WASHINGTON - The US economy was expanding at a "modest to moderate pace" in June and early July, but the employment situation only improved at a "tepid" pace across the nation, the US Federal Reserve said on Wednesday.

In its latest national economic performance survey, the central bank noted that retail sales rose slightly in most areas and manufacturing activity continued to expand slowly in most districts.

The residential housing market was gaining momentum in recent months, and overall loan demand grew modestly in most districts, according to the Fed report.

The survey, known as the Beige Book, is based on economic information supplied by the Fed's 12 regional banks, and released eight times each year to provide a snapshot of the US local economy.

Federal Reserve Chairman Ben Bernanke on Wednesday cited the renewed intensification of the eurozone debt crisis and US fiscal uncertainty as two main sources of risks to the US economic recovery in the short run.