WASHINGTON -- The Federal Reserve Board reported on Wednesday that economic activity increased during the past six weeks, leaving many market watchers convinced that significant rate hikes are around the comer.

'I think the handwriting is on the wall," Norwest Corp. chief economist Sung Won Sohn said. "The Federal Open Market Committee is going to have to raise the rate at least 50 basis points."

"The Fed is going to raise rates higher," agreed James Bills, vice president and economist at Comerica Inc. "The open question is, will they be more aggressive than in the past and raise rates 75 or 100 basis points?"

The two economists based their forecast on the Beige Book, a report that tracks economic activity in each of the Fed's 12 districts. The report is published every six weeks, just before the meeting of its chief monetary policymaking committee, the Federal Open Market Committee.

The FOMC is scheduled to meet Nov. 15.

The Fed reported in the Beige Book that economic activity remained strong, with signs of acceleration in all regions of the country except New York.

Consumer spending was up in most areas, led by "very strong" auto sales.

Loan demand advanced at a "healthy" pace, with commercial real estate activity reporting the most gains. Single-family construction, however, fell across the Country.

Mr. Bills said his biggest worry is a line in the report stating that labor markets are tightening.

"If wages start accelerating in any meaningful way, the Fed will have to hit the brakes very hard, and that could lead to much higher rates than most expect," Mr. Bills said.

Mr. Sohn said he frets that the Fed found that manufacturers plan to pass along to retailers the increased cost of raw materials.

"That would mean higher inflation down the road," Mr. Sohn said. Threats of higher inflation lead to higher interest rates, he added.

Not everyone was quite as concerned about the Beige Book. Nicholas Perna, chief economist for Shawmut National Bank, said the report doesn't tell market watchers anything new.

"It is just kind of corroborating what we already know," Mr. Perna said.

He said a careful review of the Beige Book shows that the central bank was careful not to alarm the markets. One example of this, he said, was the decision to call loan demand healthy rather than excessive.

He' said this type of moderate language leads him to conclude a 50-basis-point raise is in the works, rather than a 75- or 100point boost.

"There is nothing in there with this type of urgency," he said.

The Beige Book also reports that:

* Bank competition for home mortgage borrowers has squeezed profit margins. But bankers report that they are not altering their underwriting standards to attract more customers.

* Warm weather has hampered apparel sales on the East Coast, though retailers said they still expect a strong holiday season.

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