Beige Book Report: Richmond
May 1, 1991
Overview
District business and financial conditions apparently improved in
March and early April. Commercial and industrial loan demand,
housing starts and sales, and tourist activity all rose. Consumer
spending and manufacturing activity were steady, after several
months of decline, and export activity outpaced import activity at
District ports. The return of military personnel boosted some local
economies, and agricultural conditions remained strong.
Consumer Spending
Responses to our regular survey of retailers suggested that retail
activity was steady in recent weeks. Retailers reported little
change in sales and shopper traffic, although over half believed
that the end of the Gulf War benefited sales. Employment apparently
decreased slightly, while wholesale and retail prices evidently
increased somewhat.
Retailers expressed optimism about their prospects in coming months. Over three-fourths expected their traffic and sales to rise. On balance, survey respondents expected retail employment to increase in the months ahead.
Manufacturing
Our survey of manufacturers indicated that District factory activity
remained stable in past weeks. Respondents reported little change in
shipments, orders, and order backlogs but noted increases in export
orders. One-fourth said the conclusion of the Gulf war had led to
improved sales, while most of the rest indicated that the war's end
had had no effect on their businesses. Most manufacturers noted no
change in the costs of their raw materials or in the prices of their
finished products. Manufacturers' inventories of raw materials and
finished goods and manufacturing employment apparently declined over
the survey period.
Manufacturers' forecasts for the coming months were quite optimistic. Nearly three-fourths believed shipments and new orders would increase over the next six months; only a few foresaw a decline. Similarly, three-fourths of the respondents expected conditions in their local areas and in the nation to improve in the next six months.
Ports
Representatives at District ports -- Baltimore, Charleston, Hampton
Roads (Norfolk) -- indicated that exports are generally unchanged in
March from February and that imports were generally lower. Compared
with a year ago, export activity was higher and import activity was
lower. Port representatives expected exports to increase faster than
imports throughout the spring and summer.
Real Estate
A telephone survey of residential home builders and realtors
suggested that housing activity rose moderately in recent weeks.
Over two-thirds of the builders reported increased customer
interest. Most of these builders attributed the heightened interest
to greater consumer confidence and to the return of U.S. military
personnel. A few builders said that lower interest rates contributed
to the rise in shopper interest.
Half of the builders reported that housing starts increased in the last month; only a few said that starts declined. Builders noted that almost all homes were built under contract rather than for speculative purposes and that most of these homes were in the middle price range.
A majority of realtors indicated that home sales in their local areas increased in the last month, while the remainder noted no change. Realtors commented that sales of owner-occupied homes exceeded sales of new homes. Almost half of the realtors said that middle-priced homes sold most readily, while slightly fewer said that lower-priced homes had been the easiest to sell. Home prices appeared to be stable across all price ranges.
Tourism
A telephone survey of District hotels, motels, and resorts indicated
that tourist activity improved in March from February and was better
than in recent springs. Most respondents experienced increased
bookings and attributed them to the end of the Gulf war, good
weather, and returning customers. A majority of tourist industry
representatives expected tourist activity to increase in coming
months. Other District contacts confirmed this upbeat picture.
Finance
A telephone survey of District financial institutions suggested no
change in commercial and industrial loans closed compared with
recent weeks. Demand for new loans, however, apparently picked up.
Half of the lenders reported flat loan demand, but most of the rest
reported an increase. Lenders attributed the increase to "bottled-up
demand," the resolution of the Gulf war, and prospects for improved
economic conditions. Respondents reported that borrowers were
primarily larger, established customers rather than smaller, new
businesses. Interest rates on loans apparently changed little over
the survey period.
Most financial institutions reported that the delinquency rate on their loans stayed about the same or decreased in recent weeks. Lenders cautioned, however, that the improvement in delinquency rates may have reflected stronger collection efforts rather than improved economic conditions.
Return of Troops
The return of military personnel from the Gulf boosted economic
activity, especially in areas near military bases. Business leaders
indicated that economic activity -- particularly sales of homes,
cars, and other big-ticket items -- in military-dependent areas had
not yet returned to pre-conflict levels, but that retail traffic was
up sharply. One respondent reported that apartments in his area were
fully occupied in contrast to the 30 percent vacancy rate in early
March. Other contacts reported a pickup in hiring activity and a
drop in unemployment insurance claims.
Agriculture
Generally favorable weather led to active planting in early April
according to District farm analysts. Corn planting was ahead of a
year ago in most parts of the District, and vegetable and melon
crops were on schedule in the Carolinas. Small grains were in good
condition because of favorable temperatures and moisture, but some
areas reported powdery mildew in wheat. Peaches and apples were in
bloom, and no substantial frost damage was reported.