U.S. economy growing at "modest" to "moderate" pace - Fed

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WASHINGTON (Reuters) - U.S. economic activity expanded from early April to late May and growth was expected to continue at a "modest" to "moderate" pace against the backdrop of declining oil and gas investment, the Federal Reserve said on Wednesday.

In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the U.S. central bank said most of its regional Fed banks reported that while manufacturing had either held steady or increased, growth was tempered by the downturn in the oil and gas industry.

"The Dallas District noted that oilfield machinery sales remained weak and were down significantly from a year ago, and the Philadelphia District said businesses involved in natural gas and pipeline work noted negative impacts from decreased drilling activity and lowered capital expenditures," the Fed said.

"Contacts in the Boston District said the slowdown in oil and gas investment has been much bigger and faster than anticipated."

(Reporting by Lucia Mutikani; Editing by Paul Simao)