April 14, 1976
Consumer spending in the District is up from last year. Data available through January puts retail sales about 15 percent above a year ago, and surveys of District retailers taken in late March indicate that the pace of sales has remained strong since January. Appliances and home furnishings are selling well. Auto dealers' sales increases have been especially large, with the bulk of the increases coming in the intermediate and luxury models.
Resort owners also say that business was good over the winter months despite less than normal snowfall; most expect a strong tourist season this coming year.
Despite sales gains, retailers continue to maintain tight control over inventories; however, suppliers have been able to meet short delivery schedules.
In the manufacturing sector, sales appear to be above a year ago in both dollar terms and in real terms. In addition, manufacturers expect larger sales gains in coming months. The average workweek in manufacturing has been increasing since late autumn; however, manufacturing employment is only slightly above the recession low of last summer. One director, whose firm is a major manufacturing concern, feels that slow employment gains are partly due to the high costs. of adding new employees.
Overall wage and salary employment in the District is now above a year ago despite lower employment in manufacturing and construction. Gains have come in the trade, services, and government sectors of the economy. Employment is up in all regions except Michigan's Upper Peninsula, where unemployment in the copper industry is still substantial. Initial claims for unemployment benefits in the District are now down to the lowest level in about a year and a half. Seasonally adjusted unemployment rates have fallen sharply since October.
Data are not yet available on first quarter residential construction, though the higher level of permits in 1975's second half provides potential for an improved level of starts. A director whose firm supplies materials to the housing industry thinks that recent construction activity has been stronger than anticipated. The value of nonresidential construction awards is still below last year, as is overall construction employment.
At savings and loan associations, both new mortgage lending and commitments outstanding are down for 1975's fourth quarter, but are substantially above a year ago. Total bank lending is increasing even though business loans are at about the same levels as last year. The rate of increase in consumer time and savings deposits at banks has fallen in recent weeks; deposits at S&Ls continue to run about 15 percent above last year.
Farm work in the District is currently several days ahead of normal. Seeding of spring wheat and oats is about half completed in some areas of Minnesota, and corn planting may get under way by mid-April. Subsoil moisture is slightly below desirable levels in many areas, but the shortages are not so great as to hinder crop development.
Carryover of last year's grain by farmers is still greater than normal, and inventory financing has boosted farm lending at rural banks. Lending by Production Credit Associations also appeared strong in the first quarter.
Cattle prices have turned up sharply in recent days after having dipped to a seasonal low in late March. Dairy prices continue to move seasonally lower, but are above last year. Hog operations appear profitable, and one director says that in his locality all livestock operations except cattle are undergoing expansion.