Results of our most recent survey of businessmen and bankers suggest that the District economy remains robust. Some abatement in the rapid rate of expansion reported in recent months is evident, however. Most manufacturers reported no change in shipments, new orders and backlogs, although manufacturing employment increased further. Reports from bankers suggest some tapering off in residential construction activity, while non-residential construction activity continues at recent high levels. Further advances in retail sales were reported, with automobile sales being especially vigorous. On balance, businessmen and bankers expect economic activity in the District to stabilize at present levels.

Survey responses indicate that economic activity in the manufacturing sector of the District economy may be leveling off at recent high levels. The range of responses from manufacturers shows little change in shipments, new orders, and backlogs. This is in sharp contrast to recent surveys in which numerous firms have reported increases in these items. Manufacturing inventory levels declined further and one-third of the respondents reported that inventory levels were low relative to sales prospects. Tight labor markets continue to hamper production in some manufacturing lines, especially furniture.

Employment in the District apparently increased during the past month. Approximately one-fifth of the manufacturing firms reported an increase in employment, and nearly one-third of the banking respondents indicated that employment in their area had risen. Manufacturing respondents reported further increases in wages paid with little change in prices received.

Retail sales in the District remain strong. Forty percent of the banking respondents reported further increases in retail sales in their areas. Information from major District retailers and other sources also indicate gains in retail sales during the past month. Automobile sales were reportedly strong with the demand for smaller cars, both domestic and foreign, being especially brisk. One major retailer reported plans to reduce inventory levels substantially because of the recent sharp increases in business loan rates.

A strong demand for all types of loans continues to be evident throughout the District. Increases in the demand for business, consumer and mortgage loans were reported by more than 50 percent of all banking respondents. Several District banks moved quickly to raise interest rates paid on savings deposits following the change in Regulation Q ceilings. Bankers in all parts of the District also report general tightening of loan terms and a much closer screening of loan applications.

Construction activity in the District remains strong. Banking respondents report that residential construction in their areas increased again during the past month, although the number reporting increases was considerably lower than in recent months. Increases in non-residential construction activity were reported by more than 50 percent of the banking respondents. New plant locations and plant expansion account for much of this activity. Weyerhaeuser recently announced a $100 million expansion program in North Carolina.

Dislocations resulting from the price freeze have created almost chaotic conditions in certain segments of the agricultural industry. Numerous broiler, egg, and hog producers have been forced to curtail production. Tobacco farmers in North Carolina could lose more than $27 million worth of this season's crop because of a shortage of fuel for curing, according to an estimate by North Carolina agricultural extension service. District farmers' January-April cash receipts increased 29 percent above a year ago. Farmland values recorded one of the sharpest increases on record during the year ended March 1, 1973. Gains in all District states, except South Carolina, were well above the national increase of 13 percent.

On balance, business men and bankers expect little change in District economic activity in the immediate future. More than 60 percent of the banking respondents expect economic activity in their areas to stabilize at present levels.