August 10, 1973
Results of our most recent survey of businessmen and banks indicate that economic activity in the District is still expanding. Further increases were reported in employment, and retail sales remain robust throughout the District. Loan demand continues strong and mortgage markets have tightened further. Activity in the manufacturing sector appears little changed from last month, although the inflow of new orders may be weakening. Most businessmen and bankers expect business activity to stabilize at present levels.
Activity in the manufacturing sector is reported to be continuing at the recent high level, with little further change in shipments and backlogs. But for the first time in more than a year the number of manufacturers reporting a decline in new orders exceeded the number reporting an increase. Manufacturing inventories were reported unchanged from the previous month's survey, and manufacturing respondents appear generally satisfied with current inventory levels. One large manufacturer of synthetic fibers, however, reported that August-September production will be curtailed because of shortages of raw materials.
District employment has apparently increased since the last survey. Both manufacturing and trade and services respondents indicated net new hirings during the past month, and nearly a third of the banking respondents reported employment increases in their areas. Manufacturing respondents reported further increases in wages paid with little change in prices received. Trade and services respondents reported increases in both wages and prices received.
Retail sales in the District have continued upward in recent weeks. More than one third of the banking respondents reported that sales in their areas had increased during the past month. Major retailers report continued improvement in sales, although the rate of increase tapered off during the month. Retailers expressed some concern over the newly passed minimum wage legislation.
Loan demand remains quite strong in the District. More than two thirds of the banking respondents reported increases in the demand for consumer and business loans, while nearly 50 percent reported increases in mortgage loans. Bankers report further tightening in the mortgage markets. One banker observed that increased rates have reduced loan requests from small businessmen, while loan demand from larger businesses remains unabated.
Construction activity in the District may have moderated from the recent fast pace. On balance, banking respondents report no change in nonresidential construction and a decline in residential building in their respective areas.
Generally larger crops than last year were indicated on August 1 for Fifth District crop prospects. Biggest gains were anticipated for soybeans, up 25 percent; peaches, 18 percent; peanuts, 13 percent; tobacco, 11 percent; and feed grains, 7 percent. Exceptions to these expected improvements were lower forecasts for cotton, wheat, apples, Irish potatoes, and hay. In general, larger acreages and higher yields combined to produce the improved prospects.
In general, businessmen and banks expect economic activity in the District to stabilize at present levels. More than 50 percent of the banking respondents expect no change in business activity in their areas during the next three months.