The economy of the Eleventh District continues to expand at a fairly rapid pace. Although industrial production in Texas fell slightly in March, employment in the five district states continued to rise. Construction activity rebounded sharply in March, and new automobile registrations increased substantially. Sales of district department stores continued to advance in April. Furthermore, a recent survey of business economists in district states revealed them to be quite optimistic about economic conditions in the second half of 1973.

Our respondents generally expected economic activity in the second half of 1973 to be higher for their states than for the nation as a whole. They were particularly optimistic about the prospects for consumer spending and plant and equipment investment. They also felt that inventory investment would continue strong.

In line with this general optimism, the majority of the respondents expected further employment gains in the second half of the year. Most expected growth in employment to be greater in the district than in the nation. The respondents anticIpated particularly strong employment advances in the retail trade and service industries, and in state and local government. Despite the outlook for rising employment, less than half saw the unemployment rate declining significantly.

Most of the respondents viewed prospects for corporate profits in the second half of 1973 to be about the same as in the first half. And although there were wide differences of opinion among the respondents, the majority felt that consumer prices would rise at least as fast in the second half of the year as in the first half. Consequently, there was unanimous agreement that there would be a continuation of wage-price controls throughout 1973, and a number of respondents expected some further strengthening in the controls program.

The seasonally adjusted Texas industrial production index eased slightly in March, receding from its record February level. Output in both the manufacturing and mining sectors declined slightly, while utilities rose. In manufacturing, durable goods production continued to rise mainly as a result of increases in fabricated metal products, furniture and fixtures, and lumber and wood products. Nondurable goods output fell in March due primarily to decreases in food and food products, apparel, and paper and paper products. Mining also fell as declines in crude petroleum and natural gas production more than offset small increases in the mining of metal, stone, and earth minerals and natural gas liquids. Utilities increased in March as both electricity and gas distribution surpassed February levels.

Although state oil regulatory agencies continue to permit maximum production consistent with conservation limitations, district oil-producing states are still pressed to meet all demands for their oil and gas. As buyers have not been able to find all of the domestic crude they need, some refineries have had to operate at less than full capacity. To fill part of the supply gap, Persian Gulf oil was imported into Texas and, for the first time, piped inland to be refined.

Seasonally adjusted total employment in the five district states rose in March for the ninth consecutive month. Nevertheless, the monthly increase in the labor force outpaced the employment growth, and the unemployment rate edged up to 3.7 percent from 3.6 percent in February. Both manufacturing and nonmanufacturing employment rose in March as significant increases were reported in finance, construction, transportation and public utilities, and government services. Mining was the only industry group to show a decline. All industries reported year-to-year employment gains.

The value of construction contracts awarded in the five district states rose sharply in March after falling slightly in February. While all three major types of construction increased, nonresidential building showed the largest gain, reaching a record high. The cumulative value of contracts awarded through March of this year reached a level over 17 percent higher than the corresponding period last year.

Sales of department stores in the district continued to rise above year-ago levels in April. Cumulative sales for the first four months of the year were significantly above the level for the corresponding period last year in all five metropolitan areas for which data are regularly published. The total number of new automobile registrations for the four largest metropolitan areas of Texas—Dallas, Fort Worth, Houston, and San Antonio—rose sharply in March over February's level, as Houston and San Antonio reported increases of more than 40 percent. Cumulative new car registrations through March were over one-fifth higher than in 1972.

Weather continues to slow all agricultural activities in the Eleventh District. Field preparation and planting activities have been severely limited and the situation is becoming critical. Cotton planting is barely under way in Texas and Louisiana, a situation much different from this time last year, when about one-third of the planting in these two states had been completed. Soybean, sorghum, and rice plantings are also lagging. Widespread livestock losses due to the severe weather have also been reported, and Arizona has had numerous losses from poisonous weeds. However, the number of cattle and calves on feed in the four western states on April 1 was still nearly one-fifth larger than a year ago.