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The U.S. economy continued to grow at a modest to moderate pace in June and early July, with manufacturing expanding in most areas of the country, the Federal Reserve said on Wednesday.

In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the U.S. central bank said factories in many of the 12 districts reported increases in new orders, shipments or production.

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The findings on manufacturing, compiled by the Federal Reserve Bank of St. Louis from data collected on or before July 8, fit in with other surveys and suggest that a slowdown in factory activity earlier in the year had probably run its course.

The Fed also struck an upbeat note on the housing market, noting that residential real estate and construction increased at a moderate to strong pace in all districts. That in turn is helping to prop up manufacturing.

(Read more: Bernanke: Markets beginning to understand our message)

"Strong demand in residential construction continued to stimulate the manufacturing sector in several districts," the Fed said.

The Fed also said consumer spending and auto sales increased, which should help to underpin the recovery in the third quarter. While hiring held steady or increased at a measured pace in most districts, there was a reluctance to hire permanent or full time workers it said.

"Wage pressures generally remained contained, although some districts reported modest or moderate wage growth in some sectors," the Fed said.



