December 9, 1992
Overview
Overall District business conditions improved slightly in recent
weeks, although activity in many sectors remained sluggish. Retail
sales increased somewhat, but manufacturing was unchanged. Activity
at District ports was mixed. Residential real estate continued to
improve, but commercial real estate was lackluster. Credit
conditions were unchanged at District financial institutions, while
state tax collections showed strength in most jurisdictions. In
agriculture, fall harvesting neared completion in most areas of the
District.
Consumer Spending Our regular survey indicated that retail activity strengthened somewhat in recent weeks. Shopper traffic and sales, excluding big- ticket items, apparently increased, as did wholesale and retail prices. No change was reported in employment or capital expenditures. Wages generally were unchanged, although a few respondents indicated that wages rose.
Retailers were upbeat about recent business conditions and foresaw improved prospects for the next six months. Respondents said general business activity increased both in their areas and in the United States. Looking ahead, retailers expected increases in most indicators, especially sales and shopper traffic.
Manufacturing
Manufacturers indicated that District factory activity held steady
during the past month. Respondents noted little change in most
indicators, although they reported lower levels of order backlogs
and apparently paid higher prices for raw materials. Respondents
cited government regulation as the most important problem they
faced.
Manufacturers were sanguine about their prospects for the next six months. Increases in most indicators were anticipated, but raw materials inventories and the number of workers were expected to be unchanged. Finished goods inventories were expected to decline.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--reported that imports were higher in
October than in September while exports were generally lower.
Compared to a year ago, import activity was generally higher and
export activity remained about the same. During the next six months,
exports were expected to increase at Charleston but to remain
unchanged at Baltimore and Hampton Roads.
Tourism
Hotels, motels, and resorts throughout the District indicated that
tourist activity in November was unchanged from October but was
below year-ago levels. About half of the respondents reported that
fall bookings were about even with a year ago while most other
respondents reported declines. Regarding the outlook for the next
several months, respondents were evenly divided between those who
expected tourist activity to improve and those who expected activity
to be unchanged.
Finance
District financial institutions contacted by telephone indicated
that credit conditions were little changed over the last six weeks.
Respondents stated that both commercial and consumer loan demand
were steady. Rates on commercial loans were unchanged while those on
consumer loans were lower. Banks noted that mortgage loan rates
Increased recently and that home mortgage activity slowed because of
lessened home refinancings. Some nonbank institutions continued to
report that stringent examination standards hampered their ability
to lend to creditworthy customers.
Residential Real Estate
A telephone survey of realtors suggested that activity in the
residential market continued to improve in most of the District,
although increased buyer apprehension apparently slowed activity in
some areas. Home prices remained steady. New home sales were
stronger than existing home sales in the Carolinas and in the
Washington, D.C. area, while the reverse occurred elsewhere in the
District.
Nonresidential Real Estate
Activity in the commercial real estate market generally remained
sluggish, but realtors indicated that leasing activity improved.
Vacancy rates in the office and retail markets fell slightly because
of the absorption of existing space. In the Columbia, South Carolina
area, several new shopping centers were under construction, but
little new commercial development was reported elsewhere.
State Government Revenues
Tax revenues continued to grow in District states according to
forecasters contacted by telephone. In several states, tax analysts
suggested that Income tax withholding collections were running at
higher levels than state employment figures would suggest, which
indicated that state employment figures may have understated actual
job growth. Several tax forecasters reported increases in tax
collections from retail and real estate sales.
Agriculture and Forestry
Analysts reported that crop conditions improved in recent weeks.
Favorable weather allowed completion of fall harvesting across most
of the District, although rain continued to hamper activity in South
Carolina. Preliminary estimates indicated record or near-record corn
yields.
Lumber industry contacts reported strong demand and prices for hardwood lumber. Furniture manufacturers, both in the United States and abroad, apparently were the primary source of the increased demand. Industry contacts indicated that lumber prices rose in response to stronger demand and tougher government regulations on lumber suppliers.