August 4, 1993
Overview
The Fifth District economy grew, on balance, but this growth
continued to be moderate and uneven across sectors. Hot, dry weather
boosted tourism and electric power demand but badly damaged
agriculture. Retail spending was somewhat higher, while
manufacturing was flat. Moderate growth was seen in bank lending,
state revenues, and residential real estate activity. Commercial
real estate remained mostly sluggish. Port activity was lower, and
the shellfish industry continued to face serious supply constraints.
Consumer Spending
Our mail survey of retailers indicated rising sales, wages, and
prices but declining shopper traffic and employment in late
June/early July. Retailers expected shopper traffic and sales to
increase in the next six months but anticipated little change in
employment.
Manufacturing
District manufacturers surveyed saw little change in most
indicators, except for higher raw materials prices. Weak product
demand was cited as the most important industry problem. Respondents
expected higher shipments, new orders, and raw materials prices in
the next six months but lower employment.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated lower imports and exports in
June, compared with May and with a year ago. All three ports
expected exports to increase faster than imports during the next six
months.
Tourism
Since early June, activity at District hotels, motels, and resorts
was higher than in May or a year ago; good weather and package deals
were cited as causes. Most respondents were booked to capacity over
the Fourth of July weekend and expected activity to improve in the
next six months.
Financing
District financial institutions contacted by telephone indicated
that credit conditions improved slightly during the last six weeks.
Commercial, consumer, and residential mortgage loan demands were
reported marginally higher. Refinancing activity rose while mortgage
originations were steady. Commercial, consumer, and residential
mortgage loan rates all fell slightly.
State Revenues
State tax analysts reported that revenue growth seemed to imply real
economic growth rates of 2.5 to 3.5 percent in Virginia and North
Carolina, 2 percent in West Virginia and Maryland, and 1 percent in
South Carolina. Collections implied continued weakness in the
District of Columbia economy, with sales and property taxes
remaining sluggish.
Electric Power
Hot weather caused especially high District electric power demand,
according to power company analysts. Residential demand was up
significantly, while commercial and industrial demands were steady.
With only one exception, electric utilities had sufficient capacity
to meet demand, though most were purchasing power from cheaper
sources. The increased demand was expected to be temporary.
Residential Real Estate
Real estate analysts and homebuilders surveyed by telephone reported
that the residential market strengthened modestly in most areas
during the past six weeks, though activity decreased slightly in
Virginia and the District of Columbia. In Charleston, South
Carolina, the lower-end market weakened substantially due to the
scheduled closing of the naval base, but home sales remained strong
in the area's resort/retirement market. Home prices and starts
remained mostly steady during the past six weeks.
Commercial Real Estate
Commercial real estate activity remained sluggish in most areas of
the District during the past six weeks but continued to improve in
the Charlotte and Raleigh areas. Many analysts throughout the Fifth
District reported a rapidly shrinking supply of large blocks of
office space. Much anchored shopping center construction was
underway, though some landlords were having difficulty leasing
existing space. Leasing activity was relatively flat in the
industrial market in most areas.
Fisheries
Fishery analysts contacted by telephone indicated that District
activity continued to decline. Seafood demand remained strong, but
supply shortages were forcing District wholesalers to buy elsewhere.
The crab harvest remained steady in Maryland in 1993 but was
expected to drop about 30 percent in Virginia. The 1993 shrimp
harvest in North Carolina was expected to be two-thirds of last
year's total. Supply constraints had also afflicted scallop markets;
scallop prices nearly doubled in the past year. Clam harvests
remained steady, and the striped bass industry continued to recover.
Agriculture
Agricultural analysts and bankers reported drought and near-drought
conditions and above-normal temperatures in most of the District.
Corn, sorghum, tobacco, and soybean crops were mostly rated in poor
condition, and yields were expected to be low. Bankers in some areas
warned that their farm customers might face financial difficulties
this fall because of bad harvests.