July 9, 1975
A modest upturn in business activity in recent weeks was reported by a number of District businessmen. Several retailers and manufacturers indicated improved sales compared with earlier in the year, although sales of most products remain considerably off from year-earlier levels. Savings deposits continue to increase rapidly at thrift institutions, and some increased loan demand was reported. Representatives of the agricultural sector reported that crops are doing well in most of the District, and higher prices for livestock are improving the profit prospects for livestock producers.
Area retailers reported that sales turned up in recent weeks although no great surge in sales has occurred. Apparently, department store sales bottomed out in May in the St. Louis area. It was observed, however, that the trough was associated with the ending of a major strike in the area. Retail inventories have generally been brought down to desired levels. Retailers continue to report sluggish sales for big-ticket items with sales gains occurring largely among software lines. Automobile sales, however, were higher in recent weeks than earlier in the year with sales of imported cars increasing faster than sales of domestic cars.
Manufacturing activity has improved in several industries, but it continues rather sluggish in others. Manufacturers of consumer goods, such as watches, bicycles, clothing, and appliances, reported some modest turnaround in demand from earlier in the year. A producer of metal connector plates used in construction noted an upturn in demand in the past couple of months and had returned to a two-shift workday. A welding equipment manufacturer also noted a decided upturn in sales in the past few weeks. On the other hand, sales of residential construction items were reported to be flat with some excess in inventories yet to be worked off. A steel industry representative reported a bottoming out of steel production in recent weeks.
Sales for most manufacturing industries continue to be off substantially from year-earlier levels, but most inventories have been worked off and are now under control. Large inventories of steel held by steel consumers such as automobile and appliance companies are reportedly being reduced, but the excess will soon be worked off and steel production is expected to rise in the third quarter of this year.
Building activity has improved slightly since the first quarter of the year, but it remains generally weak.
Savings and loan associations, as well as banks, continue to report sizable gains in deposits. Large amounts of funds are being placed in passbook-type accounts. Mortgage loan demand has turned up somewhat in recent weeks, and some institutions have recently increased the rates charged on such loans. Total loans at large commercial banks in the District have turned up in all the major centers except in St. Louis. However, one of the larger St. Louis banks reported an increase in loan demand during the past two weeks.
Crop and livestock producers were reported to be faring quite well in most of the District. Large acreages of corn, soybeans, and rice were planted; and the crops are generally doing well. Cotton acreage was reduced more than planned in some parts of the District due to wet weather, but weather conditions improved sufficiently to plant soybeans on most of the acres on which cotton could not be planted. Higher beef, hog, and poultry prices, in combination with lower feed prices, have substantially improved the profit picture for livestock producers. The relatively small marketings of cattle in recent weeks partly reflect the abundance of pasture grass which permits farmers to obtain low-cost weight gains on cattle.