May 6, 1985
Through late April, the southeastern economy pushed ahead, although somewhat unevenly. Florida and Georgia labor markets are generally tight, while those in Alabama, Mississippi, and Tennessee exhibit considerable slack. Foreign competition continues to pressure employment and industrial output, particularly in the textile, apparel, agriculture, and energy sectors. Consumer spending and installment lending advanced in lackluster fashion, although auto sales have improved since earlier this year. Southeastern construction, real estate, tourism, and convention industries all are having a good spring. In Louisiana, a soaring mortgage delinquency rate, slowing new automobile registrations, and increasing imports of refined petroleum products join the list of difficulties facing that state's beleaguered economy.
Employment and Industry
Competition from imports continues to adversely affect employment in
the region's industrial sector. Labor market conditions are tight in
the service-oriented economies of Georgia and Florida, while double-
digit unemployment rates continue to plague Alabama, Mississippi,
and Tennessee. The growth of textile and apparel imports has
slackened recently. Carpet producers report a slowing of activity
from last year's unusually brisk pace. Rising imports of refined
petroleum products attributed to the strong dollar are adversely
affecting Louisiana's petrochemical industry. However, indications
are developing that domestic oil prices may be firming. Bank
directors report that exports of southern pine to Germany and Italy
are on the increase.
Consumer Spending
District retailers reported April sales to be about even with year-
ago levels. However, the Easter selling season came early this year.
Through April sales remained healthy and ranged from 6 percent to 12
percent above last year. Seasonal goods such as clothing, home
furnishings, and lawn and garden materials were in strong demand.
According to retailers, shoppers have responded strongly to post-
Easter promotions. First-half sales and profits are expected to be
slightly higher than last year.
Auto Sales
New motor vehicle sales in the Southeast remained brisk through mid-
April. Industry contacts attribute healthy spring buying to dealers'
offerings of limited discount financing and to continuing strong
demand for minivans and light trucks. New motor vehicle
registrations in the region in the January-February period were 11
percent above the corresponding period last year, compared to 7
percent for the nation. Louisiana is the only regional state which
registered fewer new cars and trucks during the January-February
period than last year.
Construction
Contacts report a generally brisk pace of single-family home sales
and construction through the fourth week of April. Developers
expressed satisfaction with current inventory levels. Speculative
building was evident in all major cities except New Orleans, where
an influx of Jefferson Parish bond money should boost the market.
Mortgage delinquencies for Louisiana have climbed from 4.1 to 5.7
percent, from November 1984 to February 1985, which is nearly double
the rate for any other state in the region. The multifamily market
is strong, with Nashville, Jackson. and Miami experiencing improved
rentals. The office market remains vigorous, particularly in Atlanta
and Tampa, hut mentions of potential oversupply and a decline in
construction have become more frequent. Contacts report the growing
use of perquisites by leasing agents to close deals. The only major
market in which contacts do not expect sizable new construction is
New Orleans.
Financial Services
Unadjusted credit growth at large banks in the Southeast continues
to lag behind December's peak rate. Weak and volatile consumer
lending growth in February and March appears to be the major reason.
Bank business and real estate credit both advanced in March.
Preliminary data for April suggest some further weakening of total
loan growth attributable to softer demand for business credit. State
bank commissioners expect the Federal Reserve Board's recent limited
support for interstate banking to accelerate bank combinations in
the Southeast.
Tourism
Tourist activity has strengthened as the spring season progresses.
Available air travel indicators showed healthy increases, and the
number of auto travelers registering at state visitor centers was up
in March. Lodging tax receipts for all states except Mississippi
showed increases over year-ago levels. Convention business,
particularly in Nashville, Miami, and Orlando has been strong.
Contacts report advance bookings through April as very high and many
feel this could be their best spring season ever. In Orlando, most
hotels report higher occupancy levels than a year ago. Hotels have
been running at near-capacity occupancy in some Florida resorts and
cities. However, many of Georgia's attractions have experienced soft
attendance in the early spring, and overbuilding has adversely
affected occupancy in New Orleans' hotels.
Agriculture
Favorable weather accelerated planting in most of the Southeast.
Reflecting the low profitability of past months, the marketing of
pork and beef in the District fell in the first quarter of 1985 as a
result of smaller farm inventories. Despite the 11 percent decline
in marketed pork relative to a year ago, pork prices weakened and
fell sharply near the end of the quarter due to increased poultry
production and pork imports from Canada. Cotton, an important
southern crop, faces a growing imbalance between supply and demand.
Competition from foreign producers is heavy and domestic demand is
weak, yet, Sixth District farmers plan to expand acreage planted
this year.