The US economy showed signs of slowing in June and July, but labour markets were tight, forcing firms to raise pay and to find creative ways to entice workers, the Federal Reserve said yesterday.

The US central bank's latest Beige Book, a summary of coast-to-coast business conditions, reported that easing consumer demand for goods and services appeared to be restraining price increases. It noted that energy prices, which have soared in the last year, may have already hit their peak.

But the scarcity of workers seemed to be "limiting growth of activity in some areas", the Fed said, noting that many firms reported that wages were on the rise and some companies were using free meals and signing bonuses to lure employees.

The Beige Book findings will be used when the Fed's policymaking Federal Open Market Committee next meets on August 22nd to set US interest rates. Analysts expect the Fed will leave rates unchanged.