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To: Giraffe who wrote (22591)	11/4/1998 9:50:00 PM
From: Giraffe	Respond to of 116759

FOCUS-Fed says some U.S. economic sectors slowing By Glenn Somerville WASHINGTON, Nov 4 (Reuters) - The Federal Reserve said on Wednesday that U.S. economic growth lost some steam in September and October as both businesses and consumers grew wary about future prospects. ''District reports suggested that the pace of economic expansion moderated in September and October amid signs of slowing in some sectors,'' the Fed said in its Beige Book summary of national economic conditions. The survey was prepared by the regional Fed bank of Chicago and will be used by the policy-setting Federal Open Market Committee when it meets on Nov. 17 to consider whether to trim interest rates further. The U.S. central bank has cut short-term rates twice since late September and analysts said the indication of slowing activity likely meant more rate reductions ahead. ''The economy should continue to slow we think,'' said economist Gary Schlossberg of Wells Fargo Bank in San Francisco. ''(That) should be a factor in monetary easing by early next year and I think the Beige Book reinforces that view.'' Schlossberg said he anticipated the Fed will reduce rates again to keep the economy on an expansion track ''at least once before the end of the year if not several times.'' The latest report said growth in manufacturing activity weakened in 11 of the 12 Fed districts in the period. Most districts reported ''economic turmoil abroad, especially in East Asia, was at least partially responsible for softening demand,'' the survey said. There was virtually no sign of inflation pressures in the Fed report, despite ''very tight'' labor markets in most districts yet shortages in some that were hampering businesses' ability to expand. Information technology, skilled trades and construction workers were most often mentioned as being in short supply. By contrast, the survey said manufacturing jobs declined in about half the Fed districts and noted some layoffs and bonus reductions in financial services industries because of weaker stock prices. The Fed said retail prices were steady while wholesale prices were flat-to-lower since the last Beige Book was issued on Sept. 16. The survey found that both businesses and consumers were cautious about the economic outlook. Economic uncertainty was cited by bankers as a key reason for stiffening lending terms for business loans in about two-thirds of the Fed districts. Most of the tightening in credit terms was applied to real estate developers, the Fed said, though in some cases companies found it harder to borrow money to finance mergers and takeovers. By contrast, consumer lending was strong and some districts reported that banks were softening their conditions for loans to individuals. Falling interest rates also were spurring refinancings of mortgages and demand for new mortgage loans, the Fed said. Bond prices, which plummeted early on Wednesday, recovered some of their losses after the Beige Book was issued but the yield on the bellwether 30-year bond, which moves in the opposite direction from the price, was up sharply to 5.33 percent late in the session from Tuesday's close of 5.21 percent. Stock prices, which were up more than 100 points early in the day, shaved about half their gains in the afternoon amid the latest official sign that economic growth and corporate profits were likely to lose vigor in coming months.