Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points:
(1) Continuing weakness in the manufacturing sector in shipments, volume of new orders, and backlogs of orders;
(2) Considerable post-holiday strength in retail sales including automobiles; (3) A weak but slightly improved employment situation; (4) Continuing evidence of price cuts in manufacturing, but not in retail trade and services;
(5) A gradual slight improvement in residential construction; (6) Continued very weak loan demand at District banks;
(7) An optimistic but somewhat guarded outlook for future business conditions.

District manufacturers report on balance that shipments, new orders, and backlogs of orders continued weak during the first month of the new year. Reports of weakness in such industries as chemicals, synthetic fibers, electrical equipment and nonferrous metals continue, while some improvement is noted in containers, furniture, and hosiery.

District bankers and businessmen in trade and services report that retail sales are continuing on the high side in their respective areas, following a good holiday season for retailers. Further improvement in automobile sales is also reported, particularly in relation to the severe slump of the last three months that was associated with the automobile strike.

Manufacturers' inventories are reported to have increased again in January while retailers report no recent change. Retailers' inventories were brought down considerably in December.

Respondents in manufacturing and District bankers continue to report on balance that employment is down, but reports of further decline are less numerous than during the final quarter of last year. Businessmen in trade and services report no change in employment in January.

District bankers report that available labor supplies in their respective areas remain high, and in the manufacturing sector, the length of the workweek continues down. Some prolonged strikes in the District account in part for the continuing weakness in the employment situation. Evidence of further deterioration which was present last fall, however, has decidedly waned.

The improvement in prices noted in the last two surveys by District manufacturers is apparently continuing. Some producers in nonferrous metals and hoisery report price cuts, and for the third consecutive month, reports of price increases are outnumbered by reports of declines. Businessmen in retail trade and services, however, report that prices are continuing to climb. Respondents across the board report that upward pressure on wages remains strong.

Some improvement in residential construction during January was reported by District bankers. Recovery in the residential building field, however, is not yet vigorous. Comments received from respondents indicate that considerable further increases can be expected in the months ahead, but thus far some evidence of weakness remains. Nonresidential building, which had been on the increase in the District since last August, was reported to be lower in January.

Business loan demand, which was reported down substantially in December, remains very weak according to District bankers. Mortgage loan demand is reported unchanged, following a sharp drop in December, and consumer loan demand is reported down after a December increase. According to banking respondents, loan demand in general is weaker than at any time during the second half of 1970.

Although sentiments are mixed, the general outlook of survey respondents remains favorable. The proportion of respondents expecting further improvement in economic conditions continues to be a majority. Although the outlook is favorable, a notable lack of enthusiasm concerning future conditions is evident in the reports of respondents. Manufacturers in the District continue to be plagued with inventory problems and they show little inclination toward a resumption of spending for new plant and equipment. While District retailers were apparently satisfied with the sales of the recent holiday season, they also remain cautious but basically optimistic in their outlook.