September 20, 1983
The broadly based economic expansion continued during August and early September in the Eighth District, and most respondents expected further gains during the fall and winter. Retail sales continued strong, factory orders and production rose, and employment increased. Orders for business equipment, however, remained depressed, housing and auto sales slipped, and the hot dry weather destroyed many crops.
Outlook
A research organization recently projected that real economic growth
in Arkansas and Missouri would be slightly greater in the last half
of 1983 than in the first half. It anticipates that real growth in
1984 will be over 5 percent in Arkansas and 4 percent in Missouri.
Hotels and Motels
Since May there has been a pronounced increase in District hotel and
motel occupancy rates. A manager for a chain of motels operating
throughout the district noted a marked rise in occupancy rates.
Summer conventions, increased tourism and more business travel have
kept downtown St. Louis hotels nearly full for the first time in
years. With large fall and winter bookings, hotel and motel managers
are optimistic about the future. In the St. Louis area, two new
major hotels are now under construction, one hotel has just
completed a substantial renovation, and at least three others are
planning sizable redecorations or enlargements this fall.
Sales
Department stores, discount houses and small shops throughout the
District report relatively favorable sales in August and early
September. Back-to-school promotions were successful and furniture,
floor coverings, appliances, jewelry and toys moved briskly. One
large store is stocking shelves for an expected "spectacular"
Christmas season.
Automobile sales continued to be lively, but were down from peaks reached in June and July. Inventories are low at a number of dealers, and several said they could have sold more if the cars had been available. Demand for used cars remains good, and prices of late models have risen.
Home sales remained below the pace reached in the spring, but were still up substantially from a comparable period a year ago. Higher interest rates and the hot weather contributed to the slowdown. Housing construction, however, continued to rise.
Manufacturing
Orders and production at most industrial firms in the District rose
in August and early September. Orders for appliances and other
consumer durables were particularly large, but equipment sales to
businesses are still depressed. Inventories are at desired levels at
most firms, but reports have been received of an abundance of
gasoline stocks which has softened prices somewhat. Several firms
are increasing their outlays on research and development.
Transportation
A major railroad reported that traffic was recently running 9
percent above year ago levels. Grain shipments were sufficiently
strong to eliminate the surplus of covered hoppers. Several trucking
companies also reported an increase in tonnage hauled.
Employment
Employment in the District rose in August, as many service,
construction, transportation and manufacturing firms slowly
increased their work forces as the need became clear. The
unemployment rate, however, changed only slightly because the labor
force grew and because of some offsetting reductions in employment,
primarily through attrition. Three large District employers have
scheduled rehirings, totaling 5,000, over the next two months. It
was announced, however, that a plant employing 500 would be phased
out this fall.
Agriculture
Crop damage in the District from the hot dry weather was the largest
in years. Many crops were completely wiped out; farmers in most
counties sustained some damage, and in a number of counties output
will be less than half of last year. Corn, soybeans, tobacco,
alfalfa, cotton, fruits and vegetables were all hurt, and many
chickens and some hogs died. Financial losses to many individual
farmers and rural communities have been severe. Meat and other food
prices are likely to rise over the next year because of the reduced
supplies. The lower yields, reinforcing the PIK program acreage
cuts, are reducing the large overhang of inventories. Commodity
prices have risen, bolstering total farm income. A few farm
equipment dealers report improved sales, and farmland prices, which
have declined for about two years, reportedly have stabilized and
even risen in recent months.