January 10, 1973
Most Third District businesses which were contacted report continued healthy expansion. Production activity has leveled off a bit but is still moving upward. Employment opportunities are currently static but are expected to be better in the months ahead. Retail sales are high. Inventory investment is increasing a bit and is expected to accelerate, and many firms are increasing their plant and equipment outlays. Construction activity is progressing at a moderate rate with residential building ahead of other types of construction. Area bankers report rising deposits. Loan demand is good, with consumer and mortgage loans being the strongest. On the darker side, inflationary expectations continue high.
Production activity has leveled off somewhat at most of the firms responding to this Bank's monthly business outlook survey. The majority of firms report no current change in new orders and shipments; most of the remaining firms are experiencing increases, however. Over half the firms have rising production schedules for the next six months. This represents slightly less production growth than was reported last month.
Current employment demand is holding steady with over three fourths of the surveyed firms reporting no changes in their number of employees or their average workweek. However, almost one third of the business outlook survey respondents do expect to hire more workers within the next six months. Retail sales are high. Area department stores and auto dealers both report strong consumer demand.
Business inventories are currently being increased at about one third of the firms surveyed, while over half of them report no change in inventories. During the next six months the picture is better, with 50 percent of the firms reporting plans to increase their inventories.
Almost half the firms contacted in this District are increasing their plant and equipment during the next six months, and nearly all the rest of the firms are maintaining their present plant and equipment facilities.
Home construction activity in the Third District is expanding, particularly in the suburbs and at the beach-resort areas. Nonresidential construction remains flat at a high level. Public works projects are hardly moving at all. In the Third District, total construction outlays are expanding but at a slower rate than the national average.
Inflationary expectations remain high. Almost one third of the responding firms report paying higher prices, while only 10 percent of them are charging higher prices. Looking ahead six months, over one half expect to pay higher prices and almost one third plan on increasing the prices they charge.
Local banks report that deposits are increasing a bit more rapidly now. Some demand deposits are coming in. The local bankers report that time deposits can be easily increased if the bank is willing to pay a high enough savings rate. Loan demand is good. Most banks report strong demand for consumer and mortgage loans. But, one large bank reported that its rate of consumer loan delinquencies is at an all-time high. The senior officer reporting this fact attributed it to easier consumer loan criteria and a change in public morality. Business loans are increasing at most of the banks contacted.