The US economy kept growing in September and early October, even as higher prices for energy put a crimp in consumer and business spending, the Federal Reserve said yesterday.

"Reports from the 12 Federal Reserve Districts generally indicated that economic activity continued to expand in September and early October," the US central bank said in its "beige book" report, an anecdotal look at economic conditions across the Fed's dozen regions.

"Many reports suggested that higher energy costs were constraining consumer and business spending," the report said, in a sign Fed officials may be worried about the potential threat of continued high oil prices on the economy's health.

The beige book will be used by Fed officials at their November 10th policy meeting. The Fed has already raised its benchmark federal funds rate three times this year and is widely expected to do so again to keep inflation from gaining a foothold.

But oil prices remain a wild card in the outlook, along with their potential to cause cuts in other spending by consumers as well as increased inflation, a possibility noted in the report.

"Businesses in most districts continued to express concern over the rising costs of energy and other inputs, although more manufacturers and business service providers were reportedly able to pass part - if not all - of these cost increases along to their customers," the report said.

Still, wages and retail prices were described as "subdued".

The report also said consumer spending, the lifeblood of the economy, was "mixed" both by region and by type of expenditure. Business spending "appeared to pick up", though, and manufacturing activity had also increased since the previous "beige book" report, the Fed said.

Yesterday's report was compiled by the Federal Reserve Bank of Chicago, based on information collected from the other regional banks before October 18th.