price pressures also translated into higher transportation and shipping costs, the Fed said. Businesses also saw higher prices for metals, petrochemicals, and food, the survey found.

"Firms' ability to pass along cost increases by raising selling prices varied," the central bank said.

Meanwhile, most districts said businesses were reporting limited wage pressures and some loosening of labor markets.