Results of our most recent survey suggest that the pace of economic activity in the District continues to advance, perhaps at an increasing rate. Manufacturers generally report further increases in shipments, new orders, backlogs of orders, employment, and hours worked per week. Bankers and trade and services respondents indicate substantial improvements in sales accompanied by increases in employment. While business loan demand continued the weakness first reported in the last survey, the demand for consumer and mortgage loans remains strong. Contact with our regular survey respondents and other businessmen fails to indicate any substantial step-up in the rate of inventory accumulation. Respondents continue to view the outlook for future business conditions with considerable optimism.

The diffusion of responses of manufacturers in our latest survey indicates that strength in shipments, new orders, and backlogs of orders is greater than at any other time in the last six to eight months. Increases are reported by important producers in such industries as chemicals, metals, textiles, and synthetic fibers. Manufacturing respondents report sharp increases in employment and hours worked per week, while trade and services respondents indicate a substantial increase in employment but no change in hours worked per week. Banking respondents report that there has been little change in employment in their areas and that available labor supplies are moderately higher.

Gains in sales were reported by a large proportion of trade and services respondents, and bankers indicated substantial improvement in both automobile and general retail sales. Some price increases were reported in the trade and services areas, but the diffusion of manufacturing responses suggests no significant changes in industrial prices. Both groups of respondents indicated further increases in wages paid.

Manufacturers report a slight decline in actual inventories and a moderate increase in inventory levels relative to desired levels. Trade respondents indicate increases in both the actual level of inventories and the level of inventories relative to desired levels. Conversations with representatives of several large retail outlets and manufacturers in the District suggest that no important changes in inventory policy have occurred in recent weeks nor are any planned. A sizable number of manufacturing respondents report that current capacity is less than adequate.

In spite of the indicated pickup in both trade and manufacturing, demand for business loans continues soft, but bankers report good increases in the demand for consumer and mortgage loans. According to banking respondents, both residential construction and nonresidential construction continue strong.

On balance, results of our survey and other contacts indicate that businessmen in the District continue to view business prospects with optimism. Nearly 60 percent of the banking respondents responded that they expect an increase in business activity in the months ahead.