August 5, 1992
Overview
District business conditions and attitudes in June and early July
were little changed from the weeks before. Economic activity
continued to grow modestly, and while survey participants remained
concerned about the pace and sustainability of that growth, on
balance they were optimistic about business prospects in coming
months. Activity increased in manufacturing, ports and finance.
Buyer traffic rose in residential and nonresidential real estate but
sales remained flat in most areas. Consumer spending and tourism
were flat. In agriculture, recent rains partially reversed earlier
damage to crops.
Consumer Spending
Our regular mail survey indicated little change in retail activity
in recent weeks. Retail sales and shopper traffic were unchanged,
and employment was stable. Wholesale prices, retail prices and wages
apparently rose. Inventories increased, as did capital expenditures.
Retailers were optimistic about their prospects for the next six months. They expected sales, shopper traffic and employment to increase. They also anticipated higher employee wages, wholesale prices and retail prices.
Manufacturing
Our regular mail survey of manufacturers showed that District
factory activity and general economic conditions improved moderately
in recent weeks. Respondents reported increases in shipments, new
orders and employee hours. Prices rose, and most other indicators
were stable. Manufacturers noted that, besides poor sales,
government regulations and excess capacity were their most important
current problems.
Manufacturers' forecasts for the coming months remained optimistic. They anticipated increases in all measures of economic activity except inventories and employment, which they thought would be stable.
Tourism
Hotels, motels and resorts throughout district reported that tourist
activity in July was below that in June but about the same as a year
ago. About half of the respondents reported that bookings were
slightly below last year's levels while one-third reported
increases. Several respondents attributed the increases to an
unusually good Fourth of July weekend, while those who experienced
declines blamed general economic conditions. About half expected
tourist activity to pick up through the remainder of the summer.
Finance
District financial institutions contacted by telephone indicated
that credit conditions improved somewhat over the last six weeks.
Commercial loan demand, while still weak, had strengthened. Consumer
loan demand was steady. Loan rates had fallen somewhat for
commercial, consumer and mortgage loans. Mortgage demand rose, but
the bulk of the activity was in refinancings rather than in
originations.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--reported that both imports and exports
increased in June from May. Compared with a year ago, import
activity was mixed, while export activity was generally higher.
Export activity was expected to continue increasing at Charleston
and at Hampton Roads but to decline at Baltimore during the next six
months.
Residential Real Estate
A telephone survey of real estate agents and homebuilders indicated
that activity had been mixed in the residential market since mid-
June. Many respondents noted that buyer inquiries had increased, but
that sales had remained generally flat. Respondents in several
jurisdictions reported growth in the sales of lower-priced homes.
Home sales appeared to have risen more in South Carolina than in
other jurisdictions in the District.
Several respondents believed that a homebuyer's market existed and that many sellers had lowered prices. Most respondents said that lower interest rates had not improved their sales. As in previous surveys, some real estate agents said that the concern of prospective clients about their job security was causing them to delay home purchases.
Nonresidential Real Estate
Real estate agents surveyed by telephone said that the
nonresidential market had been flat or had grown slowly over the
past six weeks. On balance, the reports suggested a slight pickup in
traffic across the District. District sales and leases had been
flat, although weak growth was reported by some respondents,
particularly in the Carolinas. Rents and prices on commercial real
estate had been stable, and few nonresidential construction starts
were reported. Most respondents thought that lower interest rates
were having little effect on their markets.
Agriculture
Recent scattered rain throughout the District has brought some
relief to heat- and drought-stressed crops, according to
agricultural analysts. They indicated that unfavorable weather in
early to mid-July probably had reduced corn yields somewhat and had
slowed the development of soybeans. Hay and pasture conditions were
said to be fair to poor, but were expected to rebound quickly with
the rain. Vegetable crops and tobacco were reported to be in
generally good condition, with harvesting underway. The peach crop
in the Carolinas, however, was poor.