January 10, 1973
According to our latest survey of businessmen and bankers, most Fifth District economic indicators either have recorded further gains or have shown no significant change. Manufacturers' shipments, backlogs, and new orders increased again in the past month, while retail sales, including sales of automobiles, continued to expand. Following increases in the last several months, manufacturing employment and residential construction have apparently stabilized at high levels. Severe labor shortages, reported in several areas of the District, have restricted the output of textiles and furniture. Optimism concerning the economic outlook remains high among District businessmen and bankers.
Manufacturing activity in the District continues in a strong advance, with further gains in shipments, new orders and backlogs reported. While strength appears to be widespread, textile producers in particular seem to be benefiting from the economic expansion under way. Further declines in inventory levels were reported, but on balance manufacturing respondents believe that inventory levels relative to desired levels are now about right. A sizable number of manufacturing firms continue to report that current plant and equipment capacity is at lower than desired levels.
Our latest survey shows a strong employment picture in the District. Manufacturing respondents indicated no change in employment but sizable increases in hours worked per week. Trade and service respondents reported increases in both employment and hours worked per week, and most banking respondents believe that employment has increased in their areas. A severe shortage of labor, reported in several areas of the District, is particularly troublesome to textile and furniture producers and has apparently restricted output increases. Both manufacturers and retailers continue to report increases in wages and prices received.
Survey responses indicate further increases in retail sales throughout the District. More than 85 percent of the banking respondents reported that retail sales rose on a seasonally adjusted basis during the last month. One half of the trade and service respondents reported gains in general retail sales, while increases in automobile sales were reported by three fourths of the banking respondents.
Loan demand at reporting banks appeared to be of greater than seasonal strength, with increases reported in business, mortgage, and consumer loans. More than 85 percent of the banking respondents indicated further increases in consumer loans. One large banking respondent reported business loan demand at an all-time high for his institution. For the first time in several months, banking respondents reported a slight decline in residential construction in their areas. Increases in nonresidential construction continue to be reported, however. Nonresidential construction has benefited from new industries locating in the District and from sizable plant expansions by several manufacturing firms.
District farmers' cash receipts from farm marketings during January-October 1972 were 8 percent above those a year earlier, compared with a 10 percent gain nationally.
Most businessmen and bankers in the District remain optimistic about the general economic outlook. More than 60 percent of the banking respondents expect an improvement in business activity in their areas in the immediate future. Optimism about the business outlook among textile producers seems especially high.