April 6, 1971
Surveys of businessmen and bankers in the fifth district indicate general agreement on the following points: (1) further improvement in manufacturers' new orders and shipments with a decline in backlogs of orders; (2) continued improvement in retail sales and automobile sales; (3) softness in manufacturing employment, but some improvement in retail trade and service employment; (4) some backup of prices in manufacturing and continued upward pressure on retail and service prices; (5) strong improvement in residential construction activity; (6) further improvement in the demand for mortgage loans and consumer loans and slight improvement in business loan demand.
Improvement noted last month in district manufacturing activity has continued through March according to most manufacturing survey respondents. Respondents in nonferrous metals, steel, electrical equipment, containers, chemicals, and hosiery indicate an increased volume of new orders and increased shipments. Backlogs of orders have declined during March.
Retail sales of goods and services continue to improve according to district bankers and retailers. Automobile sales in March continued the rapid advance begun in January. Both retail inventories and manufacturers' inventories are reported to have increased slightly further during the past four weeks.
Employment in manufacturing industries remains soft in the district. Reporters in textiles, furniture, chemicals, and electrical equipment continue to report employment down on balance. Hours worked per week also continue to be off according to manufacturers. Reports of further declines, however, are less numerous than they were last fall, and the impression expressed by some respondents that the employment situation is stabilizing seems reasonable. District retailers and bankers report some improvement in the employment picture.
The price situation among district manufacturers is reported to have changed somewhat during the recent four-week period. Earlier surveys this year showed price declines outnumbering price advances among manufacturing respondents. A slight reversal occurred during March, however, as important producers in chemicals, building materials, and steel marked prices up. Retailers and respondents in the service industries report prices continuing to rise on balance. According to district manufacturers, wages remain relatively stable during March.
Residential construction is reportedly continuing to improve sharply over the district at large. Without question, this is the most ebullient sector of the fifth district economy at present. Nonresidential construction is reported not to have changed significantly during the past four weeks. Some respondents indicate, however, that they expect a considerable increase in road and other non-building government construction in their respective areas in order to alleviate unemployment.
Consumer loan demand and mortgage loan demand at district banks are reported to have improved further during March. Demand for business loans has improved somewhat from the reduced levels of the past four months, but is still characterized as down on balance by district bankers.
The general outlook of survey respondents continues to improve. Settlements were reached in March in several significant strikes which had adversely affected the district economy since last fall. These strikes were in coal mining, textile products, and metal products, all in West Virginia.
Comments received from respondents indicate growing optimism concerning construction and the employment outlook. The latest survey shows a continuation of the cautious attitude of manufacturers concerning capital spending plans. A few respondents even indicate that further downward adjustments of plans have been made recently.