November 2, 1994
Overview
District economic activity grew moderately in September and early
October. Areas experiencing growth included the service-producing
sector, commercial real estate, ports, state revenues, and tourism.
Manufacturing growth slackened, however, and housing activity
declined. Consumer spending was unchanged, while conditions were
mixed in finance and in agriculture.
Consumer Spending
Respondents to a mail survey and other contacts indicated that
District retail activity was flat in September. Overall sales and
auto sales were unchanged from August, and employment and wages
changed little. Inventories increased, but shopper traffic and big-
ticket sales declined. Survey respondents indicated that retail
prices increased 0.5 percent in September. They foresaw increased
demand for their products and an increase of 1.6 percent in their
prices during the next six months.
Service-Producing Firms
Respondents to a mail survey and other contacts indicated that
activity in the service-producing sector increased in September.
Revenues and wages rose, but employment changed little. Revenues
decreased, however, in real estate and health services. Service
producers indicated that prices rose 0.6 percent in September. They
expected increased demand for their services and an increase of 1.1
percent in their prices during the next six months.
Manufacturing
Indicators of factory activity growth declined in September from
their August levels, according to a mail survey of District
manufacturers. Finished goods inventories were down compared to six
months ago, and respondents expected a further decline during the
next six months. Manufacturers expected shipments and employment to
increase during the next six months, but they anticipated little
change in the workweek. Finished goods prices increased faster in
September than in August, while raw materials prices rose more
slowly; both increases were below the general inflation rate.
Tourism
A telephone survey of hotels, motels, and resorts throughout the
District indicated that tourist activity in the first half of
October was above that of September and a year ago, especially in
mountain areas where fall foliage was near its peak. Fall bookings
were up compared to a year ago, and contacts expected better-than-
normal business over the next six months.
Ports
Representatives at the District ports of Baltimore, Charleston, and
Hampton Roads (Norfolk) indicated that export levels in September
were higher than those of August and a year ago. Imports increased
in Baltimore and Charleston but decreased in Hampton Roads. During
the next six months, port representatives expected both exports and
imports to increase.
Finance
District financial institutions reported that loan demand was mixed
during September and early October. Demand for commercial loans
increased, but consumer loan demand declined moderately. Mortgage
lending activity continued to decline. Interest rates were higher on
commercial, consumer, and mortgage loans.
Residential Real Estate
According to District realtors and builders, residential real estate
activity declined during September and early October. Building
permits, home sales, and buyer traffic all decreased. Homebuilders
indicated that they started fewer houses following the recent rise
in mortgage rates. Home prices remained stable, although prices of
nonlumber building materials rose slightly.
Commercial Real Estate
Real estate contacts reported that commercial real estate activity
grew in October. Commercial vacancy rates declined throughout the
District. Commercial rents were steady, but contacts anticipated
slight increases in the near future. Leasing agents reported that
the availability of large blocks of office space continued to
tighten, particularly around Washington, D.C. Contacts reported
little change in new construction, except in North Carolina, where
new build-to-suit. construction increased.
State Revenues
State government forecasters said September tax collections grew
moderately. Real revenue growth remained slow in South Carolina,
flat to negative in the District of Columbia, and moderate to
healthy elsewhere.
Agriculture
Conditions in agriculture were mixed in early October, according to
District farm analysts. Crop harvesting was progressing at a normal
pace. Near-record crop yields were expected to lead to large
production levels. Analysts, however, expected weaker crop prices to
dampen increases in crop cash receipts. The planting of winter small
grains was underway, and farm analysts believed that dry conditions
may have slightly damaged the crop in some areas of Virginia and
Maryland. In the livestock sector, hog production was steady in all
District states, except in North Carolina, which experienced a
dramatic increase; hog prices were sharply lower. Poultry production
increased in Maryland, Virginia, and North Carolina, and prices were
steady.