Beige Book Report: Richmond
September 9, 1970
Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points: (1) increased shipments, volume of new orders, and backlogs of orders in manufacturing; (2) considerable improvement in retail sales, except for automobiles; (3) increased inventories in manufacturing, trade, and services, and excessive levels of inventories in manufacturing; (4) continued weakness in employment; (5) increased upward pressure on wages; (6) some improvement in the demand for business and consumer loans but weakened demand for mortgage loans; and (7) definite improvement in the optimism of respondents regarding future business prospects.
District manufacturers report shipments still slightly down on balance, but considerably improved from the last several months. An improvement noted last month in volume of new orders and backlogs of orders continued with the September report. Reports of improvement have come from manufacturers in building materials, electrical equipment, coal, fabricated metal products, and synthetic fibers. Numerous important producers in cotton textiles and furniture, however, report continued slow activity.
Retail sales are reported substantially improved for the first time in several months by businessmen in trade and services and by bankers. Automobile sales apparently have remained about unchanged from last month's report, which was one of considerable improvement.
Manufacturers report inventories have increased during the past month, and most of them continue to feel that inventory levels are higher than they prefer. Retailers' inventories are reported to have increased also, but retailers apparently do not feel that current levels are too high.
Employment declines continue to be reported by manufacturers in electrical equipment, metals, and furniture. The length of the workweek in manufacturing is also reported down. Retailers report some increase in employment and hours worked, but on balance the District employment situation remains weak. Reports of increasing unemployment continue, although District bankers report some decline in the supplies of available labor compared to reports of the past four months.
Price increases are reported by some manufacturers in fabricated metal items, electrical equipment, and coal. Price declines are reported by one manufacturer of cotton textiles. Reports of price increases by businessmen in retail trade and services are fewer than in recent months. Upward pressure on wages continues, however, in furniture and metals as well as in textiles, where annual wage increases are currently being awarded. Wage increases in retailing and freight transportation are also reported.
Last month's modest improvement in residential construction activity apparently has subsided. The only area of the District where respondents report increased residential building is Baltimore. Nonresidential building remains on the increase, however, following the pickup reported in August. Some respondents expressed the view that further improvement in both categories of construction is ahead.
Slight improvement is reported in the demand for loans by businesses and consumers. Demand for mortgage loans in the District, however, has tapered considerably from the improved levels of May through July.
The number of respondents reporting that they expect improvement in general economic activity increased sharply in the September survey, and a tone of optimism is present among respondents for the first time during the current year. Some respondents cautioned, however, that they believe recovery will be slow.
Manufacturers in the District continued to feel that their plant and equipment capacity is in excess of current needs. Reluctance to cut back planned capital expansions, however, has been typical of District businessmen.. Some intentions to cut back were voiced last month, but apparently most manufacturers now feel that further reductions are not necessary.
Manufacturers in synthetic fibers, hosiery, cotton textiles, furniture, and fabricated metals continue to report inventories higher than desired, particularly in finished goods. This condition has been typical of District manufacturers for several months, and efforts to cut back inventories apparently are still being made.