Beige Book Report: Richmond
December 19, 1972
Fifth District business conditions continue to improve, according to the results of our most recent survey of businessmen and bankers. Manufacturing shipments, backlogs, and new orders continue to reflect the strength evident in recent months. The retail sales picture is bright with better than seasonal increases being reported. Further increases in employment and hours worked per week were reported, with labor shortages restricting the output of some firms. Widespread increases in wages and prices received were reported. Businessmen and bankers in the District remain optimistic about the prospects for business during the next several months.
District manufacturers report that shipments, new orders, and backlogs continued the strong upward momentum recorded last month. Increases in these indicators of business activity were reported by approximately 40 percent of all manufacturing respondents. While the increases appeared to be fairly general, strength was especially evident among textile and apparel producers. Boxcar shortages continue to plague some District manufacturers, and furniture production is reportedly being restricted by a shortage of both skilled and unskilled labor. More than one-half of the manufacturing respondents indicated a decline in inventory levels, but inventories relative to desired levels were reported to be about right by most respondents. Over the last several months, a growing number of manufacturing firms have reported that current plant and equipment capacity is at lower than desired levels.
Employment expansion continues and more firms report a shortage of both skilled and unskilled labor. Both manufacturers and trade and service respondents show increases in employment and hours worked per week. On balance, bankers report increases in employment in their areas. Both manufacturers and retailers report that wages and prices received have increased during the last month.
The retail sales picture in the District remains bright. More than 50 percent of the bankers surveyed indicated that general retail and automobile sales have increased since the last reporting period. Contacts with regular survey respondents, directors and other businessmen, in the District suggest that department store sales are strong.
In general, loan demand increased at responding banks in the past month. Increases were reported for business, mortgage, and consumer loans, with more than 50 percent of the banking respondents showing an increase in consumer loans. Banks also report continued strength in the construction sector, with nonresidential activity being at a somewhat higher level than residential activity.
District farmers' total cash receipts from farm marketings during the first nine months of 1972 were 10 percent above those in the same period last year, with gains of 14 percent in crop receipts and 7 percent in receipts from livestock. Record high prices averaging 10 percent above a year earlier highlighted the 1972 flue-cured tobacco marketing season. Volume of marketings was 5 percent smaller, however, so value of sales increased only 5 percent.
Optimism concerning the economic outlook remains high among District businessmen and bankers. More than two-thirds of the backing respondents expect an improvement in business activity in their areas in the immediate future.