But area retailers offered a brighter view, reporting stronger sales than a year ago. "Shopping trips and a willingness to spend were aided by falling gas prices," the Fed said. "Consumers continue to search for value, and retailers continue to respond with merchandise at lower price points."
Local banks said there was little change in lending volume, including weak demand from small businesses.
Though some area residential real estate agents said housing sales had picked up from levels of a year ago, they noted that 2010 figures had been depressed by the end of the federal home-buying tax credit.
The Philadelphia area consists of the eastern two-thirds of Pennsylvania, the southern half of New Jersey, and all of Delaware.
The Fed survey, called the Beige Book for the color of its cover, is conducted periodically in all 12 Federal Reserve districts nationwide.
Economic growth slowed in seven of the Fed's 12 bank regions compared with the previous survey in the spring. That marks the worst showing this year.
The survey found that factory output weakened in several areas in addition to Philadelphia. That's likely to heighten concerns that manufacturing, one of the economy's few bright spots over the last two years, is sputtering.
The report found that the job market remained weak in most of the 12 districts. Consumer spending improved, aided by a drop in gas prices, which had peaked at nearly $4 a gallon in early May. But auto sales dropped. Supplies at many dealers remained tight because of disruptions stemming from Japan's March 11 earthquake.
Droughts and severe flooding weakened seven districts with major agricultural sectors, the report said.
The overall weak picture of the national economy echoes recent data on hiring and manufacturing. Economists expect growth for the April-June quarter, which will be reported Friday, will be only 1.7 percent, the second straight quarter of anemic expansion.
