August 9, 1995
Overview
Contacts in the Southeast generally reported improving economic
activity since the last Beigebook period. Merchants said recent
sales have bettered year-ago levels and expressed optimism about the
fall season. Manufacturers generally expect to continue to see
rising orders and output in the coming months, but gains are seen as
modest and no significant hiring is expected. Summer tourism and
theme park attendance appears to be exceeding expectations in most
locales. Single-family housing sales are improving, and prices in
some areas are increasing; markets also reportedly continue to
strengthen for the commercial and multifamily segment. Bankers note
generally healthy commercial and consumer loan demand. Most contacts
believe that wage and price pressures are under control and expected
them to remain so for the foreseeable future.
Consumer Spending
Retailers throughout the District reported that sales were above
last year's levels during June and early July. Most merchants said
that inventories were in good shape, with several noting that their
inventories were actually a little under plan. Home furnishing sales
have improved as have sales of women's and children's apparel.
According to several retailers, men's apparel sales have slowed
recently. Overall, retailers remain optimistic and expect good back-
to-school sales. Auto sales, on the other hand, were generally
characterized as sluggish.
Manufacturing
Factory activity is improving or steady, according to most industry
representatives, but recent gains in shipments and new orders have
been modest. Inventories for most producers are said to remain below
levels posted earlier in the year. Most manufacturers contacted
anticipate further near-term output increases; however, new hiring
remains restrained. Some apparel manufacturing contacts said demand
had recently been stronger than expected; however, some producers
continue to announce layoffs. Increasing output was reported by
chemical plants, but they expressed a concern about the availability
of raw materials. Industrial computer systems and electronics
manufacturers note increasing order backlogs. Shipments are
increasing for medical equipment fabricators, and producers of
heavy-duty trucks say that strong demand has them operating at 100
percent capacity. On the other hand, central Florida continues to be
adversely impacted by military contractors' job cuts. Slow auto
sales have also forced a regional tire producer to cut production.
Although current sales remain good, some paper industry managers are
becoming uneasy because of possibly slowing demand.
Tourism and Business Travel
Tourism is reported to be improving notably in Florida. There are
more European visitors, and occupancy rates are rising. Savannah's
tourist infrastructure is benefitting from improvements spurred by
the Olympics. Casino gambling activity in Mississippi is reportedly
stable to increasing, and hotel occupancies in New Orleans are above
historical averages. On the basis of the record so far this summer,
attendance at the region's theme parks is expected to outpace last
year's figures.
Construction
According to real eats contacts, single-family home sales continued
to improve throughout most of the District during June and early
July. Realtors are again attributing the increase in housing demand
to low mortgage rates. However, home inventories are extremely low
in several markets, driving home prices up modestly. Single-family
home construction activity is generally mixed. Both realtors and
builders are cautiously optimistic that the market will continue to
improve.
Commercial and multifamily contacts continue to report strengthening activity. Multifamily construction demand continues to be strong in many areas of the market but has slowed slightly in some. The majority of commercial construction remains build-to-suit; however, several major speculative office buildings have broken ground recently or been announced within the District. Realtors are optimistic and anticipate that both commercial and multifamily markets will continue to strengthen moderately during the remainder of 1995.
Financial Services
Bankers around the region report that overall loan demand remains
moderately strong but portray competition on both price and credit
terms as fierce. Commercial demand remains relatively strong. Most
contacts reported moderate to strong activity in commercial and
industrial lending; however, demand for commercial real estate loans
has slowed. Consumer loan demand was generally characterized as
mixed. Several bankers noted that home equity credit lines were
doing quite well. They said that lower rates have spurred mortgage
lending in the last few months. Refinancing activity has not been
quite as strong as some bankers expected. With mortgage rates edging
up again, many contacts expected home mortgage lending to slow
somewhat in the coming months. Auto lending was reported to be flat.
Wages and Prices
Although a few areas still face a shortage of skilled workers, wages
generally remain stable in the region. Most contacts continue to
report little change in prices received for finished goods or prices
paid for materials. Few expect price changes in the near term. Those
reporting price increases were confined mainly to the chemical,
paper, and building products industries.