The US economy continued to expand in October and November, the Federal Reserve said today, but there were only modest gains in wages and prices and the strong dollar was weighing on manufacturers.

Seven of the US central bank's 12 districts around the country reported a tightening in labour market conditions, the Fed said in its Beige Book report of anecdotal information collected from business contacts.

The Fed said activity varied across regions but that the outlooks were mainly positive, with six districts expecting "moderate" growth.

"As in the past four Beige Books, wage growth was characterised generally as modest, on balance, by district contacts," the Fed said.

A lack of wage pressures has been a thorn in the Fed's side as it seeks to raise interest rates.

Despite the US labour market nearing full employment, economists have yet to see that spark broad-based higher wages and in turn higher inflation.

US central bank policymakers have sought in recent weeks to lay the groundwork for a possible interest rate hike this year after holding off earlier amid economic uncertainty.

Uncertainty over the 8 November presidential election was reported as causing a modest softening of activity in some districts, including vehicle sales in the St Louis and Richmond districts and hiring activity in Cleveland, the Fed said.

Hiring activity was uneven among districts, as Boston reported "fairly strong activity" with staffing firm revenues increasing 10% to 25% year-on-year.

Staffing firms in Cleveland attributed a modest decline in job openings and placements to election uncertainty.

Motor vehicle sales declined slightly in most reporting districts during the reporting period, with Kansas City reporting sales well-below year-earlier levels.

New vehicle sales in Chicago were characterized as strong, but supported by high incentives.

The Fed raised rates from near zero for the first time in a decade last December, and has emphasised the pace of any further interest rate rises will be historically slow.