May 6, 1992
Overview
Economic activity in the District apparently picked up steam in the
last several weeks. Retail activity, including sales of big ticket
items, rose broadly. Manufacturing activity also posted strong
gains, as evidenced particularly by increased production and new
orders. In the financial sector, loan demand rose and institutions
caught up with home refinancing applications made earlier in the
year. Home sales and prices strengthened. Commercial leasing
activity rose, although the amount of square footage absorbed was
apparently not large. In agriculture, good weather benefited spring
planting, and agricultural bankers had ample funds to lend.
Consumer Spending
Our regular mail survey indicated that District retail activity
continued to improve in late March and early April. Retailers
reported increases in most indicators of activity, including sales
of big ticket items. Retailer inventories and capital expenditures
were unchanged from the previous month.
Survey respondents were optimistic about their prospects for business in the next six months. They anticipated that retail activity, particularly sales and shopper traffic, would increase.
Manufacturing
Manufacturers indicated that District factory activity and business
conditions improved considerably in recent weeks. Respondents
reported strong increases in shipments and new orders and said that
most other indicators of activity rose as well. Producer inventories
of raw materials were little changed, and finished goods inventories
apparently declined somewhat. Manufacturers noted steady to stronger
overall business conditions this month compared to last month,
nationally as well as in their local areas.
Respondents remained optimistic about their business prospects in the next six months. They expected increases in every indicator of activity except inventories, which they anticipated would be flat, and they anticipated further strengthening in general business conditions.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--reported that the volumes of exports were
lower and imports were generally higher in March than in February.
Compared with a year ago, both export and import volumes were lower.
Over the next six months export activity is expected to increase
faster than import activity at the Port of Charleston, while exports
and imports are expected to rise at about the same rates at
Baltimore and Hampton Roads.
Tourism
Hotels, motels and resorts throughout the District reported
increases in the numbers and spending activity of tourists and
convention attendees in recent weeks. Several respondents attributed
the recent increases to the late Easter weekend and good weather,
but others were optimistic that business would be strong in the
months ahead. They noted that their convention and tourist bookings
for the rest of the spring and summer were above last year's
bookings.
Finance
District financial institutions contacted by telephone indicated
that credit conditions generally improved over the last eight weeks.
Respondents noted that rates on commercial loans moved lower and
that both commercial and consumer loan demand strengthened.
Bank respondents reported that the demand for home mortgages slowed as mortgage rates moved up in late March. The slowdown, they said, allowed them to catch up with the surge in home mortgage refinancing applications that occurred earlier in the year. Some bankers pointed to a second, smaller surge in refinancing activity in recent weeks as rates drifted lower.
Real Estate
Activity in both residential and commercial real estate apparently
picked up in recent weeks. Real estate analysts and home builders
contacted by telephone reported a moderate increase in residential
sales and in housing starts in the first three weeks of April. The
prices of new and existing homes rose slightly in many areas in the
District, with some upward pressure on new home prices said to be
due to rising lumber costs. Commercial real estate leasing activity
improved in most urban areas in the District. Some respondents
reported that potential lessees in their areas were shopping mainly
for relatively small blocks of retail or office space.
Agriculture
Agricultural analysts and bankers in the District reported favorable
conditions for spring planting and for financing farm activity.
Analysts said that abnormally mild weather during the first half of
April had allowed District farmers to begin spring planting ahead of
schedule, but recent heavy rains in Virginia and North Carolina may
have slowed planting progress somewhat in those states. A late frost
in the Carolinas apparently damaged the peach crop, possibly
reducing prospective yields by as much as 20 percent.
Preliminary responses to a quarterly survey of District agricultural bankers indicated that farm credit conditions were steady in late March. The survey showed stable loan demand, greater-than-usual funds availability, and falling rates on farm loans.