WASHINGTON (AP) — A Federal Reserve survey of U.S. business conditions has found modest economic gains at the start of the year, although some parts of the country saw slowdowns stemming from a renewed surge of COVID-19 cases.

The Fed report released Wednesday said that the bulk of the Fed's 12 regions reported modest gains in economic activity in recent weeks.

But three districts — New York, Philadelphia and Cleveland — said that activity had weakened. Two districts — St. Louis and Kansas City — said activity was generally unchanged since the last Fed meeting in mid-December.

The Fed said that reports on consumer spending, which drives 70% of economic activity, were mixed. Some districts reported declines in retail sales and demand for hospitality and leisure services as local governments imposed stricter measures in an effort to contain the surge in virus cases.

“Although the prospect of COVID-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concern over the recent virus resurgence and the implications for near-term business conditions,” the Fed said.

The Fed's report, known as the beige book, will form the basis for discussions when central bank officials hold their next meeting on interest rates Jan. 26-27.

The Fed pushed interest rates down to a record-tying low of zero to 0.25% last March. The expectation is that rates will remain at ultra-low levels through this year and beyond.

The beige book said that the demand for workers was the strongest in manufacturing, construction and transportation, but employers in those industries were reporting difficulties filling job openings.

“These hiring difficulties were exacerbated by the recent resurgence in COVID-19 cases and the resulting workplace disruptions in some districts,” the report said.

The leisure and hospitality sectors reported further layoffs due to stricter containment measures in response to a surge in virus cases.