January 19, 1994
Overview
Most sectors improved further since the last Beige Book. Activity in
the manufacturing, retail and wholesale trade, tourism, and real
estate industries grew. Loan demand was mixed, and exports declined
at District ports. Worse-than-normal weather impeded agricultural
activity.
Manufacturing
Our regular mail survey of manufacturers indicated that District
factory activity continued to strengthen in December. following
improvements reported in our two previous surveys. Manufacturers saw
increases in shipments, new orders, and exports. Order backlogs and
employment changed little, while raw materials inventories declined.
Raw materials prices rose faster than finished goods prices, but
both rose by less than recent general inflation rates.
Most manufacturers expected shipments and exports to increase and raw materials inventories to remain unchanged over the next six months. They expected employee hours to increase somewhat, employment to remain the same, and the recent modest price increases to continue.
Retailers and Wholesalers
Our survey of mailers and wholesalers indicated very strong revenue
growth in December. All other indicators grew, including employment
and seasonally adjusted sales of big-ticket items. Respondents
reported that their prices rose by less than the general inflation
rate; they did not expect their price increases to exceed that
inflation rate during the next six months. Demand for retail and
wholesale services was expected to rise in the same period.
Ports
Representatives at District ports-Baltimore, Charleston, and Hampton
Roads (Norfolk)--indicated that on average, exports and imports were
unchanged from November to December. Compared with a year ago,
imports and exports were generally unchanged. All three ports
expected exports to increase faster than imports during the next six
months.
Tourism
Hotels, motels, and resorts throughout the District indicated that
tourism was higher in December than in November and a year ago.
Respondents attributed the improvement to increased popularity of
vacation packages and growing consumer confidence. Almost all
respondents noted that their bookings this winter were higher than
last winter's, and all expected tourist activity to continue to
improve during the next six months.
Finance
District financial institutions indicated that credit conditions
were mixed during the last six weeks. Respondents stated that
commercial loan demand was moderately higher, while consumer loan
demand was unchanged. Commercial and consumer loan rates were
steady. Residential mortgage demand fell during the last six weeks;
mortgage originations were off slightly, and refinancing activity
was sharply lower. Residential mortgage lending rates were up
slightly.
Residential Real Estate
Real estate agents and homebuilders reported that seasonally
adjusted residential real estate activity strengthened throughout
most of the District in November. Most respondents indicated
moderate to strong growth in home sales and housing starts. Home
prices apparently changed little during the period, but most
homebuilders reported that lumber costs continued to increase
significantly. Several homebuilders reported increases in the cost
of wallboard and other building materials.
Commercial Real Estate
Commercial real estate analysts reported that leasing activity
improved in most of the District during December because of stronger
consumer confidence and job growth. Vacancy rates declined in all
areas, and some landlords raised rents, either directly or through
reduced concessions. Some businesses began construction of
facilities they had previously delayed; however, very little
speculative activity was reported. While activity was growing in
Maryland and the D.C. suburbs, some analysts were cautious about the
sustainability of that growth.
Agriculture
Below-normal temperatures and above-normal precipitation in recent
weeks hampered District agricultural activity somewhat. Weather
conditions delayed late fall and early winter sowing of small grains
across much of the District. Ranging livestock were subjected to
stress from the weather, and cattle producers in the western part of
the District expressed concern over survival rates during the winter
calving season. Above-normal snowfall was expected to reduce hay
stocks, already low because of last summer's severe drought.