Economy gained strength as 2011 began: Fed

WASHINGTON (Reuters) - Economic activity kept slowly gaining strength as 2011 opened and manufacturers and retailers were having some success in pushing their prices up, the Federal Reserve said on Wednesday.

"Reports from the 12 Federal Reserve districts indicated that overall economic activity continued to expand at a modest to moderate pace in January and early February," the central bank's Beige Book summary said.

It was based on information collected in all the regional Fed districts on or before February 18 and was compiled by the Atlanta regional bank.

While the Beige Book indicates a strengthening economy, it was not growing evenly across the country. "Chicago reported that although there was an increase in activity, it was at a pace not quite as strong as during the previous reporting period," the Fed said.

Wage growth was weak but businesses were trying to boost prices to make up for higher costs of other items such as raw materials that they needed.

"Manufacturers in many districts conveyed that they were passing through higher input costs to customers or planned to do so in the near future," the Fed said. Retailers in some districts similarly were planning to hike prices or had already done so.

Job prospects "modestly improved across the country," the Fed said, though in some cases companies still wanted to hire only temporary workers instead of creating permanent jobs.

Real estate remained a soft spot.

"Some districts reported a slight increase in the level of residential real estate activity, although all districts maintained that the overall level of home sales and construction remained low," the Fed said.

In some areas including Boston, Richmond, Kansas City, Dallas and San Francisco there was a pickup in commercial real estate sales and leasing activity, the Beige Book said.

(Reporting by Glenn Somerville; Editing by James Dalgleish)