03:31 PM EDT, 09/04/2024 (MT Newswires) -- Economic activity either remained flat or fell in a majority of districts, while the outlook was for conditions to largely remain stable or "improve somewhat" in the coming months, the Federal Reserve said in its latest Beige Book released Wednesday.

Nine Fed districts reported flat or declining economic activity in the current period, up from five in the prior period, while three reported slight growth, according to the latest Beige Book, which was prepared by the Cleveland Fed based on information collected by Aug. 26.

The previous report, which was released July 17, showed that economic activity in a majority of districts rose at a "slight to modest" pace, while overall growth in the coming months was expected to be slower amid uncertainty around inflation and the upcoming presidential election.

In recent weeks, employment levels were generally "flat to up slightly," the latest Beige Book showed. Wages increased at a modest rate, consistent with the slowing trend seen in recent reports.

Five districts reported slight or modest growth in overall headcounts, while reports of layoffs were "rare," the document showed. "Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook."

Most districts saw a drop in manufacturing activity, with two attributing the declines to ongoing contractions in the sector. Consumer spending fell slightly in most districts.

The US manufacturing sector remained in contraction territory in August as demand weakness weighed on new orders, according to data published Tuesday by the Institute for Supply Management and S&P Global (SPGI).

Prices rose "modestly" on balance, though three districts saw only slight gains in selling prices, according to the Beige Book. "Contacts generally expected price and cost pressures to stabilize or ease further in the coming months."

Some districts reported gains in auto sales, while other reported a slowdown due to elevated interest rates and high vehicle prices. Reports from most districts pointed to "softer" home sales, the document showed.

"District contacts generally expected economic activity to remain stable or to improve somewhat in the coming months, though contacts in three districts anticipated slight declines," the Beige Book said.

Markets are currently pricing in a 55% probability that the Fed will reduce interest rates by 25 basis points Sept. 18, with the remaining odds in the favor of a more aggressive 50-basis-point cut, according to the CME FedWatch tool.