Beige Book Report: Richmond
August 12, 1970
Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points: (1) continued weakness in manufacturers' shipments, but some improvement in new orders; (2) improved retail sales and considerable improvement in automobile sales; (3) continued weakness in employment and shortened work weeks, as well as further increases in unemployment; (4) further upward pressure on prices and wages, especially coal prices; (5) some improvement in construction activity; (6) weaker demand for bank loans; (7) increased evidence of cutbacks in planned capital spending; and (8) difficulty in reducing excessive levels of business inventories.
While District manufacturers report their shipments to have slipped further, some improvement in volume of new orders and backlogs of orders is reported. A mixture of reports is common, however, within most manufacturing industries important to this District, and the slight improvement is due to fewer reports of further declines rather than to any significant resurgence of orders.
Recent improvement in retail sales, especially in automobiles, is reported. Reports from West Virginia, however, indicate that business has been seriously affected by the current coal miners' strike. Manufacturers' inventories, while apparently being reduced somewhat, are still reported to be higher than desired.
The District employment situation apparently remains weak. While some further employment declines are reported in textiles, chemicals, metals, and electrical equipment, the declines do not appear as widespread as they were two or three months ago. The length of the work week, however, is reportedly still decreasing in manufacturing industries.
Reports of increasing unemployment are common throughout the Fifth District, and available labor supplies are generally regarded as adequate. Respondents in manufacturing as well as trade and services report skilled labor to be in relatively short supply, but they feel that there are adequate numbers of unskilled workers available.
Reports indicate that, on balance, prices continue to rise in the District. Coal, fabricated metal items, and electrical machinery are among the District's manufacturing industries in which prices are reported increasing. Large increases in coal prices are of considerable concern in the region because of implications they have for electric utility rates as well as other services. Few instances of actual declines in list prices are reported, although respondents continue to report evidence of price shading. Continued upward pressure on wages is reported in nonferrous metals and furniture manufacturing.
Residential construction, which has been severely depressed in the District, is reported somewhat improved in recent weeks. Though still on the down side, some improvement is reported in residential building activity in certain areas of North Carolina, Virginia, and West Virginia, and in the Baltimore area. Nonresidential building, which has fared better in recent months, apparently is continuing to improve throughout the District generally.
Loan demand of all types at banks in the District apparently has failed to keep pace with last month's reported rise. Demand for business loans is reported essentially unchanged, and consumer loan demand has increased only slightly. Increases in mortgage loan demand were reported to be significant in May and June, but began to taper last month, and were only marginal in the most recent four-week period.
The number of respondents reporting that they expect further decline in general economic activity diminished substantially in the most recent survey. Evidence of optimism, however, remains spotty, and apparently no general expectation of an immediate recovery exists yet in the Fifth District.
Respondents in the District have been far from unanimous in their evaluations of their capital spending plans. While some respondents have indicated reductions, planned capital spending apparently has not been substantially reduced in recent months. The latest survey, however, indicates somewhat more widespread reductions than before, especially in textiles, chemicals, and furniture manufacturing.
Inventories in manufacturing and in trade and services remain on the high side. This is reported in such manufacturing industries as textiles, chemicals, furniture, metals, electrical machinery, and building products. Efforts are being made to reduce inventories or to hold them at present levels.