"The 17 Federal Reserve rate hikes and higher energy prices are beginning to slow the regional economy," Goss wrote. "Additionally, shortages of skilled labor are slowing growth in portions of the region. While I do expect the region to continue to expand for 2006, it is clear that second-half growth will be somewhat less than was experienced the first six months."

Colorado's index rose to 64.1 from May's 63.5, but was down from April's 68.0. Wyoming reported dramatic slowing, dropping to 63.3 from May's robust 74.8 and April's 81.1

"All eyes will be on the Fed when it meets again in August," Goss wrote. "At this point in time, I expect the Fed to cease raising rates as forthcoming data confirm a slowing economy. However, it will depend on the Fed's interpretation of the economic data released between now and Aug. 8."

Also Monday, the Commerce Department reported that construction spending nationwide fell in May by the largest amount in nearly two years as the once booming housing sector suffered another big decline.

The report said that building activity dropped by 0.4 percent in May to a seasonally adjusted annual rate of $1.206 trillion following a 0.2 percent fall in April. It marked the first time in more than three years that construction spending had fallen for two consecutive months. May represented the biggest one-month decline since a 0.7 percent fall in September 2004.

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