August 6, 1984
Favorable economic trends continued during July in the Eighth District. Consumer spending, factory production, commercial investment and total employment continued to grow. The outlook is for further, but more moderate, expansion for the remainder of the year. Agricultural crops over a broad area have had near-ideal growing weather.
Consumer Spending
Department store sales in the District continued above year-ago
levels in the first three weeks of July. Clothing moved better than
hard goods. Merchants are optimistic about the upcoming Christmas
season and are stocking their shelves based on this anticipation.
Restaurant business is reported to be good.
New automobile sales at seven dealers in the District averaged 13 percent above year-ago levels in the first 20 days of July. Both trucks and used cars also moved well.
Industrial Production
New orders at a number of District factories decreased slightly in
July, but production and shipments continued to rise because of
large backlogs of orders. Capital goods spending has improved, but
the demand has come in spurts. A major automobile manufacturer
announced that it would add another shift in the early fall to
produce a luxury car. Orders at both metal fabricators and basic
metal producers were weak, in part reflecting foreign competition.
Although the outlook is generally for prices to rise only moderately
faster in the second half of 1984 than in the first half, a few
firms began buying selected supplies in anticipation of price
increases. On the other hand, a major chemical company noted it was
becoming harder to make price increases stick.
The strike at the lead mines, which began at the end of March, continues. Prices of lead are now up about 25 percent from before the strike, but industry spokesmen believe prices will fall quickly if the strike is settled soon.
Housing and Construction
Realtors are experiencing a rise in the average length of time a
house is on the market, and new single-family housing starts have
run below year-ago levels since May. On the other hand, builders in
both St. Louis and Memphis have started considerably more apartments
than at this time a year ago. Construction activity remains strong,
reflecting both the building of apartments and the large volume of
back orders for single-family dwellings. A recent survey found that
65 percent of the new mortgages in the region around St. Louis were
on the adjustable rate basis, and that rates on new mortgages ranged
widely from 11-1/2 to 15 percent.
Employment
Total employment in the District continued to rise in July, and
early indications are that the unemployment rate drifted slightly
lower. Both retail and wholesale firms added to their staffs, and
employment in the services industries continued to expand. Hiring
for construction continued to rise, but this is expected to reverse
in August, since housing starts have declined, and several large
road projects and commercial buildings will reach completion. There
was also some hiring in the month to fill in for vacations and other
temporary needs for help. Manufacturing employment increased only
slightly, on balance, since one major company lost a government
contract and another was on strike.
Agriculture
Weather conditions across major corn and soybean areas of the
District have been favorable during much of July, and the outlook is
for relatively large crops. Chemical companies report an increase of
insecticide and herbicide sales. Feed sales to farmers, however,
have been soft as a result of the decline in the numbers of hogs and
cattle since a year ago. Farm equipment sales remain low, with any
farmers repairing old equipment or buying used equipment from those
going out of business.
Banking
Real estate loans at 12 relatively large District banks rose at a 24
percent annual rate in the first three weeks of July, while
commercial and industrial loans increased at a 12 percent rate.
Consumer installment credit, however, changed only slightly at these
banks, while rising at smaller institutions.