June 17, 1992
Overview
District activity from late April through May generally continued to
improve at a modest pace. Growth was reported in retailing,
manufacturing, housing and port activity. Contacts in the tourist
industry gave mixed reports, but most were optimistic. Weather was
blamed for slower agricultural activity in recent weeks.
Consumer Spending
Our regular mail survey indicated that District retail activity
continued to improve in May. Shopper traffic and sales increased,
although sales of big ticket items relative to total sales
apparently decreased. Respondents reported increases in wholesale
prices, retail prices and inventories over the survey period.
Retailers were optimistic about their prospects for the next six months. They expected sales, wages and prices to rise. They anticipated no change in retail employment.
Tourism
Hotels, motels and resorts throughout the District indicated that
tourist activity in May was mixed compared with April and with a
year ago. About half of the respondents reported that bookings were
slightly above last year's while a third reported declines. Several
respondents attributed the increases to a good Memorial Day weekend,
while respondents with decreases attributed the declines to bad
weather and to the economy. Over half expected tourist activity to
pick up throughout the summer.
Manufacturing
Manufacturers surveyed by mall indicated that District factory
activity continued to improve in recent weeks. Respondents reported
increases in most indicators, particularly shipments and employment.
Inventories and order backlogs were little changed. Manufacturers
noted that excess capacity and the burdens of government regulation
were important current problems. Most respondents expected profits
in the first half of 1992 to be moderately higher than profits in
the first half of 1991.
Manufacturers remained optimistic about general business conditions and about their own prospects over the next six months. They foresaw increases in all indicators except for finished goods inventories, which they anticipated would be flat.
Finance
District financial institutions contacted by telephone indicated
that credit conditions improved modestly over the last six weeks.
Commercial loan demand apparently strengthened slightly, while
consumer loan demand was steady. Banks noted that they had kept
their commercial loan rates steady in recent weeks but had reduced
their mortgage rates slightly. Respondents reported that the demand
for new residential mortgages had picked up while refinancing
activity had continued to tail off.
Ports
Representatives at District ports--Baltimore, Charleston, Hampton
Roads (Norfolk)--indicated that both imports and exports were
generally higher in May than in April. Compared with a year ago,
import activity was higher while export activity was lower. Exports
were expected to continue increasing at the Port of Charleston and
at Hampton Roads but to remain the same at Baltimore during the next
six months.
Housing
A telephone survey of real estate and homebuilding contacts
suggested stable to improving housing activity in much of the
District. Several respondents said activity in their areas was at
its highest level in two to three years. Overall increases were
reported in traffic, sales, starts and prices. There were exceptions
to the general tone of optimism, however, especially in the
Washington, D.C. area. Speculative homebuilding remained very slow.
Agriculture
According to agricultural analysts, bad weather slowed planting and
crop development over much of the District in recent weeks. Rain in
late May slowed planting, which is now behind last year's pace, and
below-normal temperatures held back the development of small grains.
The District's peach crop was in poor to fair condition because of
late frosts in mountain areas.
West Virginia was an exception to the rest of the District. Sparse rainfall in May allowed planting to progress on schedule but left many parts of the state short of soil moisture.