February 7, 1973
Results of our latest survey of businessmen and bankers suggest that the Fifth District economy retains a strong upward momentum. Manufacturers' shipments, backlogs, and new orders registered strong increases over the past month, although production is being impeded by labor shortages in some areas of the District. Retail sales, including sales of automobiles, advanced over the previous month. Employment showed little change from recent high levels, but hours worked per week increased. Residential construction was unchanged, while nonresidential construction increased. Bankers and businessmen continue to be optimistic about the economic outlook in the District.
Our latest survey shows continued widespread strength in the manufacturing sector. There was a substantial rise in the number of manufacturers reporting increases in shipments, new orders, and backlogs. Increases in new orders and backlogs were especially pronounced. Furniture manufacturers are still plagued by labor shortages, and textile sales and production appear to be especially strong. While inventories reportedly declined further in the past month, inventory levels relative to desired levels are judged to be about right by most respondents. Numerous manufacturing respondents reported that current plant and equipment capacity is lower than desired.
Manufacturers reported little change in recent high levels of employment and additional increases in hours worked per week. On balance, banking respondents believe that employment in their areas has increased since the last survey. Unemployment rates as low as 1-1 1/2 percent were reported in some local labor market areas. Increases in wages and prices received were experienced by a sizable number of manufacturers and retailers.
The retail sales picture in the District continues strong. Despite a sharp decline in the number of banking respondents reporting increased retail sales in their areas, on balance, bankers believe that retail sales showed further gains in the past month. Contacts with retailers indicate that they remain optimistic about the outlook for retail sales.
Banking respondents reported continued increases in the demand for all types of loans. Although loan demand appears to be strong throughout the District, demand for loans in North Carolina appears to be especially brisk. Banking respondents reported no change in residential construction in their areas and additional increases in nonresidential construction. A large brick producer in the District recently announced major expansion plans.
Unfavorable weather conditions plagued District farmers throughout much of the 1972 crop season, lowering yields per acre and damaging fruits and nuts, especially peaches. Nevertheless, farmers' January-November 1972 cash receipts from farm marketings registered an 8 percent gain over a year earlier. Livestock receipts were up 9 percent, and those from crops 7 percent. Farmers' January plans for the 1973 planting season point to increases in feed grain and soybean plantings, and decreases in cotton and wheat.
District businessmen and bankers remain optimistic about the general economic outlook. More than 50 percent of the banking respondents expect an improvement in business activity in their areas in the immediate future.