US economic activity expanded modestly in recent weeks, although activity was flat in some regions and declined in a couple of others, the Federal Reserve said on Wednesday in a report that showed firms growing more pessimistic about the outlook.

"National economic activity expanded modestly on net since the previous report; however, conditions varied across industries and districts," the Fed said in its latest collection of surveys known as the "Beige Book," conducted across its 12 districts until October 7. "Outlooks grew more pessimistic amidst growing concerns about weakening demand."

Firms noted that price pressures remained elevated, although there was some easing in several districts, and several said labour conditions were cooling somewhat.

The central bank's latest summary of observations from its business, community and labour contacts was released in the run-up to its November 1-2 policy meeting.

With the latest data showing inflation by the Fed's preferred measure continuing to run at more than three times the central bank's 2 percent target, despite what has already been the most aggressive round of Fed policy tightening in 40 years, the report may do little to temper expectations for a fourth straight 75-basis-point rate hike in three weeks.

Policymakers have signalled they will keep raising rates until they see inflation cooling, even as they acknowledge that higher borrowing costs will likely translate to slower growth, softer labour markets and a likely increase in unemployment.

US job growth has been strong, and the unemployment rate in September fell to 3.5 percent. While underlying price pressures for goods have eased as supply chains heal, those of services, which tend to be stickier, continue to rise rapidly.

But as Fed policymakers lift their benchmark overnight lending rate, currently in the 3.00-3.25 percent range, nearer to the 4.50-5.00 percent range that most of them think will be needed to drive down inflation, they and outside analysts are looking for evidence that the policy tightening is starting to do its work.

Such signs could usher in a slower pace of rate hikes that Fed Chair Jerome Powell has said will come "at some point." But so far they have been hard to see in much of the broad economic data beyond that tracking housing, where a sharp deceleration is underway. (Reuters)