WASHINGTON -- Businesses continued to demand more loans from banks during the last two months, while consumers' appetite for credit showed signs of weakening, the Federal Reserve said yesterday in its latest senior loan officer survey.

"Demand for business credit has continued to grow according to the November reports, with responses suggesting a more widespread pickup than in the last survey," the report said.

Meanwhile, "demand for consumer crediI was essentially flat since August, but presumably remains at high levels;' the report said. Demand for mortgages weakened further since the last survey released Aug. 22, reflecting the ongoing rise in interest rates.

The November survey was based on responses from lending officers at 57 domestic banks and 24 branches of foreign banks operating in the U.S. The Fed conducts the survey every few months.

Despite the Fed's repeated moves to slow the economy by tightening credit six times this year, the banks surveyed reported that they were continuing to ease lending terms and standards to business. In addition, bankers reported an "increased willingness" to lend to individuals, the survey said.

The Fed's survey shows that economic growth remains robust, with the economy just beginning to show signs of slowing due to higher interest rates, analysts said. The report probably portends slower growth in housing and big-ticket consumer goods in the coming months, because consumers are generally more interest-rate sensitive than businesses, they said.

"The survey is positive for growth but not interest rates," said Paul Kasriel, an economist at the Northern Trust Co., a commercial bank in Chicago.

"But consumer demand is beginning to flatten out a bit; higher rates are intended to get people to spend less and save more."

Both Kasriel and Gary Thayer, senior economist at A.G. Edwards & Sons Inc., a St. Louis investment firm, said the survey provides an early indication the Fed will raise rates again early next year because growth isn't slowing enough. But a lot can happen between now and then, they cautioned. Nonetheless, Thayer also predicted declining home and durable goods sales in the coming months due to higher rates. "The economy is doing well right now but momentum is starting to turn from rapid to moderate growth," Thayer said. "A lot of business borrowing is for inventories, and declining consumer demand could affect this."

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