Results of our most recent survey of businessmen suggest that business activity in the Fifth District generally remains strong. In the manufacturing sector, shipments, new orders, and backlogs were reported unchanged. Employment appears to have changed little during the past month, although the truckers' strike has resulted in some temporary layoffs within the past few days. Despite consumer cautiousness, major retailers report that sales increased during January.

The business situation in the District manufacturing sector remains essentially the same as reported in the last survey. Shipments, new orders and backlogs were reported unchanged from the previous month. Material shortages and uncertainty over the energy situation remain the major problems facing manufacturers. Numerous respondents commented on the difficulty of planning for the future in the face of recession fears, rapidly advancing prices and an uncertain energy picture. Shortages mentioned by participants run the gamut from parts for assembling trucks to wood pulp. Several respondents commented that they were experiencing unfavorable credit conditions and increasing difficulty in the collection of accounts receivable. Inventories of both materials and finished goods increased during the past month. Nearly 40 percent of the manufacturers believe the current plant and equipment capacity is inadequate. However, most feel that current expansion plans are about right.

Results of our survey indicate that the District employment situation is mixed. Manufacturing respondents reported a very slight increase in the number of employees and a slight decrease in hours worked per week. Several major retailers reported that the number of employees declined in recent weeks.

A continuation of price increases was reported by both retail and manufacturing respondents. More than 80 percent of the manufacturers reported higher prices paid and 40 percent reported higher prices received. All of the retailers reported an increase in prices paid and three-fourths reported an increase in prices received.

The diffusion of retailers' responses indicates that retail sales increased during the past month. Retailers report, however, that consumers are more price conscious and more insistent about value than they have been in the past.

Judging from the experience of large commercial banks in the District, demand for consumer and real estate loans changed little during the past month while business loan demand increased.

The trucking strike has caused some disruptions in the food sector of the District economy. According to newspaper reports, a large hog slaughtering operation in North Carolina temporarily closed eight of its ten operating centers. A large poultry producer and processor closed five processing plants in North Carolina and Virginia for several days. News stories indicate that production from the plants, which employ more than 4,000 workers, is normally distributed to about 4,000 eastern seaboard stores.

District farmers reaped a bountiful harvest in 1973. Production gains over 1972 ranged from slight to spectacular for most major crops, with output of soybeans, corn, and peanuts at record levels. Value of production for all principal crops totaled $2,797 million-more than 40 percent above 1972. Farm real estate values jumped 22 percent during the year ended November 1973, recording the largest annual increase on record.

While the planted acreage of 1974-crop wheat is up 36 percent over 1973, as of January 1 farmers were being cautious in their plans to expand planted acreages of other crops. Planting intentions indicate only a 7 percent gain in feed grain acreage and about a 2 percent increase in soybean plantings. Cotton acreage will be down slightly.

Sentiments of survey respondents changed little during the past month. Two-thirds believe that the level of business activity nationally will worsen during the next six months, while nearly 40 percent believe that local business activity
will decline.