US economy 'continues to contract'

The US economy is continuing to contract but there are tentative signs that falling activity may be stabilising, the Federal Reserve has said.

In its Beige Book survey, the central bank said that economic conditions remained weak and that employment continued to decline across a range of industries.

The survey came 24 hours after President Barack Obama pointed towards "glimmers of hope" in the economy during his latest assessment on efforts to pull the country out of recession.

The Federal Reserve's optimism was more muted, but it did state that five of its 12 regional banks reported a moderation in the pace of decline.

But overall, its assessment remained downbeat. Retail spending remained "sluggish", while "employment continued to decline across a range of industries, with only scattered reports of hiring".

On Tuesday, in what was billed by the White House as a "major speech" on the economy, Mr Obama pointed towards sectors in which his near-US$800bn (€908.3bn) stimulus package had saved jobs.

However, he added that the US economy was "by no means out of the woods just yet".

During an address to students at Georgetown University in Washington, Mr Obama added: "2009 will continue to be a difficult year for America's economy. The severity of this recession will cause more job loss, more foreclosure, and more pain before it ends."