April 10, 1974
Results of our most recent survey of businessmen indicate that business activity in the District remains strong. Little change was reported in the manufacturing sector. However, business sentiments in this sector improved considerably in the past month. Employment in the manufacturing sector registered a further slight decline. Price increases continue to be widespread in both manufacturing and retailing. Retail sales increased in recent weeks, although consumers are reported to be more discriminating in their purchases.
Manufacturing activity remains strong in the Fifth District. Shipments and backlogs increased slightly during March, while new orders were essentially unchanged. Textiles, chemicals, primary metals, and machinery and equipment industries are among those reporting increased activity. Many manufacturers, particularly those in textiles, are concerned that some consumer resistance to sharply higher fall prices may be encountered, while material shortages remain a problem, some easing in the shortage of electronic components was reported. Shortages of synthetic fibers continue to be a problem in the textile industry.
The level of employment in the District has apparently declined somewhat in recent weeks. The diffusion of survey responses suggests that in manufacturing both the number of employees and the hours worked per week declined. Retailers reported no change in the number of employees. Reports of price increases are pervasive. More than 90 percent of the manufacturers reported higher prices paid and 55 percent reported higher prices received. All respondents in retail trade reported an increase in prices paid and three-fourths reported an increase in prices received.
Survey results suggest that retail sales remain strong in the District. Nearly two-thirds of the respondents indicated increased volume during the past month. Reports are common, however, that higher prices for food and fuel are causing consumers to be more discriminating in purchasing discretionary goods. Reports of adverse effects of the gasoline shortage on tourism continue to be received. Colonial Williamsburg, one of the largest tourist attractions in Virginia, reported that attendance for February was 50 percent below year-ago levels. Lodging and restaurant business in the Myrtle Beach, South Carolina area are said to be off 30 percent compared to a year ago.
Large commercial banks in the District indicate that demand for business, consumer, and real estate loans remains strong. Loans in all three categories rose substantially during the month of March and are apparently continuing strong so far in April.
Farm income continues to show significant improvement over year-earlier levels. The District's 35 percent increase in January, however, was below the 48 percent gain nationally.
District farmers' planting plans for this year have changed little since January. Overall, the planned acreage increase as of March 1 adds up to about 6 percent over 1973. Corn accounts for better than half of the planned expansion, while wheat, with acreage stepped up sharply, comprises around one-third. Most of the remaining intended acreage increase will go into tobacco and soybeans.
The diffusion of responses suggests a substantial improvement in business psychology since the last survey, with much of this improvement apparently due to the lifting of the oil embargo. Among manufacturing respondents, nearly three-fourths expect national business activity to remain the same or improve, whereas only 46 percent were this optimistic last month. Nearly one-half of the manufacturers expect the level of production in their own firms to increase. Only 27 percent were this optimistic a month ago. Responses from retailers suggest that they also expect business conditions to improve both nationally and locally.