June 21, 1995
Overview
The rate of economic expansion in the Fifth District appears to have
decreased in late April and May. Retailers, service producers, and
manufacturers reported that growth decreased in their industries.
Likewise, government forecasters reported somewhat slower growth in
state revenues. Contacts at area ports and in the tourism industry
reported experiencing increased activity. Temporary employment
agencies saw increased demand for temporary workers. Dry, hot
weather continued to hamper some agricultural production, but
conditions improved somewhat.
Retail Trade
Indicators of retail activity growth decreased in May from their
April levels, according to a mail survey of District retailers. The
indexes of sales, employment, inventories, big-ticket sales, and
shopper traffic decreased. The index of wages increased, however.
Survey respondents indicated that retail prices rose 0.6 percent in
May. They foresaw slower growth in the demand for their products and
an increase of 1.1 percent in their prices during the next six
months.
Service Production
Indicators of service-sector activity growth declined slightly in
May from their April levels, according to a District mail survey.
The revenues index decreased, and the employment and wage indexes
changed little. Service producers reported that prices rose 0.3
percent in May. They expected slower growth in the demand for their
services and an increase of 0.9 percent in their prices during the
next six months.
Manufacturing
Most indicators of factory growth declined in May from their April
levels, according to a mail survey of District manufacturers. The
new orders, backlog, and workweek indexes declined, and the
shipments and employment indexes changed little. Manufacturers were
less optimistic about the growth in shipments and in the workweek
during the next six months, but they expected higher employment
growth than they had expected in April; they also anticipated
increased exports. Finished goods and raw materials prices rose more
slowly in May than in April, and at rates below the general
inflation rate. Respondents expected their prices to rise more
slowly during the next six months than they had expected in April.
Tourism
A telephone survey of hotels, motels, and resorts throughout the
District indicated that tourist activity in May was above that of
April and a year ago. Contacts reported above-normal bookings from
both vacationers and business groups. Contacts expected better-than-
normal business and some price increases during the next six months.
Port Activity
Representatives at District ports indicated that export levels in
April were higher than those in March and a year ago; import trends
were mixed. Contacts expected that, during the next six months,
exports would increase faster than imports.
Temporary Employment
A telephone survey of temporary employment agencies indicated that
the demand for temporary workers strengthened in May compared to
April and a year ago. Demand was particularly strong for skilled
computer operators and customer service employees. Contacts expected
demand during the next six months to be greater than usual. Wages
rose faster than the general price level did during the past year,
although contacts expected wages to stabilize during the next six
months.
Finance
District financial institutions reported that credit conditions were
mixed during the past six weeks. Interest rates fell slightly for
consumer and commercial loans and fell sharply for mortgage loans.
Demand increased moderately for mortgage loans and fell slightly for
consumer and commercial loans. Mortgage lenders across the District
reported an increase in mortgage refinancing inquiries and
applications in May.
Residential Real Estate
According to a telephone survey of District real estate agents and
homebuilders, residential real estate activity was unchanged in late
April and May. Buyer traffic, home sales, and housing starts changed
little over the period, except in South Carolina, where home sales
increased. District building permits fell. Contacts reported that
lower-priced homes were selling better than expensive homes. Home
prices were steady across the District, although the price of lumber
decreased.
Commercial Real Estate
District contacts reported that commercial real estate activity
changed little in late April and May. Leasing activity was unchanged
except in Charlotte, N.C., where it increased, and in Washington,
D.C., where it decreased. Vacancy rates declined slightly in the
Carolinas but were stable elsewhere. Commercial rents changed little
except in Charlotte, N.C., and Columbia, S.C., where they inched
upward. The availability of prime office space tightened somewhat,
and contacts reported that build-to-suit office and retail
construction changed little in most District cities. Contacts
reported some speculative warehouse construction in Greenville, S.C.
State Revenues
State government forecasters said that tax collections grew somewhat
more slowly in May. Real revenue growth was slightly lower in the
District of Columbia and Maryland; steady in North Carolina, South
Carolina, and Virginia; and slightly higher in West Virginia.
Agriculture
District agricultural conditions improved in recent weeks, although
weather-related problems persisted in some areas, according to
agricultural analysts. Spring planting and small-grain harvesting
progressed at a normal pace in most areas. In South Carolina,
however, and to a lesser extent in North Carolina, above-normal
temperatures and below-normal rainfall continued to hamper spring
planting and to reduce small-grain yields. Contacts also reported
below-normal hay yields in some areas of the District.