October 10, 1973
The ongoing business advance is continuing at a slower rate in the Third District this month. Current production activity is up. Shipments, delivery times, and employment rise. But new and unfilled orders are not increasing. Inventory investment is reported to be unchanged. But plant and equipment investment spending plans are up. Retail sales also continue to be strong. However, on the darker side, price increases are widespread, and bankers are complaining that interest rate ceilings are frustrating their growth.
Respondents to this month's business outlook survey of manufacturers in the Third District report that their businesses continue to improve. Shipments of finished products and delivery times are up again from the past month. The number of new orders and unfilled orders are essentially unchanged, however. Looking ahead six months, area executives expect decreases in their new orders, unfilled orders, and delivery times. But shipments of finished goods are expected to increase slightly.
Employment in the Third District is rising slowly. Over 80 percent of the firms contacted report no change in the number of people they employ or the length of their average workweek. But the number of firms adding to their work forces and increasing the length of their average workweek is several times larger than those reporting decreasing employment opportunities. By springtime, roughly 20 percent of the area manufacturers contacted expect to have expanded their employment while only 10 percent to cut back.
Business investment in inventories is holding about level with last month in the Third District, as the number of firms reporting increases approximately equaled the number of firms reporting decreases in inventories. Six months from now, inventory investment is expected to be down slightly. However, district businessmen anticipate still more investment in plant and equipment in the months ahead. More than twice as many firms report plans to increase these outlays as report plans for decreases.
Area retail executives report that sales are holding about level with last month. Sales of some durables, such as refrigerators, are down a bit, but clothing is selling well.
Higher prices for purchased goods are being reported by three- fourths of the responding firms, while none report decreases. And over one-third of the firms report charging higher prices in the last month. By spring, over three-fourths of the firms expect to be paying and receiving higher prices. Area bankers report that demand for business, mortgage, and consumer loans continues to exceed the supply of funds they are willing to commit at current interest rates. Checking deposits are unchanged, and savings deposits are decreasing slightly as disintermediation continues. All the bankers contacted complained about interest rate ceilings in one form or another.