Although economic activity showed continued overall growth, the Federal Reserve's 12 districts were split with two districts reporting steady activity, a handful noting only modest improvements and two districts -- Atlanta and Chicago -- showing slowed activity, according to the latest Beige Book released Wednesday. Expectations that the report, which is based on information collected on or before July 19, would show softened economic activity were heightened after Fed Chairman Ben Bernanke described the economic outlook as "unusually uncertain" in recent testimony on Capitol Hill. Indeed, the July report comes in stark contrast to the Fed's previous book -- released in the beginning of June -- which highlighted modest growth across all districts. Manufacturing activity was mixed across the regions while conditions across the services, transportation, tourism and retail all generally improved. In keeping with recent trends, districts noted that necessities continued to sell well, while pricier, discretionary items were less in demand. Notable weak spots included residential real estate, which saw a drop in demand after the expiration of the homebuyer tax credit, commercial real estate and construction. Vacancy rates held at high levels or, in some cases, were slightly elevated. "Cleveland reported that the increase in construction from previous reports has begun to diminish. Philadelphia reported that projects funded with federal stimulus support were near completion with no prospects for additional major construction, while Chicago reported that public infrastructure construction picked up," the beige book reported. Developers had a hard time obtaining credit across the Midwest, and Dallas said a few developers went out of business. Expectations for commercial and industrial real estate ranged from "further declines in activity to slow growth." The banking sector was a mixed bag. Credit standards remained tight across the board, but some areas saw overall loan demand slow. New York, Chicago, Minneapolis, Richmond and Atlanta all said labor markets were in better shape, while Boston and Dallas reported only steady progress. Temporary hiring was favored over permanent placements in Philadelphia, Atlanta, Dallas and San Francisco. In Dallas, the energy industry sustained significant layoffs in relation to the temporary ban on deepwater drilling, and the San Francisco region continued to see high levels of unemployment and meager hiring. The report will be used by the Federal Open Market Committee at its next policy-setting meeting on Aug. 10. -- Written by Melinda Peer in New York.