U.S. economic activity increased at a modest to moderate pace in June and early July as more districts are reporting slowing growth, the Federal Reserve said Wednesday in its so-called Beige Book.

The latest report, prepared by the Atlanta Fed, examined economic conditions across the Fed's 12 regions based on information collected on or before July 9. These anecdotal reports are closely watched by market participants because they will be used by Fed policymakers at their next meeting on July 31-Aug. 1.

The Fed's previous Beige Book assessment of the economy, released on June 6, showed a slightly more upbeat assessment, describing it as moderate.

Consumer spending, which accounts for around 70 percent of the U.S. economy, increased modestly during the reporting period, according to the Fed's Beige Book, a report published eight times a year in advance of the Fed's policy-setting meetings. Each report is a gathering of anecdotal information on current economic conditions by each Federal Reserve Bank in its district.

Boston and Cleveland reported sales as flat, and New York cited softer sales.

There were a few reports that high summer temperatures negatively affected sales, the central bank said, adding that most districts reported robust vehicle sales. Demand was high for fuel-efficient vehicles in particular.

All district housing market reports were largely positive as sales and construction levels increased and home inventories declined, the Fed said.

Manufacturing activity continued to expand slowly in most districts, with Cleveland, Atlanta, Chicago and Kansas City citing slight increases in production levels. However, several districts reported a deceleration in new orders, and the Philadelphia and Richmond districts reported declines in shipments and orders.

Employment levels improved at a tepid pace for most districts, the Fed said. In its previous assessment, the Fed said hiring was steady or increasing moderately.

Overall, districts reported that their contacts remained cautiously optimistic about future business conditions, the Fed said.