June 13, 1973
Business conditions in the Third District are generally favorable. Production activity is still brisk and expected to improve further. Labor markets are holding steady with small increases in payroll and work week possible by year end. A considerable number of firms are increasing their inventories in anticipation of further sales advances; retailers are experiencing good demand for their summer sportswear lines. Construction activity has slowed somewhat. Bankers are feeling the beginnings of loan demand pressure, and inflation continues to plague the District.
Production activity is maintaining last month's brisk pace. Over half of the respondents to this month's business outlook survey report sales and shipments unchanged, and a substantial 35 percent reported sales advances. While a small minority of the local manufacturers are experiencing a drop in sales, the six month outlook is bright. The majority of respondents anticipate increased sales and shipments.
The employment situation in the Third District remains basically unchanged despite small pluses and minuses in some areas. Twenty percent of the firms report increasing the number of people they employ and 14 percent are increasing the number of hours in their average work week. But the overwhelming majority report no change in either their work week or the number of people on their payroll. However, some improvement is anticipated; almost a third of the firms plan to hire more workers by year end. Investment in inventory is generally holding steady, although over a quarter of the firms surveyed are increasing stocks this month.
On the six month planning horizon, over 80 percent expect to either increase inventories or, at least, maintain them at their current levels. A considerable minority of respondents plan to increase capital outlays within six months, but their number does not represent a gain over last month. Local retailers note that recent rainy weather has slowed sales. Nevertheless, demand for goods such as summer sportswear has been good.
Overall, construction activity in the Third District is down slightly, particularly in the nonresidential and public works sectors. Bright spots are the Atlantic City metropolitan area, where increases in resort homes are boosting the local economy, and the Wilkes Barre area, which is still hard at work rebuilding from the disastrous hurricane floods of last year.
Over half of the survey respondents report paying higher prices for raw materials, and nearly 60 percent report that they are keeping their awn prices steady. No relief is expected, with well over half of area executives queried anticipating a worsening of the situation.
Third District bankers report that loan demand is up slightly, deposits are flat, and loan demand pressures are building. Several said that they were discouraging many loan applicants; but, none reported denying worthy requests for funds. Two banks report witnessing disintermediation as savers request conversion of their deposits to U.S. Government bonds.