November 10, 1971
The moderate uptrend noted in district business activity over the last several months has apparently been slowed by the prolonged coal and dock strikes. Our latest survey of manufacturers suggests a substantial reduction in the pace of shipments and declines in new orders and backlogs. Other survey respondents continue to report strong retail sales, although the number reporting increases declined from the previous period. District bankers report some tapering in the recent strong surge of consumer and mortgage loans, and only moderate increases in business loan demand are indicated. District crops have suffered severe damage from Hurricane Ginger and heavy October rains.
The diffusion of responses from district manufacturers suggests a distinct slowing of activity, although most of the slowing appears to be centered in lines affected by the coal and dock strikes. Metals producers, especially in the Baltimore area, report substantial reductions in shipments, new orders, and backlogs. A number of manufacturers in other lines also commented that the strikes are adversely affecting their business. Furniture manufacturers continue to report a strong orders picture and are generally optimistic regarding the near-term future. Except for hosiery manufacturers, textile producers are also beginning to exhibit a cautious optimism about the future.
Our survey indicates that retail sales have been seriously affected, especially in West Virginia, by the coal strike. Sales of new cars are strong in all areas except those immediately affected by strikes. Retailers generally appear to be anticipating a record or near-record holiday season.
Manufacturing inventories reportedly have declined further, and while nearly one-third of our manufacturing respondents report inventory levels higher than desired, the overall inventory situation appears much improved over three months ago. Trade respondents indicate further increases in inventories, but all of this appears to be voluntary. Employment in the district has apparently declined somewhat in recent weeks, but this seems to be due mainly to strikes. More than one-third of our banker respondents reported employment declines in their areas. On the other hand, nearly one-third of manufacturing respondents reported an increase in the number of hours worked per week. No significant change in prices received were reported by manufacturing or trade respondents.
Responses from banks in the district suggest that both residential and nonresidential construction activity may have slackened some in recent weeks. Bankers report only moderate strength in business loan demand, and the number of banks reporting increases in demand for consumer and mortgage loans were down from the previous month. In strike-affected areas, bankers report a sizable increase in automobile repossessions and, in general, loan delinquencies.
Through November 4, the season's gross returns from
flue-cured
tobacco marketings were up 5 percent over last year, as 7 percent
higher average prices offset a 2 percent decline in sales volume.
Virginia and North Carolina crop losses resulting from Hurricane
Ginger and heavy October rains have been estimated as $83 million.
Damage to the peanut crop alone is estimated to be $49 million, or
48 percent of the total cash receipts from last year s record crop.
Losses in corn, soybeans, and cotton account for the remaining $34
million.
Looking ahead, most banking respondents believe that economic activity in their areas will either stabilize at present levels or increase. Most manufacturing respondents indicated that plant and equipment capacity relative to desired capacity is about right.