Beige Book Report: Richmond
November 11, 1970
Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points: (1) recent declines in manufacturers' shipments, new orders, and backlogs of orders; (2) declines in retail sales, especially automobiles; (3) higher levels of inventories of finished goods than desired in both manufacturing and retail trade; (4) decreased employment accompanied by some increase in the available labor supply; (5) some tapering of price increases in manufacturing, but continued strong upward wage pressure; (6) continued slump in residential building and some improvement in nonresidential construction; (7) tapering off of business loan demand at District banks but some strength remaining in consumer and mortgage loan demand; and (8) a generally optimistic though cautious outlook for future business conditions.
District manufacturers report declines in shipments as well as in new orders and backlogs of orders during the past four weeks. Although reports are mixed, few manufacturing firms indicate strength in orders and shipments. Declines are reported in such industries as textiles, hosiery, chemicals, furniture, metals, and electrical equipment.
Certain large chain stores, transportation companies, and electric utilities report increased sales recently. However, District bankers report retail sales to be down in their respective areas, and automobile sales to be off significantly.
Manufacturers and retailers in the District report further increases in inventories, and both groups continue to feel that current inventory levels are higher than desired.
District manufacturers report further declines on balance in employment. Declines are reported in textiles and nonferrous metals, while some increases are reported in chemicals and electrical equipment. The length of the work week is reported down somewhat further by most District manufacturing respondents. Retailers and service establishments also report declines in employment and hours worked.
District bankers report declines in employment and significant increases in the available labor supplies in their respective areas. Manufacturers in search of skilled labor, however, continue to report a short supply of workers of the quality that they desire.
Manufacturers report no significant changes in prices during the past four-week period. Reports of increases in steel, electrical equipment, and textiles are about evenly matched by reports of price declines in nonferrous metals, hosiery, and synthetic fibers. Continued price increases are reported, however, by businesses in retail trade and services. Wage pressures are reportedly continuing strong across the board.
Residential construction continues weak in all District states. Some District bankers report expectations of improvement in residential building, but so far, reports of increased activity are few. Nonresidential building, however, is reported to have increased somewhat last month.
Business loan demand at District banks is reported down on balance during the past four weeks, in contrast to reports of moderate increases over the last several months. Mortgage loan demand and consumer loan demand continue to increase, however, according to District bankers.
The number of respondents in the Fifth District reporting expectations of improvement in general economic conditions continues to be a significant majority. The tone of comments received from reporters, however, indicates that while a generally favorable outlook exists, many businessmen remain very cautious in evaluating prospects in their respective industries.
Numerous manufacturers continue to report excessive plant and equipment capacity—in textiles, hosiery, furniture, and electrical equipment. Most manufacturers apparently feel that their present expansion plans are about right, though many have made substantial cutbacks in p1ans in recent months.
The preponderance of reporters in industries such as textiles and furniture continue to feel that their inventories of finished goods are too high in relation to current sales prospects. With the exception of a few large chain stores, District retailers also report higher inventory levels than they desire.