In general, business conditions in the Third District are sluggish, although the outlook over the next six months remains optimistic. Key manufacturing indicators, such as new orders and sales, have shown little change in the last month. The consumer sector shows normal seasonal patterns as does business loan demand at area banks. However, District manufacturers and economists see increased activity by next spring. Price increases in the District seem to have leveled off, and area businessmen do not anticipate a resurgence of inflation in the near future.

District manufacturers polled in the Bank's monthly business outlook survey generally assessed business activity as unchanged from October. Most of the key indicators for November, such as new orders and sales, were essentially flat. Virtually no companies reported that they had added employees during the month. And the manufacturers expect the lull to continue in the immediate future. Over half see no change in new orders and over 80 per cent expect to add no additional employees during December.

A majority of the manufacturers remain optimistic about the longer run; however, approximately two out of three anticipate a jump in sales and new orders by next spring, while almost one-fourth of the executives canvassed intend to add employees to their payrolls during this period. Nearly 25 per cent plan to increase capital expenditures six months out. The longer-run optimism also is picked up by area business and bank economists. They expect a 9.6 per cent growth in GNP during 1972, with about two-thirds of that expansion representing a real gain in output. The economists also predict that business spending will be a major factor in the expansion, especially in the last two quarters of 1972. Fixed investment is forecasted to rise at an annual rate of 6. 7 per cent during the first half of 1972, and 12 per cent during the second half.

Signs in the consumer sector are somewhat mixed. Members of the Bank's Board of Directors find no observable upsurge in consumer confidence. There appears to be a normal seasonal increase in retail sales, although retailers are not especially bullish. Area bankers reported a gradual upward trend in consumer credit during the last two months. Looking ahead, area economists expect that consumer spending will rise about 9 per cent during 1972, with outlays for durable goods setting the pace. Private housing starts are expected to level off in 1972 after a strong finish in 1971.

Business loan demand at area banks appears to remain seasonal in nature, with some strength in retail and nondurable goods sectors. Most customers appear to show neither great optimism nor pessimism, but retain the
wait-and-see attitude.

On the price front, nearly 90 per cent of the District manufacturers polled reported no change in prices for November, and over 80 per cent expect that trend to continue through December. Furthermore, the percentage of businessmen expecting price increases six months ahead has dropped substantially since July, the last full month before the freeze. Area economists expect that the rate of increase for consumer prices will slow to just under 3 per cent for the second half of next year, compared with 3.7 per cent for the first half.