July 21, 1971
Economic activity is continuing moderately upward in the Eighth District according to a survey of leading businessmen. Retail and manufacturing sales continued to expand in early July on a seasonally adjusted basis. Reflecting the rising demand for output, the employment picture is beginning to show improvement. Some manufacturers have begun reinstating production workers who were laid off last fall. The flow of savings into financial agencies has apparently decelerated in recent weeks from the very rapid rates of the first half of the year. The uptrend in loan demand which began in mid-1970 continued through the early weeks of July. Construction activity likewise continues upward.
Retail sales at most major department stores in the District continued to rise in July, although gains were not reported for all major cities in the District. For example, leading St. Louis stores which experienced a sharp spurt in June sales have had a turnabout in early July. This loss, however, was more than offset by gains at Louisville, Memphis, and other parts of the District.
Leading manufacturers continue to express cautious optimism. Orders are expanding moderately over a wide range of products, and midyear profits are generally higher. Plastics, fibers, other organic chemicals, and automated equipment were mentioned as specific areas of expansion.
Financial agencies report some slowdown in the rate of savings inflows from the very rapid rates of early this year, as well as a lessening of the retention rate. Loan demand, however, continues to expand. Part of the expansion, especially that of mortgage loans, reflects national rather than local conditions. The larger savings and loan associations in St. Louis report major purchases of out-of-District mortgages, but business and other bank loans which are primarily local have also expanded at rising interest rates. Mortgage loan rates on homes were reported to be one-fourth to one-half a percentage point above the level of three months ago.
Investment plans by manufacturing firms generally remain unchanged. Plant capacity is reported as adequate, but a local agency which provides information to business about opportunities in the area reported a substantial pickup of inquiries about possible new locations for investments. The major thrust of new investment, according to one manufacturer, is toward greater automation of high labor input activities.
The employment picture is beginning to show some slight improvement. None of the businessmen interviewed reported major hiring plans. All, however, are replacing those lost by attrition, and a few report some recalls of laid-off workers. A check of numbers employed by major firms reveals that a low point in the total has been reached and that the uptrend has been fairly consistent since the turning point. Although St. Louis was placed on the "substantial" unemployment list in June, the local job market improved in July according to the Missouri Division of Employment Security. Unemployment claims filed during the week ending June 9 were 1,300 less than a month earlier and 1, 400 less than a year ago.
Construction activity in the District generally continues upward, despite some leveling off of residential construction in St. Louis. Both residential and commercial construction elsewhere in the District continue to expand.