December 8, 1993
Overview
Most sectors continued to improve in recent weeks. Retail sales were
up and manufacturing activity strengthened further. Tourism, loan
demand, and real estate activity improved. At District ports,
imports were lower. In agriculture, harvesting was ahead of
schedule, but dry conditions threatened pastures.
Consumer Spending
Our regular mail survey indicated that retail activity improved in
October. Survey respondents reported that shopper traffic and sales
increased. Inventories and sales of big-ticket items, however, were
unchanged. Wages, wholesale prices, and retail prices rose, while
employment declined.
Retailers were optimistic about their prospects for the next six months. They expected most indicators to increase but inventories and big-ticket sales to be unchanged.
Manufacturing
Our regular mail survey of manufacturers indicated that District
factory activity strengthened again in October. Manufacturers
reported increases in shipments, new orders, and order backlogs.
They indicated that the number of employees was unchanged but that
the average workweek increased. Most respondents reported that
finished goods prices increased no faster than the general rate of
inflation, but that the prices they paid for inputs rose somewhat
faster.
Most manufacturers expected shipments and exports to continue to increase over the next six months. Generally, respondents looked for manufacturing prices to increase no faster than inflation.
Tourism
Hotels, motels, and resorts throughout the District indicated that
tourist activity for October and the first three weeks of November
increased somewhat when compared to September and a year ago.
Respondents attributed the increase to unseasonably good weather and
stronger-than-normal convention bookings. Looking ahead, respondents
noted that bookings for the winter season were running ahead of last
year's pace. Most expected tourist activity to continue to improve
during the next six months.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated that the volume of exports was
unchanged while imports were generally lower in September than in
August. However, compared to a year ago, imports were unchanged
while exports were lower. Over the next six months, District ports
expected export and import activity to be evenly matched.
Finance
District financial institutions contacted by telephone indicated
that credit conditions strengthened slightly during the last six
weeks. Respondents stated that commercial loan demand was moderately
higher and that consumer loan demand was unchanged. Commercial loan
rates were up slightly while consumer rates were steady.
Residential mortgage demand was unchanged during the last six weeks. Both refinancing activity and mortgage originations were steady. Residential mortgage lending rates moved moderately higher.
Residential Real Estate
Realtors and homebuilders contacted by telephone reported that
residential real estate activity remained strong throughout most of
the District during the past four weeks. Most respondents indicated
moderate to strong growth in home sales and housing starts. Home
prices apparently rose somewhat during the period. Strong demand and
higher lumber costs apparently were behind the increase. In
addition, several homebuilders in the Carolinas reported that wages
were rising for framing carpenters.
Commercial Real Estate
Commercial real estate leasing activity was slightly stronger during
late October/early November: it continued to improve in the
Carolinas and Virginia, remained steady in the District of Columbia
and Maryland, and was mixed in West Virginia. Analysts reported a
decline in office building vacancy rates in all states except
Maryland and a continued decrease in the supply of large blocks of
office space. Little new construction was reported. Respondents
noted that rental rates had apparently bottomed out in some areas
and had increased marginally in others.
State Tax Revenues
State tax revenues in most jurisdictions grew 2 to 3-1/2 percent in
recent weeks, after adjusting for inflation. Maryland revenue growth
was higher than in previous months. In West Virginia and South
Carolina, revenue growth was slightly below that of last month.
District of Columbia revenues continued to decline in real terms.
Agriculture
Warm, dry weather allowed fall harvesting and planting activity to
progress ahead of schedule. The harvesting of most crops was
complete or near completion. Fall planting of small grains also was
ahead of normal. The dry weather hurt pastures and, combined with a
poor hay crop, increased farmers' uncertainty about the adequacy of
winter livestock feed stocks.