Economic activity continued to decline in most parts of the country early this month and many business executives do not expect conditions to turn around before the second half of the year, according to a survey conducted by the Federal Reserve's 12 regional banks that was released yesterday.

The outcome of the Persian Gulf situation was regarded by many of the survey respondents as the key to the U.S. economic outlook.

Federal Reserve Chairman Alan Greenspan said last week there are preliminary signs that the economy is not declining as rapidly as it was last fall, but there was little in the report to buttress that finding.

Only the Kansas City and San Francisco districts reported that their regional economies were still growing, while Minneapolis said its situation was mixed.

As has been the case for months, the Boston Federal Reserve Bank had the gloomiest report. "A majority of manufacturing contacts report dwindling order backlogs and delivery times. ... Further declines in employment are likely. ... Retailers typically report declines in Christmas season sales from a year ago, and they anticipate intense competition for market share in 1991," the Boston Fed said.

In the survey summary, prepared by the St. Louis Fed, about the only good news reported was that business inventories are "near their desired levels," exports continue to increase and "inflation does not appear to be accelerating." If inventories were higher than desired, it could mean a further drop in new orders for goods and more cuts in production and employment.

"Despite continued export growth, manufacturing orders, employment and shipments have weakened," the summary continued. "Construction activity continues to slow in most districts and interest rate declines have done little to stimulate residential housing demand. ... Widespread weakness exists in home sales and consumer and business loan demand."

In the Richmond district, which includes the Washington-Baltimore area, "economic activity weakened further in late December and early January," the Richmond Fed found in its survey.

"Sales activity was slow for district retailers, manufacturers, Realtors and auto dealers. Manufacturers apparently decreased production and home builders started relatively few houses. Financial institutions reported weak loan demand, and hotels and resorts experienced a downturn in occupancy," it said.

"On a positive note, export volume increased again at district ports, and the region's farm sector was healthy," the Richmond bank added.

In the Kansas City district, which includes Nebraska, Colorado, Wyoming, northern New Mexico, Kansas and western Missouri, the survey found that economic growth had slowed "but is apparently still positive," the report said.

But even there the description was not rosy. The Christmas selling season was described as "disappointing," loan demand is "sluggish" and farm prospects "have dimmed somewhat."

On the West Coast, the San Francisco Fed said conditions were reported to be "softening further." Holiday retail sales were mixed but nevertheless above pre-Christmas expectations. While construction activity is "weak as a result of an abundance of office space in most of the major cities," home sales have stabilized in the past few months, "with prices near their year-earlier levels," the report said.