CHICAGO, June 10, 1998 - The Midwest economy will slow during the second half of 1998, but jobs will remain plentiful and wages will continue to rise, said Diane C. Swonk, deputy chief economist for First Chicago NBD Corporation.

That means inflation is going to heat up, Swonk said in her monthly First Forecasts newsletter. "Apartment rents have accelerated sharply in Chicago and benefit costs are beginning to trend up again," she said. "It's only a matter of time before the Midwest experiences a greater acceleration in prices. "

Midwest growth for the second half is expected to slow to 2. 4% from 4. 1% in the first quarter, as measured by the First Chicago NBD Great Lakes Index. The national Gross Domestic Product is expected to grow 2. 8% during the second half after a first-quarter gain of 4. 8%.

Though slowing, the Midwest economy will continue to grow. Light vehicle production is expected to stabilize at near record levels, investment in heavy equipment should remain relativel y robust and exports should pick up somewhat. Construction activity, however, should moderate as weather patterns return to normal after an unseasonably mild winter.

"The overall labor situation remains a worrisome issue," Swonk said. "In some markets the unemployment rate has dropped below 2%, which has created a severe problem for heavy manufacturers. "

Among the dynamics she cited:

-- A record number of older workers are beginning to retire;

-- The pool of entry level workers is shrinking;

-- Turnover rates are rising;

-- The attractiveness of jobs outside of heavy manufacturing is improving. For example, fast food restaurants in Chicago are offering benefits and wages of more than $8 an hour, more competitive than what many small manufacturers can offer.