Overall economic activity has contracted further or remained weak, according to the Federal Reserve's Beige Book report released on Wednesday, although five of the twelve Fed districts noted a moderation in the pace of decline.

The report, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts, also noted that several districts saw signs that activity in some sectors was stabilizing at a low level.

While the report showed that manufacturing activity continued to decline in most districts and across a wide range of industries, several districts said that the pace of decline had slowed or that factory activity had stabilized.

Additionally, the districts reported a marginal improvement in manufacturers' assessments of future factory, with contacts in the Boston, New York, Philadelphia, Atlanta, and Kansas City districts noting a slight upturn in the outlook for production and sales.

The Fed also said that consumer spending remained sluggish, although it noted that several districts said sales rose slightly or declines moderated compared with the previous survey period.

Auto dealers continued to struggle, however, and vehicle sales were sluggish overall due to weak demand and tight credit.

As with the other sectors, the Fed districts said that the housing markets remained depressed overall, but there were some signs that conditions may be stabilizing.

The Fed said that homebuyer tax credits, low mortgage rates, and more affordable prices have led to a rising number of potential buyers.

On the inflation front, the report showed that the districts that report on prices noted downward pressures across the board, with wage and salary pressure easing amid the continued weakness in the labor markets.

The Fed added that reports of layoffs, reductions in work hours, temporary factory shutdowns, branch closures and hiring freezes remained widespread across the twelve districts.

Peter Boockvar, equity strategist at Miller Tabak, said, What caught the attention of the market was that 5 of 12 districts said the contraction slowed.

That correlates though with what we've all seen in the economic data of late that, while still weak, haven't gotten any weaker and some, like today's NY survey, showed less of a contraction, Boockvar added.

Earlier in the day, the New York Federal Reserve released a report showing that regional manufacturing activity has continued to deteriorate in the month of April, but the pace of contraction slowed by much more than expected.

The report showed that the index of activity in the sector rose to a negative 14.7 in April from a negative 38.2 in March, with a negative reading indicating a contraction. Economists had been expecting the index to edge up to a negative 35.0.

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