April 12, 1972
The economy of the Eleventh District continues to show moderate strength. Industrial production in Texas increased moderately in February, and employment in the five District states held steady. Sales of department stores continued to experience significant year-to-year gains in February and March, and new automobile registrations rebounded in February after experiencing a sharp drop in January. Construction activity slackened in February but was still well above its year-earlier pace. The outlook for agriculture also remains generally favorable.
The seasonally adjusted Texas industrial production index rose moderately in February following a sharp advance in January. All of the February increase resulted from a large boost in mining—especially the production of crude petroleum which rose in response to the higher oil allowable. Utility output was about unchanged from January, while manufacturing production slipped nearly 1 per cent. The decline in manufacturing was due primarily to sharp drops in output of the petroleum refining, printing and publishing, transportation equipment, and apparel industries. These declines were partly offset by sizeable gains in production of electrical machinery, food, textiles, and paper.
The Texas Railroad Commission raised the state's oil allowable for April to 100 per cent of maximum efficient production, allowing for full production for the first time in a quarter century. Shortly after its announcement, however, the allowable for the giant East Texas field was cut back to 86 per cent. Other District states left their allowables unchanged.
Seasonally adjusted total employment in the five southwestern states changed very little in February. And with the labor force about the same as in January, the average unemployment rate for these states matched the 4.5 per cent of a month before. This rate was down from 4.9 per cent a year before. Nonfarm payroll employment edged up slightly as nonmanufacturing employment increased enough to more than offset a slight decline in manufacturing employment.
Retail sales in the District continue to register sizeable gains. Registrations of new passenger cars in Dallas, Fort Worth, Houston, and San Antonio rose 16 per cent in February, with all four metropolitan areas posting increases. Moreover, department store sales in the District were 17 per cent higher in the four weeks ending March 25 than in the corresponding period a year ago.
Construction activity in the five southwestern states, as measured by the value of contracts awarded, fell significantly in February, with all three major categories of construction sharing in the decline. However, the total value of contracts in the five-state region was still nearly a fourth larger than in February a year ago. The decrease from January resulted from large declines in Texas and Arizona.
District agriculture is progressing well. Planting intentions show an increase of cotton acreage in the five-state area, and planting is off to a good start. Range and livestock conditions are substantially better than a year ago and are somewhat better than the average for the past ten years. The wheat crop is making excellent progress, and cattle on feed is up substantially from a year ago. The index of prices received by Texas farmers and ranchers fell nearly 4 per cent in the month ending March 15, with most of the drop centered in commercial vegetables, cotton, and meat animals.
Total credit at weekly reporting banks in the Eleventh District rose sharply in the four weeks ending March 22. Demand for business loans was especially strong. Inflows of demand deposits moderated while net withdrawals were reported in time and savings deposits.