Beige Book Report: Philadelphia
May 8, 1996
Reports from various sectors of the Third District economy indicated that business activity was moving up slightly in April. Around one- third of the manufacturers surveyed reported some gains during the month, although producers of building materials noted recent declines in sales. Retailers said sales were picking up modestly with the beginning of the spring season. Auto dealers described the sales rate in April as good, although a bit below their expectations. Bankers noted some increased commercial loan demand and a modest increase in consumer lending. Tourism in the District has been healthy, and contacts in resort areas said advance bookings for summer vacations have been strong. Among service industries, computer consultants and service firms reported increased hiring and contracting for computer network installations.
Manufacturing
Third District manufacturers reported some improvement during April.
Although about half of those contacted said their business was
steady, a little over one-third indicated that orders and shipments
of their products were on the rise. The gains were spread among
almost all the major manufacturing sectors in the region; however,
some firms that produce products and materials for the homebuilding
industry said demand for these goods was slipping. In addition, some
firms that export, as well as those that compete with imports, noted
that the dollar's recent strength has adversely affected their
competitive position.
In general, area manufacturers reported they were working down inventories and planned to continue to do so, but there were some reports that inventories in the paper industry were rising above desired levels. Local manufacturers noted some increases in input costs in April, and they expect some additional increases in the prices of purchased supplies and materials over the summer. Manufacturing employment remained nearly steady in April: nearly two-thirds of the local firms surveyed noted no changes in employment levels or working hours, and the number of firms adding workers was matched by the number making reductions in their work forces.
Retail
Third District merchants generally reported modest increases in
sales for the March-April period compared with the first two months
of the year. An early Easter boosted March sales but held down sales
in the first half of April, according to store officials. But they
also noted that warm weather in recent weeks has spurred sales of
summer apparel and seasonal merchandise. In particular, new styles
and colors for women's clothes have encouraged more buying of
apparel this spring than last, according to some retailers, and
helped to lift performance at department stores and women's clothing
stores. Also, recent above-normal temperatures have encouraged
purchases of lawn and garden-care merchandise. Most retailers in the
District described their inventories as appropriate for the current
sales rate and consistent with their expectations for a modest year-
over-year gain in sales for the spring season.
Auto dealers generally reported that sales in April were running at a healthy rate, although a bit below their earlier expectations. Some General Motors dealers said their sales were limited by the strike at a parts plant and attendant production cutbacks in March. Most dealers for all makes indicated that their inventories were at satisfactory levels.
Finance
Bank lending in the Third District was moving up slightly in April,
according to loan officers at major banks. They noted some recent
small gains in commercial lending, primarily to manufacturers.
Bankers continued to characterize the competition for business
lending as very strong. Some banks also have seen increased demand
for consumer installment credit and home equity loans. Credit card
lending has also picked up a bit, but some bankers indicated they
were implementing more conservative credit standards, which could
restrain the growth of this type of lending.
Tourism
The region's tourism industry has been healthy, according to tourism
officials and hotel executives. Hotel occupancy rates continued to
be strong in Philadelphia. Real estate .agents in New Jersey and
Delaware shore resorts reported that more rental contracts for the
summer have been signed through April of this year than last and
rental rates have been edging up. Tourist officials in the Pocono
Mountain region of Pennsylvania indicated that hotels in the area
have seen increases in bookings for conferences and business
meetings.
Services
Data processing firms and consultants in the Third District reported
strong demand for systems design and installation as well as
hardware upgrading. Computer consultants and contractors said a
continuing trend toward personal computer networks was generating
demand for their services and for the hiring of permanent staff with
expertise in personal computer systems design and installation.
Demand for programmers was steady, and the need for mainframe
computer operators continued to decline.