January 17, 1996
Overview: Fifth District economic indicators suggested slower growth since the last Beige Book. Growth slowed in manufacturing, retail, service production, and state revenues. Tourism industry sources reported increased activity, while employment agencies reported lower demand for temporary workers. Port, finance, real estate, and agriculture contacts saw little change in their industries' activity.
Retail Trade: A telephone survey of District retail associations and retail analysts indicated that, compared with last year, sales levels were somewhat weaker during December. Department and specialty stores reported lower sales. Auto and big-ticket sales. however, were higher than last year's. Contacts said that Christmas shopping started later than in previous years and that they ended up cutting prices by more and earlier than they had planned.
Service Production: Service-sector growth slowed in mid-December from November, according to results from a District mail survey. Revenue growth decreased, and employment and wage growth decreased slightly. Service producers reported that prices rose more in mid- December than in November. They expected their prices to rise somewhat more slowly during the next six months than they had expected in November.
Manufacturing: Indicators of manufacturing growth decreased in December from November, according to results from a mail survey of Fifth District manufacturers. Survey respondents reported that growth in shipments, employment, and the workweek slowed; new orders and backlog growth changed little. Manufacturers indicated that finished goods and raw materials prices rose faster in December than in November. Respondents expected their prices to rise more during the next six months than they had expected in November. Many respondents reported a scarcity of available labor, particularly skilled labor; this observation was echoed by a service-sector contact who said that he had so much trouble hiring computer- literate workers that he had to replace computerized dry cleaning equipment with older, manual equipment.
Tourism: A telephone survey of hotels, motels, and resorts throughout the District indicated that tourist activity in December was above that in November and a year ago. At ski resorts, above- normal snowfall and colder-than-normal temperatures boosted winter bookings above year-ago levels. Contacts expected better-than-normal business and unchanged prices during the next six months.
Port Activity: Representatives at District ports indicated that both export and import levels in November were unchanged from October and a year ago. They expected exports and imports to increase during the next six months.
Temporary Employment: A telephone survey of Fifth District temporary employment agencies indicated that the demand for temporary workers was lower in December than in November, although demand was unchanged from a year ago. Contacts said that temporary workers' wages rose faster than the general price level during the past year. They expected greater-than-usual demand for temporary workers to continue to push up wages during the next six months.
Finance: District financial institutions reported that lending activity changed little during the past six weeks. Interest rates were lower on consumer, commercial, and mortgage loans. Demand rose for mortgage loans, was unchanged for consumer loans, and fell for commercial loans.
Residential Real Estate: According to a telephone survey of District real estate agents and homebuilders, residential real estate activity declined in late November and December. Housing starts, permits, and prices were down. Many contacts in the Washington, D.C., area attributed declining activity to uncertainty resulting from the government budget negotiations. Prices of building materials and wages increased slightly. Several contacts believed that the recent drop in interest rates had brightened their business prospects for 1996.
Commercial Real Estate: District contacts reported that commercial real estate activity picked up in December. Leasing activity and commercial rents increased, and vacancy rates decreased. The availability of prime office space continued to tighten in most of the District, and many contacts reported shortages. In most of the District, there was little new construction; respondents in Virginia, however, reported increased activity.
State Revenues: In a mail survey, state government analysts indicated that District economic growth appeared slower in December. Compared with November, revenues for December suggested slower growth in the District of Columbia, Maryland, and West Virginia and steady growth in North Carolina, South Carolina, and Virginia.
Agriculture: District agricultural activity progressed at a normal pace in recent weeks, according to analysts contacted by telephone. Fall and early winter harvesting activity was completed for most crops. Contacts said that above-normal rainfall limited small-grain planting activity, and below-normal temperatures hampered the crops' development. Respondents reported that hay feeding began earlier than normal, but they believed that hay supplies would be adequate, barring an unusually harsh winter.