Our latest survey of businessmen and bankers suggests an extension of the recent moderate pace of business recovery, although the manufacturing sector may have weakened slightly in the recent past. Construction activity continues robust, bankers report strong loan demand, and retail sales are apparently continuing the recent upward trend. But manufacturing respondents indicate a sluggish pace of shipments, new orders, and backlogs. Little or no change is reported in the level of employment or of prices.

Survey responses indicate that District manufacturers have experienced no change in the level of shipments since the last reporting period. The diffusion of responses suggests some decline in both new orders and backlogs. Also, there was a substantial increase in the number of firms reporting a decline in inventories. Nevertheless, manufacturers believe that current levels of inventories are high relative to desired levels. The rail strike and the slowdown in the steel industry have apparently exerted a dampening effect on District industrial activity, especially in the coal mining areas of West Virginia and Virginia. Also, a strike in the copper industry closed down a large copper producing plant in Maryland.

Respondents indicate further increases in retail sales. A majority of banking respondents reported that automobile sales had increased in their areas. Our latest survey, however, shows consumer loans rising at a somewhat slower pace than in June and early July. As in the case of manufacturers, trade inventories are also considered larger than desired.

Little change is evident in the District employment situation. The majority of respondents reported that employment remained the same in their areas, and the number reporting decreases in employment was approximately equal to the number reporting increases. The survey indicates that District firms, especially the trades and services group, are still experiencing upward wage pressures.

Strong demand for loans of all types is still apparent in the District. The number of banking respondents reporting increased demand for business and mortgage loans was larger than it was in the previous survey. District bankers report some recent weakness in consumer savings deposits but attribute this weakness entirely to seasonal factors.

Respondents report continued strength in residential and nonresidential construction. Several mentioned specifically a sizable increase in construction of apartment buildings while others noted that commercial and industrial construction was exercising a favorable impact on business in a number of areas. Some areas are also apparently benefiting from new interstate highway construction.

District cash receipts from farm marketings during January-May were three percent below those a year earlier. Crop production prospects on August 1 were generally higher than a year ago.

The banking community remains mildly optimistic regarding prospects for the immediate future, although somewhat fewer respondents expect further improvement than was the case in our July survey. Generally, the consensus among both bankers and other businessmen appears to be that recovery will continue at the recent moderate pace.