Beige Book Report: St Louis
May 8, 1984
Economic activity in the Eighth District continued to increase in March and April, but the pace of the expansion slowed. Retail sales were moderately strong, but year-over-year comparisons were less favorable than during the winter. Industrial production rose moderately, construction remained vigorous, and employment increased. Farmers have been hampered by wet weather, but expectations of large plantings have stimulated seed, fertilizer and implement sales.
Outlook
Employers generally are optimistic about the near term outlook. In a
recent survey of St. Louis area business firms, 32 percent planned
to hire more workers in the second quarter of 1984, while only 7
percent planned staff reductions in the quarter. In a similar survey
taken a year ago, 23 percent of the employers said they planned to
hire more workers and 8 percent expected to trim their staffs.
Consumer Spending
Department store sales in the District continued to be above year
ago levels in March and April. At six stores, sales during the two
months averaged 5 percent above the same two months in 1983.
Clothing items moved well, but appliance sales slowed. Inventories
are higher than in January, but retailers do not judge them
burdensome.
Auto sales have been strong. Several dealers report that March and April sales were 16 percent or more above year ago levels. Dealers claim that sales would have been larger if popular models had been available. Sales of used cars and trucks also have been vigorous.
Rainy weather in March and April adversely affected home sales in the District; they were about the same as in the comparable months a year ago. Industry spokesmen, however, expect total home sales for 1984 to be at least 10 percent higher than in l983. This year's growth in the sales of multifamily homes has been offset by a decline in single family home sales. Prices of homes are rising, but not out-of-line with general inflation. Construction costs have increased with a recent 5 percent wage boost, rising land prices and higher material costs. Builders and realtors expressed concern over increases in the mortgage interest rate: if it rises much more, sales are expected to decline greatly.
Manufacturing
Industrial activity in the District continued to expand moderately
during March and April. Expenditures for capital equipment were
strong, but most of the outlays were for replacement and
modernization rather than for increased capacity. Inventories are
higher than last fall, but with sales also up, they are generally
still within the desired range. A few firms, however, reduced their
production growth rates in order to prevent an unwanted buildup of
inventories. A large firm in Arkansas cut back its operations
significantly and laid off 450 workers because of slower sales.
Employment
Total employment in the District rose slightly in March and April
with gains recorded in the manufacturing, construction and service
industries. This increase, however, about matched the growth in the
labor force, and the unemployment rate was little changed.
Respondents indicate that summer jobs will be somewhat more
plentiful this year than last.
Agriculture
Farmers plan to plant substantially more acres this year than last,
when the PIK program caused a marked reduction in crops. As a
result, implement, seed and fertilizer sales have been much
improved. The amount of land planted in April, nevertheless, was
negligible because the ground was too wet to work. This delay will
not become critical, however, for another two weeks or so.
Finance
Banking data indicate little net change in credit and deposits in
March and only a moderate expansion in the first three seeks of
April. Commercial and industrial loans increased $120 million at 12
relatively large District banks from the end of February to late
April. Real estate loans rose only $10 million, while consumer
installment credit was up $50 million. Time deposits climbed by $70
million, while demand deposits expanded by nearly $300 million.