Beige Book Report: Richmond
May 20, 1970
Production, Sales, and Inventories
District survey respondents, except for those in certain trades and services, indicate declines
recently in retail
sales—particularly automobiles. This continues a
slackening trend evident in this District throughout the current
year. Manufacturers also report declines in shipments, new orders,
and backlogs of orders,, This situation apparently pervades both
durable and nondurable lines and remains typical of the District's
largest industry, textiles.
Inventories are reported to be substantially unchanged from the previous month in manufacturing as well as in retail trade. Manufacturers, however, report higher levels of inventories than they desire, while retailers report inventory levels to be somewhat depleted.
Employment and Unemployment
Employment is reported to have declined
in the District during the past month, in manufacturing as well as
in trade and services The decline continues a generally weakening
employment situation existing since January. Hours worked per week
have been reduced further, and initial claims for unemployment
insurance apparently continue high. On the other hand, District
businessmen indicate that good employees are still scarce in both
the skilled and unskilled categories.
Wages and Prices
District manufacturers report increases in both
wages and prices over the past month as they have consistently done
for the past year. Businessmen in trade and services indicate an
even more pronounced upward tendency. Scattered indications of price
declines have appeared in the textile and furniture industries.
Construction
Residential construction activity in the District
remains severely depressed. Nonresidential construction, however, is
reported to have increased slightly—a reversal of previous months'
reports.
Loan Demand
District bankers report that the demand for mortgage
loans increased significantly during the past month. A number of
bankers, however, indicate reluctance to accommodate this demand due
to statutory rate ceilings and other factors. Business loan demand
is reported to have increased somewhat over the past month as well,
while consumer loan demand is apparently unchanged.
Outlook
Uncertainty pervades the economic outlook among District
businessmen and bankers due to both economic and noneconomic
factors, including domestic social unrest and recent developments in
the Vietnam War.
Capital Spending
Survey respondents in manufacturing, particularly
nondurable goods, indicate plant and equipment capacity to be in
excess. Respondents in trade and services report their capacity to
be inadequate. Both groups, however, apparently plan further
increases.
Reserve bank directors confirm this consensus and report that, even in some instances where current capacity is more than adequate, spending plans are not being curtailed and are even being increased in certain cases due to a general feeling that inflationary conditions will continue.
Inventory Investment
Manufacturers report current inventory levels
to be excessive, but businessmen in trade and services feel they are
too low, Reserve bank directors indicate a similar mixture of
opinion. Adjustments are apparently still going on, and some
respondents indicate that, while the largest share of inventory
reduction has already passed, few significant increases are being
planned.
General Conditions and Consumer Spending
There is a consensus among
District bankers that further declines are ahead for general
business activity in the District. Moreover, Reserve bank directors
indicate that consumer spending plans are being adjusted downward
somewhat, reflecting largely a feeling of uncertainty over the
future course of the national economy.