Beige Book Report: Richmond
October 14, 1970
Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points: (1) An increase in manufacturers' shipments but some decline in backlogs of orders; (2) Some improvement in retail sales except for a sharp decline in automobile sales; (3) Increased inventories in manufacturing and retail trade and higher levels of inventories than desired in both areas; (4) Continued declines in employment and a further increase in available labor supply; (5) Continued price increases in important industries and further upward pressure on wages; (6) Further decline in residential building, but increased nonresidential construction; (7) Increased loan demand at District banks; and (8) Improved sentiment regarding future business conditions.
District manufacturers report some increase in shipments in October for the first time in six months. Improvement is reported in such industries as building materials, lumber, furniture, and electrical equipment. Several major textile producers continue to report declining shipments. Backlogs of orders in October are reported to have receded slightly since the September report, and new orders remain about unchanged.
Businessmen in trade and services report retail sales to be improved slightly during the past month, but automobile sales are reported to be off substantially, reflecting the effect of work stoppages in that industry.
District manufacturers report that inventories have increased slightly, and the majority of them continue to regard inventory levels to be higher than desired. Similarly, retailers report increased inventories and higher levels than desired.
District manufacturers report continued employment declines affecting such industries as furniture, textile, electrical machinery, metals, and paper. Employment in the textile industry in the District has fallen considerably under seasonal expectations. No significant change is reported by manufacturers in hours worked per week. Respondents in trade and services, however, report no change in employment but a significant decline in hours worked.
District bankers report considerable declines in employment in most areas of the District, accompanied by an increase in the available labor supply. Numerous manufacturers, however, continue to report that skilled labor—particularly of the quality which they desire—remains in short supply.
Reports of price increases continue in manufacturing and in trade and services. Increases are reported in machinery and equipment, coal and apparel. Some declines are reported in nonferrous metals and hosiery, but reports of declines continue to be infrequent. Wage pressures are continuing strong in manufacturing according to respondents, and especially strong in the retail trade and services categories.
Residential construction in the District reportedly declined further in the past month and remains in a slump. Nonresidential building, however, has tended to remain relatively strong throughout the District in recent months and is reported to have increased further last month.
Increases in loan demand are reported by District bankers. The recent increase in the demand for business loans is reported strongest, while consumer loan demand rose less last month than in August. Mortgage loan demand, which was reported off in August is now reported to have recovered significantly in September.
The number of District respondents indicating that they expect further improvement in general economic conditions increased sharply in the October survey, following a similar rise in optimism last month.
The proportion of District manufacturers reporting excessive plant and equipment capacity has gradually declined, and most respondents indicate that they do not feel further cutbacks in capital spending plans are necessary. Some respondents in the coal, chemical, fabricated metal products, and apparel industries report a desire to enlarge capital spending plans.
Manufacturers in a number of the District's important industries—furniture, textiles, paper, and metals—report that excessive inventories of finished goods continue to present a problem. The same is true of numerous retailers who report that efforts to reduce inventories have been less than successful.