US economic conditions got worse in January and February, the Federal Reserve has said in its influential Beige Book.

The report, which is used to help determine US interest rates,
also said that improvement was not expected before late 2009 or early
2010.

"The deterioration was broad-based, with only a few sectors... appearing to be exceptions," it said.

The bank said housing markets remained "in the doldrums" in most US regions.

The report, based on information collected before
23 February, will be used at the forthcoming meeting of Federal Reserve
policymakers in two weeks.

'Steep declines'

"Consumer spending remained sluggish on net, although many
districts noted some improvement in January and February compared with
a dismal holiday spending season," the Beige Book said.

In manufacturing, reports from most areas "suggested steep
declines in activity in some sectors and pronounced declines overall".

"Reports from banks and other financial institutions indicated
further drops in business loan demand, a slight deterioration in credit
quality for businesses and households, and continued tight credit
availability," the Federal Reserve said.

It was reported last week that the US economy had shrunk at an
annual rate of 6.2% in the last three months of 2008 official figures
show, a far sharper fall than previously reported.

On Tuesday Federal Reserve chairman Ben Bernanke warned of
stagnation if the US authorities do not move "aggressively" to
stimulate the economy.

He told the Senate Budget Committee that stabilising financial markets would be crucial for economic recovery.

Unemployment across the nations that share the euro
has risen again to its highest level in more than two years, as more
firms laid off staff.

The eurozone unemployment rate totalled 8.2% in January, according to the latest official European Union data.

The figures is up from a revised 8.1% in December and above the 7.3% figure in January 2008, said the EU.

Meanwhile, annualised inflation in the 16-nation area fell to its lowest in nearly a decade in January, to 1.1%.

It is down from 1.6% in the year to December.

According to official figures, the eurozone has been in recession since September of last year.

The latest unemployment and inflation figures will increase the
pressure on the European Central Bank (ECB) to cut eurozone interest
rates further, in an effort to bolster the economy and bring inflation
closer to its 2% target.

In January, the ECB trimmed rates by half a percentage point to
2%, its fourth reduction since September, when rates stood at 4.25%.

"January's rise in unemployment and further fall in core
inflation support our view that ECB interest rates have much further to
fall," said Jennifer McKeown, an analyst at Capital Economics.

"The downturn in the labour market, and indeed the wider
economy, points to a further fall in core inflation in the coming
months."

Unemployment among Eurozone nations is highest in Spain, at 14.8%, and lowest in the Netherlands, at 2.8%.