September 10, 1975
The uptrend in business activity continues in the District, according to reports from area businessmen. The rate of increase, however, appears to be rather modest, and recent employment data indicates that the District economy may be lagging the nation as a whole. Nevertheless, sales at both the retail and manufacturing level, as well as construction activity, have continued to improve in recent weeks. Savings flows into thrift institutions have slowed recently from the rapid pace earlier in the year.
Retail sales have made further gains in recent weeks. One retail executive reported that sales have improved through August and that he was fairly optimistic about continued increase as the recovery gains momentum. Automobile sales are still substantially off from the year-ago level, but improvement has been noted from earlier months of this year. Some foreign car dealers have complained that they could not obtain enough cars to satisfy their customers' demands, and a waiting period of two to three weeks is required for many deliveries.
Reports from several manufacturers indicate improvement has continued in the manufacturing sector of the economy. A representative of the paint coatings business reported a gradual improvement month by month. A major durable goods manufacturer reported that sales improved since late last year. He noted that during the first four to five months of the year real production trailed last year by 30 percent on a monthly basis, but in the last two months it has trailed by only 20 percent. A representative of a cutting tools firm stated that the consumer-related part of his business, especially do-it-yourself tools, had held up well over the recession. This firm's sales in the first six months were up two percent over a year ago. In addition, manufacturers of appliances, paper and products, welding equipment, and metal connector plates used in construction, all reported some improvement in recent months.
Latest data for total employment show an increase for the District. Reports of the rehires and callback of workers have been made for several months, but only recently has total employment begun to increase in most parts of the District. In contrast, U. S. total employment has risen since April, indicating that the economic recovery in the District may have lagged behind that of the nation as a whole.
The home building industry continues to show some slight improvement, despite the higher interest rates in recent months. The St. Louis area, where the inventory of homes was relatively low at the beginning of the recession, showed a substantial improvement in building activity in the first seven months of the year over that of the previous year. Much of the improvement came in June and July. According to a housing representative, housing permits are expected to show improvement in August. Considerable amounts of funds are reportedly available in thrift institutions for loans to the home building market. However, expectations of higher interest rates in the future are evidently causing these institutions to be cautious of lending at current rates. Representatives of savings and loan institutions indicated that the rate of growth in net savings slowed noticeably last month. Higher short-term rates on government and other securities were believed to be a chief cause of this development. Both banks and savings and loan institutions experienced large withdrawals from passbook savings accounts following a steady increase in this type of account for several months. Total time deposits at large District banks remained approximately unchanged from July to August.
Demand for most types of loans at District banks continues to be rather sluggish. Commercial and industrial loans, as well as real estate loans, continued to decline at large commercial banks in recent weeks; however, some upturn was noted for consumer installment loans.