March 13, 1996
Overview
The pace of economic activity in the Fifth District
quickened in late January and February, but some respondents
indicated that the recent uptick was a rebound from January's
weather-induced sluggishness. Retailers, manufacturers, and service
producers reported that growth picked up in their industries. Growth
in the real estate and financial sectors also increased. Employment
agencies saw stronger demand for temporary workers. Area port
representatives, however, reported slower business. Abundant
snowfall boosted tourism at ski resorts, but harmed farmers.
Retail Trade
Preliminary results from a monthly mail survey of
District retailers pointed to stronger retail conditions in
February. Growth of sales revenues, employment, wages, big-ticket
sales, and shopper traffic increased, while inventory growth slowed.
Survey respondents said that retail prices rose more slowly in
February than in January. They expected price increases during the
next six months to be in line with their January forecasts.
Service Production
Service-sector growth increased in February,
according to preliminary results from a monthly District mail
survey. Several respondents reported that inclement weather
adversely affected their businesses. Despite the weather, revenues
and employment grew somewhat faster, although wages grew more
slowly. Service prices rose more slowly in February than in January.
Respondents expected larger price increases during the next six
months than they had in January.
Manufacturing
Most indicators of manufacturing activity increased
in February from their January levels, according to preliminary
results from a monthly mail survey of District manufacturers; this
was the first such increase since September. Survey respondents
reported that shipments, new orders, order backlogs, and the
workweek increased; employment changed little. They were more
optimistic about their prospects during the next six months than
they had been in January, but they continued to report a scarcity of
skilled labor. Manufacturers indicated that finished goods prices
declined in February from the month before, but that raw materials
prices rose. Compared to January, respondents expected raw materials
prices to rise less rapidly during the next six months.
Tourism
A telephone survey of hotels, motels, and resorts
throughout the District indicated that tourist activity in February
was above that in January and a year ago. Ski resorts in North
Carolina, Virginia, and West Virginia reported unusually good
business as record snowfalls continued to boost winter bookings
above year-ago levels. Contacts expected better-than-normal business
and some price increases during the next six months.
Port Activity
Representatives at District ports indicated that both
export and import levels in January were lower than in December and
a year ago. Severe weather hampered activity in Hampton Roads (Va.)
and Baltimore. Contacts continued to expect 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
rose in February, although it was unchanged from a year ago. One
contact in Columbia, S.C. said that increased business development
boosted demand in that area. Temporary workers' wages rose faster
than the general price level during the past year. Most contacts
expected wages to stabilize but demand to rise during the next six
months.
Finance
District financial institutions reported that lending
activity increased during January and February. Demand changed
little for consumer loans but increased for commercial and mortgage
loans. A mortgage lender in North Carolina said that refinancings
boosted activity at his institution to its highest level in several
years. Compared to December, interest rates were lower on commercial
and consumer loans, and higher on mortgage loans.
Residential Real Estate
According to a telephone survey of District
real estate agents and homebuilders, residential real estate
activity increased in January and February. Housing starts, sales,
and prices were up compared to December. Participants reported a
strong increase in customer traffic, which they attributed to recent
declines in mortgage interest rates. Building permit levels changed
little throughout the District, except in West Virginia where they
decreased. Construction wages were steady and some materials prices
declined slightly.
Commercial Real Estate
Commercial real estate activity strengthened
in January and February. Leasing activity increased sharply and
commercial rents rose in most areas of the District. Office vacancy
rates decreased, except in the District of Columbia and Maryland
where they were unchanged. The availability of prime office space
continued to tighten, and many contacts reported shortages.
Respondents in Virginia and the Carolinas said that some new
construction was underway in their areas.
Agriculture
Adverse weather damaged some crops and farm buildings
in recent weeks, according to District agricultural analysts. Near-record January and early February snowfalls and low temperatures
stunted late-winter, small-grains crops in some areas. Heavy snows
also collapsed numerous farm buildings, and flooding caused
scattered crop losses in several District states. On the plus side,
the cold temperatures benefited fruit growers in the Carolinas by
preventing fruit tree overbudding.