WASHINGTON — Economic activity was weakening throughout the country in August and early September even before the terrorist attacks, according to a new Federal Reserve survey.

        The central bank's check of economic conditions in its 12 regions showed faltering manufacturing activity, slowing retail sales and rising layoffs.

        Conditions were surveyed before the Sept. 11 attacks by terrorists flying hijacked airliners.

        “The economy has been very vulnerable and fragile all year,” said Lawrence Chimerine, chief economist at Radnor Consulting. “The attacks were devastating, and the timing could not have been worse because they came when the economy was already slipping.”

        The survey of economic conditions, known as the beige book, was prepared for the Fed's Oct. 2 meeting, when analysts expect the year's ninth rate cut.

        For the Fed's Cleveland regional bank district, which includes Cincinnati, the beige book said:

        “Manufacturing was weak. Poor sales during the first two quarters forced some plant closings, hiring freezes and layoffs. Demand for stainless steel remained weak. Previously negotiated wage increases for unionized steel workers were reduced in exchange for new job-security provisions.

        “Retail sales were flat. Car sales slowed. Lending activity was mixed, but there was a large increase in refinancing activity.”

        It also said the region's corn crop would fall short, but that “livestock farmers said business is excellent.”

        “Dry weather in the northern part of the region left farmers expecting to harvest only 50 percent to 75 percent of their average annual corn yield. Livestock farmers said business is excellent. Beef prices are strong.”

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