Fed Res survey finds economy weakened further

The US economy, jolted by the September 11 terrorist attacks, weakened further in October and November, the Federal Reserve reported.

Production declined at American factories and the tourist industry struggled with a sharp drop in travel.

In its latest survey of economic conditions around the country, the Federal Reserve found evidence of additional slowing in most regions and said this outweighed the faint signs of recovery reported by a few districts.

The survey, compiled from information supplied by the Reserve's 12 regional banks, will be used by policy-makers when they hold their last meeting of the year on December 11 to consider changes in interest rates.

The economy was officially declared by the National Bureau of Economic Research to have been in recession since March. The downturn is the first in a decade.

Many economists believe the central bank will cut interest rates for an 11th time this year at the December meeting in a continued effort to lessen the severity of the downturn.

The Fed report did find some evidence of a rebound in activity, particularly in sales of autos, which soared to record levels in October as consumers responded to attractive offers of free financing.

But retailers in many parts have begun bracing for a disappointing Christmas sales season, says the central bank.