July 18, 1972
In general the overall business climate continues to improve in the Third District. New orders and shipments continue on an uptrend. Firms are expecting to hire more workers, and many expect to increase their plant and equipment outlays. Area banks are experiencing rising demand for loans. However, inflation appears to be a yet present concern of manufacturers, and retail sales in the Third District suffered recently because of adverse weather conditions.
Results of the Bank's monthly business outlook survey indicate that industrial activity is still rising, although at a slower rate than last month. Half the companies contacted expect no change in new orders and shipments in the next month while slightly more than a quarter expect an increase. The six-month picture is a bit better with 60 percent of the firms expecting increases in new orders and shipments by Christmas.
This continued expansion in business activity is having an increasingly favorable effect on employment. During the next month, 13 percent of the firms expect to hire more workers and 5 percent plan to increase their average workweek. Within the next six months, over 25 percent expect to increase both hiring and the length of their average workweek, while less than 3 percent plan cutbacks in those employment areas.
Capital spending plans appear to have stabilized in recent months. About 45 percent of the firms contacted in each of the past two months reported plans to increase their capital spending in the next half year. This is up only slightly from 41 percent which indicated they planned to increase their capital expenditures in April.
The outlook for inflation is less optimistic. Although roughly half of the businessmen contacted expect no change in prices from now until Christmas, some indicate expectations of rising prices over that time period. And virtually no firms reporting in the survey expect decreases in either prices received or prices paid during the next six months.
Loan demand at commercial banks in the Third District is advancing steadily. Consumer, real estate, and business loans are all increasing and are expected to continue on their upward trend. One large bank reported that it had all the business loans it wanted as a result of an aggressive recruiting program.
June was a disaster for retail sales in the Third District due to 22 days of rain. Summer goods just did not sell, and, surprisingly, home furnishings were also down slightly. However, retail executives are optimistic about sales for this fall.
The flood which hit the Third District late in June caused great personal suffering and financial loss to residents of the Harrisburg and Wilkes Barre areas. But, viewed in the perspective of the entire District, the effects were less pronounced. Philadelphia and New Jersey suffered only minor transportation delays, property losses along their river fronts, and depressed retail sales due to the rainy weather. Crop destruction may result in slightly higher commodity prices this fall.
Before Third District activity was temporarily depressed by the flood, strong demand for recreational services was reported by one of this Bank's directors. Motels and restaurants along the New Jersey shore were very busy.