US economic activity continued to expand at a modest pace from late November through the end of last year, a new survey released by the Federal Reserve showed.

"Reports from the 12 Federal Reserve Districts indicated that the economy continued to expand at a modest pace across most regions," the Federal Reserve said on Wednesday in its latest Beige Book which gauges its 12 districts' economy.

It showed that firms across the country and industries were optimistic about growth in 2017, Xinhua news agency reported.

According to the survey, most districts reported growing retail sales and increased sales for the manufacturing industry, while residential construction and sales were generally mixed.

Labour markets were reported to be tight or tightening, with wages growing modestly. With the tight job markets, pricing pressures intensified, said the report.

Federal Reserve chairwoman Janet Yellen said that the US economy is close to full employment and inflation is heading toward the central bank's 2-per cent target.

She noted that it made sense for the Federal Reserve to gradually lift interest rates.