On balance this month's comments indicate a further slowing in overall economic activity and more widespread pessimism regarding the near-term outlook. Residential construction remains in a depressed state throughout most of the nation. The situation in the housing sector is causing a marked decline in consumer outlays for durables related to housing, and aggregate real consumer spending appears to be weakening further. Business capital spending continues relatively strong although there are further reports of delays and cutbacks of previously scheduled outlays. The manufacturing sector presents a mixed picture with reduced demand pressure and fewer shortages in some industries, particularly those industries serving primarily the housing and consumer durables sectors, but continued tightness and shortages elsewhere. Several Districts report that the improved supply-demand balance in some industries has reduced the upward pressure on prices for certain raw materials and intermediate industrial goods, but no precipitous softening of industrial prices is yet evident. Adverse weather conditions are apparently restricting crop yields and hampering the growth of farm income in the central portion of the country, and conditions in the livestock industry have deteriorated further. Most Districts report more restrictive bank lending policies and a consequent slowing in the growth of business loans. Thrift institutions experienced further net deposit outflows in several Districts during September.

Retail sales appear to be generally flat in current dollar terms implying the possibility of some decline in real consumption during recent weeks. Boston, New York, and Philadelphia report that consumers are more cautious and bargain conscious. Several Districts indicate a further decline in sales of big ticket items, notably furniture and home appliances. Cleveland and Chicago report new model automobile sales are off to a slow start. Dealers in the Minneapolis and San Francisco Districts fear that higher prices, difficulties in obtaining financing, and the recent spurt in 1974 model sales will constrain new model sales in coming months.

Conditions in the construction sector remain dismal, although Philadelphia reports a higher rate of nonresidential building than last year due to increased public works construction. Dallas, on the other hand, foresees a sharp curtailment of nonresidential outlays in coming months due to a lack of interim financing. Nonresidential building permits have dropped by 50 percent in the Dallas District during the last three months. No District expects any near-term improvement in the residential sector given the pervasive lack of mortgage credit.

Business fixed investment remains the strongest sector of the economy, although there are additional signs of a reduced rate of planned capital expansion. Atlanta and San Francisco report sizable reductions in planned outlays by utilities. Chicago notes a reduction in the demand for certain types of capital goods due to postponements and cancellations by utilities and automobile manufacturers. In the Cleveland District machine tool orders, while still strong, are running somewhat below their peak earlier this year.

Conditions in the manufacturing sector are spotty, reflecting the sluggishness in the housing and consumer sectors on the one hand and the relative strength of capital spending on the other. Industries closely related to housing and consumer durables (lumber, glass, textiles, furniture, and appliances) are noticeably weaker. In addition, several Districts (New York, Chicago, Kansas City, and San Francisco) report that some industrial materials, particularly fuels, certain chemicals, and paper, are more readily available. The easing of supply constraints in these industries is contributing to less aggressive purchasing and some declines in order backlogs. Cleveland, Chicago, Kansas City, and Dallas indicate somewhat softer prices for chemicals, fuels, and other materials, but no major break in industrial prices has occurred to date. Steel markets remain tight in most Districts, due in part to the prospective coal strike. Both Cleveland and San Francisco suggest an easing in the steel situation in coming months, however, due to the increased availability of foreign steel.

The agricultural outlook appears generally weaker. Atlanta reports favorable harvest yields with the exception of the hurricane-damaged Louisiana sugar cane crop. But Chicago, St. Louis, Minneapolis, and Kansas City indicate that early frosts will substantially reduce corn and soybean yields, reducing farm incomes and increasing feed costs.

The demand for business loans remains strong in most Districts, although St. Louis notes a leveling off following the sharp upward trend earlier this year. Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas all report slower growth in outstanding loans and commitments due to more restrictive bank lending policies. Several Districts indicate that both banks and thrift institutions are restricting new loans to established customers.