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ASIA'S ILLS SLOWING U.S. GROWTH IN FIRST QUARTER.

Byline: Dave Skidmore Associated Press

Asia's economic troubles are lapping at American shores: In the year's first quarter, incomes stagnated in U.S. goods-producing industries, manufacturing activity slowed and construction decreased.

Consumers, though, keep right on spending.

Reports from the government and a private group offered abundant evidence that economic growth was ratcheting down to a more moderate pace after clipping along at a rapid 4.2 percent annual rate in the first three months of 1998.

During the last month of the quarter, March, consumers increased their spending by a healthy 0.5 percent. But they had to dip into savings to do it, because income growth was a moderate 0.3 percent, the smallest in seven months.

The savings rate - savings as a percentage of after-tax income - slipped to 4.2 percent in March from 4.4 percent the month before.

Wages grew only 0.2 percent, helped by increases for government and service-industry workers. But wages were unchanged in goods-producing industries and down slightly in distributive industries. Economists saw the figures as a reflection of the decline in export sales to Asia.

The slowdown continued in April, according to an index of business activity compiled by the National Association of Purchasing Managers. It indicated continued growth in manufacturing, but at a slower pace. Employment levels declined a bit.

``The basic message is that the economy boomed in the first quarter, but the most rapid growth for this year is probably now behind us,'' said economist Lynn Reaser of NationsBank Corp. in Jacksonville, Fla.

She predicted the impact of Asia will cut economic growth to a rate between 2 percent and 2.5 percent for the rest of the year.

Separately, the Commerce Department said construction spending fell 0.5 percent in March - the worst drop in 15 months. Construction of single-family homes rose 2.2 percent to an all-time high. However, spending on apartments, offices and a wide range of government projects declined.

CAPTION(S):

2 Charts

CHART: (1) CONSTRUCTION

Monthly spending in billions of dollars, seasonally adjusted.

SOURCE: Department of Commerce

(2) PURCHASING MANAGERS` INDEX

Tracks overall business activity of more than 300 industrial companies.

SOURCE: Nat'l. Assn. of Purchasing Managers.

Associated Press
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Article Details
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Date:May 2, 1998
Words:367
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