WASHINGTON (AFP) - Economic growth in the United States "downshifted slightly" in July and August amid shortages of workers and materials, as well as concerns about the rise of the Delta variant of Covid-19, the Federal Reserve said on Wednesday (Sept 8).

The slowdown was largely due to "a pullback in dining out, travel and tourism in most districts, reflecting safety concerns due to the rise of the Delta variant", according to the Fed's "beige book" report.

Activity declined in some areas of the country due to labour issues and "pervasive resource shortages" that also were driving up prices, the report said.

Sales of automobiles and homes in the world's largest economy were depressed by low inventory, while retail sales growth slowed, but construction rose modestly, the report said.

The analysis, prepared in advance of the Fed's next policy meeting on Sept 21 and 22, said contacts in most districts "remained optimistic about near-term prospects, though there continued to be widespread concern about ongoing supply disruptions and resource shortages".

The rapid reopening of businesses following the pandemic shutdowns has posed a challenge for global shipping and raw materials, including a worldwide semiconductor crunch that has hit the automobile sector.

Likewise, strong demand for workers has kept employment rising overall, but the pace has been slowed in all districts by "extensive labour shortages that were constraining employment and, in many cases, impeding business activity".

The Fed cited "early retirements (especially in healthcare), childcare needs... and enhanced unemployment benefits" as factors contributing to the difficulty in filling open positions, as well as rising wages in some regions.