August 9, 1995
Overview
The rate of economic expansion in the Fifth District appears to have
been steady in late June and July. Retailers and manufacturers
reported that growth slowed in their industries, but service
producers reported that growth picked up. Residential and commercial
real estate contacts and financial industry sources reported little
change in their sectors. Contacts at area ports and in the tourism
industry reported increased activity, and temporary employment
agencies saw stronger demand for temporary workers. Government
contacts reported mixed trends in state revenue growth. Agricultural
conditions were good, although adverse weather damaged some crops
and poultry.
Retail Trade
Indicators of retail activity growth decreased in July from their
June levels, according to preliminary results from a mail survey of
District retailers. The indexes of sales, employment inventories,
big-ticket sales, and shopper traffic were lower. The index of wages
changed little, however. Survey respondents indicated that retail
prices rose more slowly in July. They foresaw increased growth in
the demand for their products, and they expected their prices to
rise more rapidly during the next six months.
Service Production
Indicators of service-sector activity growth increased in July from
their June levels, according to preliminary results from a mail
survey of District service producers. The indexes of revenues and
wages rose. The employment index changed little. Service producers
reported that their prices rose more slowly in July. They expected
the growth in demand for their services to change little during the
next six months, and they expected their prices to rise more slowly.
Manufacturing
Indicators of factory growth decreased in July from their June
levels, according to a mail survey of Fifth District manufacturers.
The shipments and backlog indexes decreased, and the new orders,
employment, and workweek indexes changed little. Manufacturers were
more optimistic about the growth in shipments and employment during
the next six months, but their expectations about the workweek
changed little from June. They also anticipated decreased finished
goods inventories. Finished goods and raw materials prices rose more
slowly in July than in June, 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 June.
Tourism
A telephone survey of hotels, motels, and resorts throughout the
District indicated that tourist activity in June and early July was
above that of May and a year ago. Summer bookings were up compared
to a year ago, and contacts expected better-than-normal business and
unchanged prices during the next six months.
Port Activity
Representatives at District ports indicated that export and import
levels in June were higher than those in May and a year ago.
Contacts expected that both exports and imports would increase
during the next six months.
Temporary Employment
A telephone survey of Fifth District temporary employment agencies
indicated that the demand for temporary workers in June and early
July was higher than it was a year ago and was little changed from
its May level. The demand for clerical workers was particularly
strong. Contacts expected demand during the next six months to be
greater than usual. Temporary workers' wages rose faster than the
general price level during the past year, although most contacts
expected wages to stabilize during the next six months.
Finance District financial institutions reported that credit conditions were mixed during the past seven weeks. Interest rates fell moderately for consumer and commercial loans and rose slightly for mortgage loans. Demand increased for mortgage and commercial loans but fell slightly for consumer loans.
Residential Real Estate
According to a telephone survey of District real estate agents and
homebuilders, residential real estate activity was unchanged in June
and early July. Building permits, housing starts, and home sales
were stable over the period, except in North Carolina, where
building permits and housing starts increased. Buyer traffic
increased, and most contacts attributed the increase to lower
mortgage interest rates. Contacts reported that lower- to middle-
priced homes were selling better than expensive homes. Home prices
were unchanged, except in North Carolina, where they increased.
District building material prices and subcontractor wages were
steady.
Commercial Real Estate
District contacts reported that commercial real estate activity
changed little in June and early July. Leasing activity was
unchanged, except in North Carolina, where it increased. Vacancy
rates declined slightly, and commercial rents changed little. The
availability of prime office space tightened in most District
cities, and contacts reported shortages of such space in North
Carolina and the District of Columbia. Contacts reported little new
construction.
State Revenues
State government contacts reported mixed results in tax collection
growth in June. Compared with May, real revenue growth was lower in
the District of Columbia, Maryland, and Virginia; steady in North
Carolina; and higher in South Carolina and West Virginia.
Agriculture
District agricultural conditions remained good in recent weeks,
although adverse weather hurt crops and poultry in some areas,
according to agricultural analysts. Record or new-record yields were
reported for small-grain crops. Flooding in Virginia and heavy rain
in the Carolinas caused only minor damage to small-grain and tobacco
crops in some localities. A more serious impact of the rains,
however, was their promotion of blue mold growth on the tobacco
crops, especially burley tobacco. On the other hand, recent rainfall
benefited the corn, soybean, and hay crops. Above-normal
temperatures meanwhile led to higher-than-normal poultry losses,
especially along Maryland's Eastern Shore.