Atlanta: October 1975

The impact of Hurricane Eloise on the regional economy has been considerable. Substantial wind and water damage to tourist accommodations occurred in coastal Florida. Foul weather diminished tourist traffic and limited the growth of retail sales, particularly in coastal areas. Substantial damage to corn and peanut crops, pecan groves, farm buildings, and homes occurred in rural Alabama. Mid-Louisiana reports a disappointing soybean crop because of heavy rains; however, the sugar cane crop is reportedly the largest ever. Excessive moisture has also hampered corn and soybean yields in Tennessee.

Despite the hurricane's effects, directors report slow improvement in retail sales in many areas. However, sales in many localities remain below 1974 levels. Scattered reports are received of renewed reluctance to buy. The strongest recovery in sales appears to be in Tennessee, where gains in relation to 1974 levels are indicated.

The torpor of the construction industry continues, except for scattered reports from directors and lenders of renewed activity in the single-family residential sector, particularly in the state of Tennessee. A scarcity of mortgage funds is a recurrent theme in assessments of construction activity. Concerning the nonresidential sector, the latest survey of office space in Atlanta finds a vacancy rate of 20 percent, with continuing increases in store as additional structures are completed. Excessive stocks of commercial, office, and warehouse space are noted in reports from Florida. In Louisiana and Mississippi improvement is noted in building permits granted, but much of this activity is governmental. Large electrical generating plant construction projects are reported in both Louisiana and Alabama. The multifamily residential market remains depressed, with sales of condominiums during August in the Miami area 69 percent below the 1974 level. In Jacksonville, although condominium sales were the best this year, only 4.3 percent of the 1,500 units in inventory was sold.

Two reports emphasize a continuing potential for renewed inventory reductions, should demand fail to increase as expected. Customers of an iron foundry, thinking that their inventory adjustments were complete, had increased their orders. Now sales of fabricated metal products have failed to meet expectations, and a hold has been placed on foundry shipments scheduled for late September. In addition, although a large retailer notes lengthening delivery times and short supplies of piece goods, he states that insufficient increases of demand could cause a stock liquidation similar to that in 1974.

A membership survey by a purchasing managers association in Georgia found the following trends: lead times are lengthening on goods ordered; higher prices are reported by 40 percent, as in the previous month; 55 percent report prices unchanged; three-quarters anticipated higher prices over the next three months, compared to two-thirds in the previous month; reductions in inventories are indicated by about one-third and unchanged stocks by about 60 percent.

District labor markets were buffeted by strikes and layoffs but benefited from rehiring in certain industries. The strike by flight attendants against National Airlines, which began September 1, still continues. The central issue is comparability of wages with those of other carriers. Proposals for a five-year, no strike agreement are being considered by seven unions which represent National Airlines employees. An indefinite layoff of 500 workers, in addition to the 750 furloughed in March, began October 6 at the Ford Motor Company assembly plant near Atlanta. These additional layoffs during a period of the year in which production is usually high are explained by weak demand for the intermediate-sized models manufactured at the plant. Near Birmingham, a lack of orders for steel has caused the shutdown of a U.S. Steel Corporation plant which employs 700 to 800 workers. A Georgia chemical manufacturer has recalled 600 workers after a shutdown which lasted for six months, following settlement of a dispute concerning terms for extending a labor contract. A Florida iron foundry has recalled its second shift for molding of heavy castings. These employees were laid off in April. In Tennessee 300 workers have been recalled by a manufacturer of baseboard electric heaters and electric can openers. An additional 200 employees are expected to be recalled within four to six weeks when production of portable electric fans resumes. In Alabama depletion of the state's unemployment compensation pension funds has necessitated a deduction, beginning October 1, of one-half of 1 percent from workers' paychecks in order to fund unemployment compensation payments. This is the first time in the history of the state program that such contributions have been necessary. Borrowing from the federal government will also supplement the fund.

Coal is creating significant business activity in the district. Two deep shaft coal mines are to be sunk near Birmingham at a cost of about $50 million each. Production is expected to begin in 1978. Coal will be furnished under a long-term contract to six Japanese steel companies. In Mobile, Alabama, the prospective increase in coal exports has resulted in an effort to expand port facilities to accommodate increased shipments of coal. Construction of additional coal-powered electrical generating plants has led to an announcement by Southern Railway of plans to build facilities for coal loading, storage, and blending at an Alabama location. Following its completion in 1977, this plant will receive coal from barges on the Mississippi River and then distribute it to trains for transportation to generating plants.