Slowing economy forecasts USA Federal Reserve 
Manufactured goods barely managed to touch 0.7 % rise last month, while The Federal Reserve survey painted worsening economic scenario across the country for June and early July. The latest signals clearly indicate that the economy was slowing in early summer.

Retail sales, especially for automobiles, weakened over the past two months. But, a big jump in consumer activity in early spring was also visible.

The two latest reports were the latest evidence of what Federal Reserve Chairman Alan Greenspan told Congress last week was a 'soft patch' developing in the economy in June. Greenspan believed the slowdown would be temporary, as hiring could bolster consumer spending in the coming months.

The next couple of months would be crucial in determining whether the current recovery regains altitude or whether the slowdown worsens, say a few economists.

"The economy's still growing, but not nearly at the pace it had been," said Joel Naroff, chief economist at Naroff Economic Advisors.

The 'beige book' as the Fed's new report is called for the color of its cover, will be used when central bank policy-makers meet on August 10 to decide whether to raise interest rates to ensure that inflation does not get out of hand.

The new survey found that wholesale prices, especially of such commodities as energy, steel and cement, were rising but that little of those price increases outside of energy was passed on to consumers.

As consumer prices outside of energy have remained moderate, most analysts believe the Fed would plan to raise rates at a moderate pace in coming months. A quarter point raise is forecast in the federal funds rate at the August meet.