Results of our most recent survey of businessmen and bankers suggest that business activity in the District continued to expand during the past month. Manufacturing shipments were up while backlogs and new orders remained unchanged. Further advances in retail sales were reported and employment has increased in recent weeks. Reports from bankers suggest that residential construction activity has declined because of tight mortgage markets, while nonresidential construction activity continues to increase. Banking respondents indicate that the demand for mortgage loans did not change in the past month, while the demand for consumer and business loans increased further. Most businessmen and bankers expect business activity to stabilize at present levels.

Survey responses indicate that economic activity in the manufacturing sector continues to expand. Nearly one-half of the manufacturing respondents reported that shipments increased during the past month while none reported decreased shipments. On balance, the volume of new orders and backlogs of orders were unchanged. Increased shipments were reported by important producers in such industries as chemicals, paper and synthetic fibers. Manufacturing inventories were reported little changed from the previous month's survey, and most manufacturing respondents believe that current inventory levels are about in line with sales prospects.

Survey responses suggest a slight increase in District employment during the past month. Nearly three-fourths of the manufacturing respondents reported that employment was unchanged, while most of the remaining firms reported that employment had increased. The majority of trade and services respondents reported that employment was unchanged. Both manufacturing and trade and services respondents reported increases in wages and prices received.

Retail sales in the District continue strong. Nearly a third of the banking respondents reported further increases in retail sales in their areas. Information from major District retailers and other sources also indicates gains in retail sales during the past month.

In general, loan demand in the District remains strong. Demand for consumer loans is particularly strong with more than 50 percent of the banking respondents reporting an increase in the demand for this type of loan. Mortgage loan demand is reported to be little changed from recent high levels and numerous respondents expressed concern about the unavailability of mortgage funds.

The shortage of mortgage funds is being reflected in residential construction activity. More than 50 percent of the banking respondents indicated that residential construction in their areas has declined. In general, banking respondents report that nonresidential construction activity continues to increase although at a slower rate than in recent months. Michelin Tire Corporation recently awarded a $175 million contract for the construction of two manufacturing plants in South Carolina.

A sharply improved farm income situation continued throughout the first half of 1973, with cash receipts from farm marketings recording a 27 percent gain over a year ago.

Season average prices are running below year-earlier levels on all flue-cured tobacco belts except the border belt.

Despite concern over high interest rates and the unavailability of funds for residential mortgages most businessmen and bankers expect business activity in the District to stabilize at present levels. Nearly 80 percent of the banking respondents expect no change in business activity in their areas during the next three months.