July 1, 1983
Sales and production in the Eighth District continued to expand during May and early June, and prices were nearly stable. Residential home sales, however, declined from the pace attained earlier in the year, and many manufacturing plants continue operating substantially below capacity. Although there have been net employment gains, unemployment rose from its already high level, as the labor force was bolstered by graduates and students seeking summer jobs. Most respondents anticipate that economic activity will continue to expand during the summer and fall.
Tourism and Conventions
Tourist and convention business in the St. Louis area was more than
10 percent greater in May and early June than in the same period of
1982. Continued gains are expected during the rest of the summer.
Downtown hotels already are booked to near capacity for most of
July. The Convention and Visitors Bureau has received twice the
number of inquiries about St. Louis attractions in the past six
weeks as in the same period last year. This summer, 65 conventions—more than during any other three-month period in history—will be
held in the area.
Sales
Sales at six department stores in the District were 7 percent higher
in May and early June than in the same period of 1982. The gains
occurred despite unseasonably wet weather in many areas of the
District. Furniture, appliances, rugs and "Father's Day" merchandise
showed strength. Apparel did less well, allegedly because the
weather in May was too cool for customers to be interested in summer
fashions.
Automobile sales improved in May and early June at four dealers but slipped back at two dealers. One large dealer, with sales of both new and used cars about 25 percent ahead of last year, noted that he had difficulty maintaining adequate inventories for both autos and trucks. A dealer of foreign cars said he was readily selling all the cars allocated to him and could sell many more of the popular models if available.
Home sales in the Eighth District, which had been strong earlier in the year, decreased in May and early June. The unseasonably wet weather in May and some inching up of mortgage rates in early June contributed to the slowdown. Industry spokesmen, however, remained optimistic about future sales. Residential construction continued at a relatively high level.
Manufacturing Activity
Most industrial firms in the District reported an increase in orders
and shipments since April. The gains continued to be largest for
consumer-type goods and defense items. Firms producing business
equipment and metals reported little change in sales. Capital
spending plans of most firms remain unchanged and are not likely to
increase until current facilities are more fully utilized.
Inventories at most firms are near desired levels.
Employment
Total Eighth District employment crept up in May and early June.
Because of productivity gains, however, the rise in employment was
less than the increase in production. Moreover, a few firms still
are trimming their workforces, primarily through early retirements
and attrition, in order to improve efficiency. Despite the net
increase in total employment; the number of unemployed also rose
moderately as the work force was enlarged by graduates and students
seeking summer jobs.
Finance
Consumer loans rose during May and early June at large Eighth
District banks, but commercial and industrial loans declined. Real
estate loans changed little. Bank deposits increased, with both
money market deposit accounts and super-NOW accounts rising rapidly.
Savings and loan associations, also continuing to have an inflow of
new funds, were able to increase their lending and improve their
liquidity. The financial condition of savings and loans also has
been strengthened by a slightly lower cost of funds and a higher
average yield on assets.
Price and Wages
Prices have changed little, and wages have risen only moderately so
far this year in the District. In general, expectations are that
prices and wages will rise moderately during the rest of 1983.
Projections through 1984, however, are more diverse: some analysts
focusing on excess capacity believe wages and prices will accelerate
only modestly; others, concerned about the huge Federal deficits and
rapid monetary expansion, anticipate marked accelerations in wages
and prices.
Agricultural Conditions
Planting of many District crops was delayed because of rains and
flooding. A few fields were left idle, and some farmers shifted from
corn or cotton to soybeans, which does not require as long a growing
season. Weather turned more favorable in June, however, and much of
the crops are now planted, and at this stage, most crops are doing
well.