April 12, 1972
Business prospects continue to be viewed with optimism, according to a sample of businessmen in the Eighth District. Economic activity continues to expand on a broad front. Department store officials report that Easter sales exceeded expectations and that the post- Easter trend continues upward. Manufacturing activity is increasing throughout the consumer products sectors. Farm production is expected to remain about the same as last year, but higher farm incomes are in prospect. Residential construction remains near the relatively high level of the past year. Few firms report additions to the work force, however some manufacturers are beginning to discuss the possibility of additional hirings for a second shift. Investment in new plants and commercial buildings remains generally sluggish. Savings continue to flow into financial agencies at a high rate and loan demand is picking up, but profits of these firms for the year are expected to be less than in 1971.
While not considered spectacular, sales of goods and services are moving ahead of year-ago levels over a wide range of products. Department stores reported sizeable gains in Easter and post-Easter sales compared with year-ago levels. Hardware and automobile sales are up. Hotels and restaurants likewise indicate gains, and the uptrend in airline traffic which began last fall is continuing.
Most sectors of manufacturing continue to move ahead. Manufacturers of consumer goods, including such industries as packaging, clothing, uniforms and small tools, have all made gains in recent weeks. Some steel firms report moderate increases in orders.
Net farm income in the District is expected to rise 10 to 15 percent from year-earlier levels. Higher prices are being realized for most farm products, especially meat animals, with little change in real output. Farm costs are up, but the increase is less than in most recent years.
While residential construction may have leveled off somewhat in recent months, it continues at the relatively high rate of last year. Reports indicate that most construction activity in the District is concentrated in one-family houses. A few multi-family units are being constructed in the outlying metropolitan areas. Activity in commercial and office building, however, is generally limited to a few schools and hospitals.
Employment by surveyed firms has remained relatively stable despite sizeable gains in output. Some have called back employees which were laid off last year, and, in a few cases, plans are being made for some additional hirings. From the comments received, however, the outlook is not good for a rapid reduction of the unemployment rate.
Investment in new plants and commercial buildings remains sluggish. Despite operations of near to capacity levels by many manufacturers, no great change in plant capacity is being planned. Businessmen report that while profits are up from last year's levels, prospects for future profits are still not sufficient to merit additional capital outlays.
Financial firms in the District are predicting lower profit levels this year than last as a result of lower interest rates. The volume of assets and of liabilities are up, but the margin between rates paid and received is down. Loan demand is rising, but the rate of increase in the flow of savings appears to be tapering off. Some further decline in mortgage interest rates is expected.