Business activity in the Eighth District remains at a relatively high level, but there are signs of weakening. In addition to the housing market, which has been depressed for several months, demand for many consumer durables, including automobiles, has weakened in recent weeks. Other industries, such as steel, certain chemicals, and capital goods products continue to exhibit strength, but slowing in overall demand has been confirmed by a drop in manufacturing employment. Recently, business loan volume has leveled off and interest rates have declined.

Representatives of some major retail stores reported that retail sales have declined recently. Consumer durables have been the hardest hit, with television sets, home appliances, and automobiles among items with lagging sales. In addition, there is a reported softening of other items such as clothing and shoes.

Manufacturing activity in the District has also slowed in recent weeks. Activity in the automobile industry has declined, and cutbacks in production schedules and some layoffs have been announced. Demand for paper and paper products has slackened considerably, and some firms' operations have been contracted. In contrast, backlogs of orders were reported only a few weeks ago. Shoe manufacturers also report cutbacks in production and plant closings in some areas.

Total employment in the Eighth District continues on the weak side. Payroll employment for the five Eighth District states showed only a slight increase for the third quarter in contrast to a high rate of growth last year. This small increase reflected an increase in nonmanufacturing employment and a decline in manufacturing employment.

Business loans at banks were virtually unchanged during October for the Eighth District, while total bank loans declined slightly. Savings flows into thrift institutions in October were at a somewhat higher rate than in September, with most of the growth in the higher yielding time deposits. Savings and loan associations generally reported a decline in passbook deposits in recent weeks. In addition, these associations reported making very few loans except where previous commitments were made.

Crop harvesting conditions have been generally favorable, and harvesting has generally continued on schedule throughout most of the District. Livestock farmers continue to report unprofitable operations. Cow-calf operators, poultry farmers, and dairymen are among those whose profits have been pinched in recent months. Reports indicate a considerable expansion in grass-fed beef production, while cutbacks were reported in egg, broiler, and dairy production.