May 6, 1985
Summary
Modest increases in March retail sales over 1984 levels were
attributed in part to Easter occurring earlier this year. Business
activity in two District states also remained slightly above year-ago levels though it declined from the February figures. Loan growth
at District banks, on the other hand, was slower in the first
quarter of this year than in the sane period a year ago,
particularly at large banks. Cattle and hog prices declined
unexpectedly due to increases in fed cattle slaughter and meat
imports. Crops are expected to be large despite heavy participation
in acreage reduction programs.
Consumer Spending
District department stores report modest increases in March retail
sales over March 1984 levels due in part to Easter occurring two
weeks earlier this year. Most apparel and accessory areas reportedly
did well. When adjusted for the Easter period, March sales gains
were less substantial. With the bulk of the Easter season falling in
March, April sales results are expected to be lackluster when
compared with last year.
Employment
Increases in District employment were reported in the manufacture of
consumer nondurables and automotive parts, while a plant closing in
the glass industry was postponed and a textile plant tins reopened.
On the other hand, job Losses have occurred in the petroleum
refining, telecommunications and carpet manufacturing industries.
Business Activity
Business activity in March, as measured by an index of seven
indicators, declined in Arkansas and Missouri at rates of 3 and 2
percent, respectively. The March figures were up just over 1 percent
in Arkansas and almost 2 percent in Missouri from the year-ago
levels.
Building materials inventories have increased in some areas of the District and are considered ample to cover short-run demand. Prices for solid wood have fallen to 1982 levels. As a result, timber and timberland values are declining in the same manner as cropland.
Construction
Multi-family housing construction continues strong in the District's
metropolitan areas. The St. Louis area reports multi-family housing
permits issued in the first quarter of 1985 were up 50 percent from
the year-ago level. There was a decline of 9 percent in single-
family housing permits issued over the same period.
Banking and Finance
Total loans outstanding at large weekly reporting banks in the
District grew at a 20 percent annual rate over the first three
months of 1985, substantially slower than the 42 percent rate
established over the same period a year earlier (all bank data are
not seasonally adjusted). At small weekly reporting banks, total
loans grew at an 8.3 percent rate in the first three months of this
year compared to the 10.6 percent rate for the same period a year
ago. Consumer lending has shown the greatest strength in March, the
most recent month for which data are available, while real estate
lending has been the weakest loan category at both large and small
banks. Deposit growth at large banks in March, although modest at a
6 percent rate, exceeded deposit growth of March 1984. Large
denomination CDs, which grew sharply in February and March of this
year, are responsible for much of the increase in total deposits.
Legislative activity on regional interstate banking continues in the District. Indiana recently adopted legislation authorizing reciprocal interstate banking with neighboring states; two drafts of a similar proposal have been passed in the Tennessee state Senate and House and await reconciliation before final approval from the Governor. Illinois and Missouri legislators also will be reconsidering regional banking laws in the coming months.
Agriculture
Missouri farmers received higher prices for vegetables, eggs, cotton
and sorghum in March. Sharp declines in prices received for hogs,
cattle and milk, however, led to an overall decline in the index of
prices received. The declines in cattle and hog prices were
unanticipated as most market observers had expected lover production
to raise prices. Instead, sharp (4 percent) increases in fed cattle
slaughter and strong meat imports led to price reductions.
Similarly, imports from Canada have increased total hog supply and
reduced hog prices.
Despite widespread participation in the acreage reduction programs, intensive planting on the best land combined with average yields will produce crops equal to or larger than last year's.