Published: Wednesday, 9 Sep 2009 | 2:30 PM ET

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Half of the Federal Reserve's 12 districts saw evidence the U.S. economy had improved by the end of August, although labor markets remained weak and retail sales were flat, a Fed report said Wednesday.

Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted gains. Other areas reported the economy was stable or showing signs of stabilization while St. Louis said the pace of economic decline appeared to be moderating.

"Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive," the Fed's Beige Book survey said.

The modestly upbeat report said most regions reported some improvement in hard-hit residential real estate markets and an uptick in manufacturing.

Tempering those developments, Fed contacts reported that demand for commercial property remained weak and that businesspeople in some areas believed recently higher vehicle sales levels were likely not sustainable after the government's "cash for clunkers" incentive program lapses.

But even some of the gloomiest segments of the economy held glimmers of hope, said the survey by the Fed — the U.S. central bank.

"Labor market conditions remained weak across all districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs," the report said.

The Fed at its last policy-setting meeting held its benchmark short-term interest rate steady near zero and said it would likely hold it there for an extended period to guide the way to recovery.

Fed officials have said recently they expect a sluggish recovery with persistently high unemployment. The U.S. jobless rate hit a 26-year high of 9.7 percent in August.

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