The pace of economic activity in the Eighth Federal Reserve District remains moderately upward. Manufacturing activity generally continues strong, especially for firms connected with the capital goods industry. On the negative, construction activity, particularly single-family dwellings, has deteriorated. Some firms supplying this industry also report a slowing in activity. On the agricultural side, a large increase in crop output is still in prospect, but cattle, hog, and poultry feeding operations are unprofitable.

Retail sales have generally continued upward in recent weeks. Some retailers reported increases of 10 percent or more from a year ago. This growth, however, is largely nullified when price increases are taken into account. Retailers report that clothing and other "soft lines" have experienced large sales increases, while some slowdown has occurred in "big ticket" items, such as air conditioners, refrigerators, and other home furnishings.

The pace of manufacturing activity in the District is almost unchanged from the high rate of last month. With the abatement of the energy crisis, manufacturing is outpacing the level of late last year and early this year. Firms in the capital goods industry report production at a record pace and some reported continued increases in order backlogs. Fewer complaints about raw material shortages were voiced than in recent months, however, raw materials prices have increased substantially since the lifting of price controls and apparently the market is clearing at the higher prices.

Home construction is the weakest sector of the District economy at this time. In addition to rising interest rates and higher prices, usury laws in some of the District states have hampered the industry. Apparently hardest hit is Missouri where usury laws restrict interest rates to 8 percent on loans to individuals. This law has led mortgage lenders to seek higher yielding investments such as Federal funds and outstate mortgages and reports from St. Louis indicate that mortgage funds are virtually impossible to obtain. In addition, a labor strike is currently hampering construction in the St. Louis area.

Growth of savings accounts has slowed in recent weeks at both commercial banks and savings and loan associations, apparently reflecting higher yielding opportunities for other forms of investments. Low yielding savings deposits have remained virtually unchanged with some slight growth in the higher yielding small denomination certificates of deposit.

The livestock feeding industry, in the face of high feed costs and deteriorating livestock prices, is reported to be unprofitable. If so, this would lead to a reduction in output of fed animals until some improvement in profit from feeding is anticipated. Crop farmers, however, are more optimistic. Weather conditions in the Eighth District have been more favorable to crop planting compared with the nearly disastrous planting season last year. Reports indicate that farmers are planting larger acreages than a year ago, as had been forecast. In general, farmers are able to obtain fertilizer at the substantially higher prices, but reductions are being made in the amount applied per acre. This practice will lead to somewhat reduced yields, but given normal weather conditions and the larger number of acres planted, total crop output will probably be up.