October 10, 1973
Most economic indicators continue to show strength for the Eleventh District. Total employment for district states reached a new high in August, while industrial production in Texas advanced strongly. District department store sales increased rapidly in September, and bank deposits experienced a sizable gain. Livestock prices began to decline in September; but at the same time, prices of crude oil from new production have increased rapidly. The unemployment rate for the five district states moved up substantially in August.
Seasonally adjusted total employment in the five district states rose 0.3 percent in August, reaching a new high. But the labor force advanced even more rapidly, raising the unemployment rate from 3.8 percent in July to 4.1 percent in August. Nonagricultural employment was up 0.2 percent in August. This was primarily the result of an increase in nonmanufacturing employment, with strong gains in construction and mining. On the other hand, manufacturing employment changed little, with an increase in durable goods manufacturing being offset by a decline in the nondurable section.
The seasonally adjusted Texas industrial production index rose 1.1 percent in August, 7.3 percent above a year ago. The monthly advance resulted mainly from increased production by manufacturing and mining firms, as utilities output declined.
Department store sales in the Eleventh District were 15 percent higher in the four weeks ending September 22, 1973 than in the comparable period a year earlier. Registrations of new automobiles in Dallas, Fort Worth, Houston, and San Antonio increased slightly in August after having declined for two straight months. Cumulative new car registrations through August were 17 percent higher than in the same period of 1972.
Under the Cost of Living Council's two-tier price system for crude oil, prices for production from existing sources, i.e., "old" oil, have been rolled back slightly, while prices for new crude are allowed to reach free market levels. Because of short supplies of domestic crude and high prices for imports, the price of some new crude reached levels as high as $6 per barrel in September. This compares to an average price of $3.47 per barrel last April—before the two-tier system was initiated. With prospective shortages of heating oil this winter, prices could go even higher.
Agricultural conditions in the Southwest remain generally good to excellent. The cotton crop is progressing well, and the bumper crop in grain sorghum is more than 50 percent harvested. But the rice harvest, which is essentially completed, shows a heavy loss in yield due to severe wind and rain. In addition, fertilizer supplies are reported to be limited, and there is some concern that the shortage will result in lower crop yields next year. Average farm prices declined during September, with the most noticeable reduction coming in fed cattle prices. Some reflection of this in retail beef prices is anticipated.
Total credit at Eleventh District banks declined slightly during September. Bank loans were essentially unchanged as increases in business, consumer, and real estate loans were offset by declines in loans to nonbank financial institutions and to security dealers. Despite an increase in bank deposits and little change in bank loans, district banks reduced their security portfolios during September.