June 23, 1971
Our regular survey of businessmen and bankers suggests no major new trends in the Fifth District economy. In general, responses of survey participants indicate a continuation of the gradual business recovery, with some evidence that consumer spending may be strengthening. Retail sales, especially sales of automobiles, are reported as rising, and banking respondents indicate sizable increases in consumer loans. Bankers also report improved demand for other types of loans. The construction sector remains strong, and employment generally appears to have stabilized. Manufacturers report further increases in shipments but little change in new orders and backlogs.
In manufacturing, a number of respondents reported an increase in hours worked per week, and a few reported that employment was up from the previous period. In general, however, the responses suggest little change in the overall employment situation. Several respondents commented on increased unemployment resulting from large numbers of college and high school students temporarily entering the labor force. Cutbacks in defense-oriented industries and installations apparently continue to affect employment in some areas. On balance, manufacturing respondents indicate a decline in inventories, although inventory levels still appear to be higher than desired. Two large furniture manufacturers reported that new orders and backlogs of orders were down from the previous reporting period.
Construction continues to be a major source of strength in the district economy. A majority of the banking respondents reported an increase in both residential and nonresidential construction in their areas. One brick and tile company reports sales at a 15-year high, with production running three months behind orders. A manufacturer and distributor of food products reported substantial construction of new plant facilities in process. One banking respondent noted a sharp increase in apartment construction in his area, which he attributed to a rush among contractors to get construction loan approval before anticipated interest rate increases.
The outlook for business expenditures on plant and equipment in the district does not appear to be bright. Most respondents indicated that current plant and equipment capacity was adequate or more than adequate.
Wildcat strikes by coal miners in Virginia and West Virginia had a temporary effect on some local areas in the district. But respondents in most areas continue to report increases in both general retail sales and automobile sales. A large majority of the bankers polled indicated stepped-up consumer loan demand, with some reporting sizable increases in their outstandings.
District cash receipts from farm marketings during
January-April
were 4 percent below those in the same period a year ago, compared
with a national decline of 3 percent. An 8 percent decrease in
district livestock receipts more than offset an 8 percent increase
in receipts from crops.
Respondents' opinions on the outlook for the near-term future are mixed. Approximately one-third of the bankers in the survey expressed the opinion that the level of business activity would rise in the immediate future, while the remainder believed that it would remain unchanged or decline. Prospects for increases in business investment in fixed plant and equipment are rated low, although respondents remain generally optimistic about prospects for residential construction and for consumer spending.