The latest indicators of economic activity in the Eleventh Federal Reserve District were mixed. While total employment, department store sales, and new automobile registrations were all higher, construction activity slowed and the Texas industrial production index edged downward. The rate of growth of total bank credit also slowed slightly in November. A recent survey of business economists in District states, however, revealed them to be quite optimistic about economic conditions in 1973.

Our respondents generally expected economic activity in 1973 to be higher for both the Nation and their states. They were particularly optimistic about the prospects for consumer spending and plant and equipment investment. They also felt that residential construction, both nationally and within their states, would continue strong.

In line with this general optimism, the majority of our respondents expected employment gains in 1973. Most expected growth in employment to be greater in the District than in the Nation. Employment advances were anticipated to be particularly strong in the service industries. Manufacturing and state-local governments were also mentioned as sectors where employment growth was expected to be more rapid. Despite the outlook for rising employment, less than half saw the unemployment rate declining significantly.

The majority of our respondents foresaw continued improvement in corporate profits in 1973. There was also general agreement that wage-price controls would be continued, at least in some form, after April. In fact, over half the respondents felt that controls would be continued into 1974.

Despite the fact that wage and price controls were viewed as continuing, there was almost unanimous agreement that consumer prices would be rising at a higher rate in 1973 than in 1972. Those responding were also in agreement that the deficit for fiscal 1973 would be greater than the Administration's estimate of $25 billion.

The seasonally adjusted Texas industrial production index eased slightly in October after rising sharply in September. Small increases in the indexes for manufacturing and mining were more than offset by a sharp decline in the index for utilities. Expanding durable goods production enabled manufacturing to post a small gain despite a slowdown in the nondurable sector, notably, petroleum refining. Within the durable goods sector, significant increases were recorded by the transportation equipment and fabricated metal products industries. Mining also edged higher as increased production of natural gas and natural gas liquids outweighed a decrease in crude oil production. The sharp decline in the index for utilities was due primarily to the decreased output of the electric utility sector, probably reflecting a larger than seasonal decline in air conditioning usage.

Harvest of a good cotton crop has been delayed by cold, wet weather across the District in recent weeks. Some loss in quality of cotton is expected but yield prospects continue mostly good. Otherwise, agricultural conditions remain optimistic for a year of record production and incomes.

Regulatory agencies in District states continue to allow maximum oil production. State regulators continue to closely monitor producing conditions, however, and several fields in Texas have had production restricted for conservation reasons. The Texas Railroad Commission has also held hearings to determine state priorities for natural gas in case rationing should become necessary.

Construction activity in the District states, as measured by the value of contracts awarded, declined in October for the second consecutive month. All major types of construction experienced award decreases, but the largest decline occurred in nonbuilding construction.

Both the manufacturing and nonmanufacturing sectors recorded gains in employment in October and helped to push total employment in the District states to a record level. Still, the unemployment rate remained at 4.4 percent—the same as in September. All major employment categories reported gains except mining. Increases were the largest in the construction, durable goods, trade, and service industries.

Sales of department stores in the District continued to advance in November. Among major metropolitan areas in Texas, sales were strongest in Dallas and Houston. But San Antonio and El Paso also experienced modest gains. New automobile registrations in the four major metropolitan areas of Texas increased in October.

The rate of growth of total loans at weekly reporting banks in the District accelerated sharply in November. Reductions in bank security holdings, however, held the rate of increase in total bank credit to a somewhat slower rate than in October. Time and savings deposits also rose sharply in November due primarily to a large increase in large negotiable CD's outstanding.