Fed Report Sees Continued Slow Growth : Economy: The survey of the 12 regional banks shows an apparent weakening in the construction sector.

The U.S. economy is continuing to grow sluggishly although the construction sector appears to be weakening, according to a Federal Reserve survey released Wednesday.

“The tone of district reports suggests continued slow growth in the economy with little change in the underlying inflation rate,” said the so-called Beige Book, a summary of economic findings by 12 Fed district banks.

The report was based on information collected by the district banks. The survey, completed June 8, was similar to three polls conducted earlier this year that found slow but continued economic expansion with moderate inflation.

It was conducted by the Cleveland district bank for use at the July 2-3 meeting of the central bank’s Federal Open Market Committee, which establishes U.S. monetary policy.

The Fed has kept a tight grip on credit to slow the economy and lessen inflationary pressure. Some economists think that the economy has slowed too much and could slide into recession if the Fed does not loosen its grip.

One sign of sluggishness, the survey found, was “very little growth, if not a decline, in real consumer spending for durable and non-durable goods this quarter.”

The Fed said it was unclear to what extent unusual weather contributed to the sales softness.

“Both residential and non-residential construction have been edging downward in recent months in most districts and indicators of future construction suggest further softening,” the survey found.

“An underlying problem in commercial construction is an apparent excess supply of new office space in many parts of the country,” particularly downtown Manhattan and in metropolitan areas of the Dallas district, it said. Credit demand appears to be easing, but real estate, consumer and business loans are still growing, although at reduced rates, it added.