Economic conditions in the Pittsburgh region continued to show signs of improvement "although overall activity remains significantly below pre-recession levels," the Federal Reserve said in a report Wednesday.

The Fed's latest Beige Book report said the economy improved, albeit modestly, in nine of its 12 districts, including the Fourth District, which includes Western Pennsylvania, Ohio, the northern panhandle of West Virginia and eastern Kentucky.

The Fed survey was based on information collected through Feb. 22 and will help guide the discussion at the next Fed policy session that begins March 16.

Factories in the Fourth District reported production was stable or up moderately.

The Beige Book said industry contacts were "cautiously optimistic."

That was the tone set by most of the business contacts surveyed.

Home builders, while reporting a slight improvement in new home sales, "expressed concern about the potential effect on home sales once the first-time home buyers' tax credit expires on April 30."

Retailers also reported an uptick in sales in the region, although auto dealers reported that many consumers remain reliant on manufacturers' incentives.

Bankers in the Fourth District and nationwide reported that credit standards remained tight and that demand for conventional loans was weak. The residential mortgage market was described as "stable to down and dominated by refinancings."

There were two positive trends noted in the Fourth District report: Natural gas drilling may get a boost from recent investments made in Marcellus Shale reserves, and some businesses are beginning to recall laid-off workers.

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