The Federal Reserve's periodical report on current economic activity, released Wednesday afternoon, paints a picture for October of a still sluggish economy that is nonetheless headed in the right direction.

The "Beige Book," as it is called informally, opens with, "Reports from the twelve Federal Reserve districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October."

The Fed said manufacturing activity continued to expand, demand for non-financial services was stable to up, consumer spending ticked up slightly, new vehicle sales held their own and travel and tourism picked up.

Conversely, as every home builder knows, housing demand remained weak, but the Fed said it found evidence that home prices were stable. "There were scattered reports of some improvement in sales in a few districts, however,"the Fed said. "Philadelphia noted an increase in sales of existing homes, and Richmond, Kansas City, and Dallas reported upticks in sales of higher-priced homes. Sales reports were mixed in the St. Louis and Minneapolis districts, with increases in some metro areas and declines in others. Home inventories were elevated or rising according to most district reports."

The report continued, "Home prices were generally stable since the last report, although Kansas City noted a decrease in prices, and New York and Minneapolis reported declines in some metros. Home builders in the Atlanta district reported downward price pressure and expressed concern about rising foreclosures and bank-owned properties coming to market."

The Fed said single-family construction activity remained "at very low levels" but noted some improvement in the Chicago, St. Louis, and Kansas City districts. It also said builders in the Dallas district said they had pulled back on starts considerably after the run-up earlier in the year.

The employment market was sluggish. The Fed said many firms remained reluctant to add to permanent payrolls. Staffing firms in the New York and Dallas districts noted a slowdown, and the Cleveland district said new job openings declined. Richmond's report noted increased demand for temporary workers; the Philadelphia district said staffing firm clients were adding positions as workloads increased. Atlanta noted a preference for increasing staff hours and using temporary help rather than hiring additional full-time staff.