May 6, 1992
According to contacts across the country, economic activity has increased further since the last survey although conditions remain uneven across regions and sectors. The Chicago, Atlanta, Richmond, and Cleveland districts report noticeable improvement, while the Dallas, St. Louis, Kansas City, and Minneapolis districts report continued moderate rates of economic expansion. The San Francisco, New York, Boston and Philadelphia districts report continued sluggish economic activity. These districts, however, report either slightly improved conditions or increased optimism about the near- term outlook.
Manufacturing activity has picked up in most regions of the country. Continued growth in residential construction has been widespread. Many districts report gains in retail sales. Several regions, however, report continued declines in commercial construction, energy extraction and defense manufacturing. While the demand for non-mortgage loans generally is reported as weak, there has been some pickup in demand for these loans in several regions. Producer and consumer prices are reported as generally stable.
Retail
Retail sales have increased in most regions and many districts
report improved optimism about future sales. Sales of most product
lines have improved. The Chicago and Richmond districts note
particular strength in consumer durables such as home furnishings
and appliances. Several other districts note gains in nondurables.
Retail respondents in the Chicago area note that much of the lost
sales due to recent flooding downtown was made up by increased sales
in the surrounding areas. Auto sales have increased in many areas.
The most notable exception to improved retail sales is found in the
Philadelphia district which reported a recent decline in sales. The
San Francisco, New York and Boston districts report mixed retail
performance.
Manufacturing
The most significant change since the last Beige Book survey appears
to have occurred in the manufacturing sector. While respondents in
the last survey generally described the manufacturing sector as
weak, respondents have been significantly more upbeat recently. The
Chicago and Cleveland districts report some improvement in motor
vehicle and steel production and pronounced gains in orders for
capital goods such as machinery and electrical equipment.
Respondents in the Richmond district note strong increases in
shipments and orders across many industries.
Respondents in the Atlanta and Dallas districts report strong gains in manufacturing industries tied to residential construction and moderate gains in industries such as apparel, paper and electronics. However, the manufacturing gains in the Dallas district have been offset somewhat by continued declines in energy-related industries such as oil field equipment. The San Francisco and Boston districts note continued weakness in defense-related manufacturing.
Construction
Residential construction has continued to increase in most districts
although the rate of growth appears to have slowed. The San
Francisco district reports widespread gains in residential
construction; the New York district reports increased optimism from
home builders; and the Philadelphia district reports an overall
slight increase in home construction. Several districts report
increased pressure on home prices partly due to sharp increases in
the cost of lumber. Respondents report that lumber prices have
increased because of a sharp rise in lumber demand, harvesting
restrictions and a recent trade levy on Canadian lumber. Commercial
construction remains weak in most markets.
Services
Tourism and convention activity is increasing in the Atlanta,
Dallas, Minneapolis and Richmond districts. Respondents in the San
Francisco district report continued weakness in newspaper
advertising revenue, due partly to low levels of real estate
advertising. Residential real estate brokerage activity is reported
to have increased in most markets across the country. The Dallas
district reports that the demand for legal and litigation services
remains strong and that accounting and consulting firms are seeing
an increase in demand from companies seeking to increase
productivity.
Agriculture and Energy Extraction
Several districts report favorable agricultural conditions although
extreme weather has slowed planting in some areas of the county.
Kansas City and St. Louis report that the winter wheat crop is in
mostly good condition. Agricultural prices have generally declined.
Although cattle prices remain at very high levels, Kansas City
reports that cattle feeders remain wary that sluggish consumer
demand for beef could trigger another drop in prices later this
summer. Several districts report ample liquidity for agricultural
lending.
The energy sector continues to decline. Oil and natural gas prices remain at low levels, and the drilling rig count continues to fall. Oil and gas industry respondents in the Atlanta district report that business activity continues to decline and that further layoffs are likely over the next few months. St. Louis reports that year-to-date coal production has declined about 6 percent from a year earlier.
Bank Lending
Bankers in several regions report that loan demand has begun to
increase, although demand remains uneven. Most banks across the
country report an increase in mortgage originations and a slowdown
in mortgage refinancings. Most regions continue to report soft
demand for non-mortgage loans. The Richmond, Dallas and St. Louis
districts report increases in non-mortgage loans. Boston reports
that some small businesses continue to have difficulty obtaining
bank credit, but contacts have found satisfactory alternatives,
particularly trade credit from suppliers.
Prices
Producer and consumer prices are generally reported as stable.
Boston reports that manufacturing prices are flat to down and that
retailers are feeling pressure to lower prices. The San Francisco
district reports little upward pressure on prices, with the
exception of lumber and health care. Atlanta reports that while most
contacts report relatively stable input prices, a growing minority
of factory contacts are reporting increasing material prices.
Respondents in the Kansas City district also note stable material
prices, but prices are expected to rise slightly over the next few
months.