The outlook for business activity in the Third District remains gloomy this month. Manufacturers report large declines in new orders, shipments, and unfilled orders in November. Capital investment plans remain bearish, and employment levels appear to be softening from this business decline. With the depressed economic outlook coupled with ever-rising prices, manufacturers and retailers are not overly optimistic for the next six months. Philadelphia banks continue to report flat loan levels and deposit growth rates.

Industrial activity experienced a significant slowdown in the Third District in November, according to this month's business outlook survey of manufacturers. While only four out of ten respondents experienced a decrease in the general level of business activity in October, almost nine out of ten posted decreases in November. And in their own firms, more than 75 per cent of the area businessmen also report a decrease in new orders, shipments, and unfilled orders from October levels. Manufacturers are slightly more optimistic for late spring, however. Thirty per cent more businessmen expect increases in the general level of business activity by May than expect decreases, with 40 per cent anticipating no change. But, the weakness that has been developing in the capital investment sector is still evident. Less than a third of the respondents expect to boost capital spending in the next six months.

Employment in the Third District is absorbing much of the shock of the general business decline. Only 26 per cent of the responding firms decreased their work force in October, and 10 per cent reported increases. However, in November, over 40 per cent of the responding firms cut back in employees, and 48 per cent shortened the length of the average workweek. However, looking ahead six months, over half of the businessmen expect to stabilize their employment, with those expecting an increase just about equaling those expecting a decrease. However, small increases in area payrolls will continue to spell unemployment in the Third District, as the overall total of potential workers continues to grow.

Retailers were also dissatisfied with the November level of business activity. While the dollar value of sales was up slightly over October and over last November, the number of transactions fell below those levels. This bearish outlook promises to continue throughout the Christmas buying season. One retailer reported that with a little bit of luck and a lot of good weather, he might break even. Others were less optimistic, even through the first six months of 1975. Ready-to-wear items and toys were the biggest sellers in most stores, but big ticket items were moving at a very sluggish pace. Most retailers attributed declining sales to higher prices.

Area retailers were not the only businessmen plagued by increasing prices. Area manufacturers also report inflation woes. Sixty per cent of the respondents paid higher prices for raw materials in November, but only 18 per cent reported receiving higher prices for their finished goods. Businessmen don't see any lessening in this rapid increase in prices by late May. Three-quarters expect to be paying even higher prices by late spring, and 55 per cent expect to receive higher prices for their products.

The major Philadelphia banks have continued to curtail loan growth. Some area banks report slightly stronger loan demand, with one bank negotiating a $14 million loan to Chrysler. However, in general, loan demand remains about level, with most bankers expecting declines in February as inventories are liquidated. Deposit growth also remains flat, with no signs of improvement. Large Third District country banks are experiencing loan and deposit growth rates similar to those of Philadelphia banks. In sum, loan levels and deposit rates continue to be flat in the area.