Beige Book Report: Richmond
November 14, 1972
Reports from businessmen and bankers indicate further business expansion in the Fifth District. Manufacturers report sharp increases in shipments, new orders and backlogs. Retail sales remain strong, although delivery problems have apparently dampened automobile sales somewhat. Reports fail to show any sign of an inventory buildup on the part of district firms. Improvements in employment and hours worked per week were reported. Prices received remained relatively stable while wages generally increased. Construction activity remains strong and a general mood of optimism prevails in the district's business community.
There was a sharp rise in the number of manufacturers reporting increases in shipments, new orders and backlogs. Widespread increases were reported by producers of steel, textiles, furniture and chemicals. Some producers are apparently experiencing a delay in shipments because of a shortage of box cards. In our latest survey the number of manufacturing respondents reporting higher than desired inventory levels declined substantially, although a sizable number continue to view inventories as on the high side.
Following a slight decline last month, manufacturing employment appears to have improved somewhat in the current period. Manufacturers in our latest survey report increases in both employment and hours worked and banker respondents indicate general employment gains in their areas. Prices received by manufacturing are reported to have remained relatively stable but both manufacturers and retailers indicate fairly widespread recent increases in wages.
Trade respondents report further improvement in general retail sales, with all geographic areas of the district now sharing in the improvement. However, the number of respondents indicating an increase in automobile sales declined over the previous reporting period. Several respondents referred to delivery and inventory problems, which have apparently dampened sales of domestic models.
Loan demand continues to show strength although the rate of increase in the demand for consumer and mortgage loans slowed somewhat over the previous reporting period. Even so, more than 50 percent of the banking respondents reported an increase in the demand for all types of loans.
The pace of advance in the construction sector may have slowed somewhat in recent weeks although both residential and commercial building continue strong. In our previous survey 50 percent of the banking respondents indicated that construction activity in their areas had increases whereas in the most recent month only 25 percent reported increases.
The situation in district agriculture is little changed since our last report. Weaker demand, declining prices, and poorer quality offerings have marked flue-cured tobacco sales during the past several weeks.
The mood of businessmen and bankers in the Fifth District remains distinctly optimistic. The majority of the banking respondents expect further improvement in business activity in their areas in the immediate future. Several bankers reported growth and optimism among their customers.