Beige Book Report: Richmond
September 18, 1991
Overview
District economic activity continued mixed in August, but
respondents remained optimistic about business prospects for the
next six months. Manufacturing activity rose somewhat but retail
sales and exports declined. Employment was steady in manufacturing
but lower in retail businesses. Loan demand remained weak except in
home refinancing. Conditions in agriculture improved as timely rains
helped crops.
Consumer Spending
Our regular survey of retailers indicated that, on balance, retail
activity weakened in August. Total sales apparently fell somewhat
along with sales of big ticket items. Shopper traffic was lighter
than in July. Inventories were drawn down and employment declined.
Wages rose as did wholesale and retail prices.
Looking forward, retailers were optimistic about the business outlook for the next six months. They anticipated increases in shopper traffic and sales. Most expected little change in employment and inventories but looked for wages, retail prices, and wholesale prices to rise further.
Manufacturing
Our regular mail survey of manufacturers indicated that District
factory activity improved in August. Increases were reported in
shipments, new orders, and the length of the workweek. Inventories
apparently shrank while employment, prices, and other business
indicators remained steady. Manufacturers identified poor sales,
government red tape, competition, and excess capacity as their
biggest problems.
Manufacturers remained optimistic about general business conditions and their own prospects for the next six months. They foresaw increases in virtually all categories of activity including capital expenditures and exports.
Port Activity
Representatives at District ports -- Baltimore, Charleston, and
Hampton Roads (Norfolk) -- reported that exports were generally
lower and imports higher in August than in July. Compared to a year
ago, exports were up and imports were down. Contacts at District
ports expected export growth to outpace import growth throughout the
fall and winter.
Tourism
A telephone survey of hotels, motels, and resorts in the District
suggested that tourist activity through the Labor Day weekend was
unchanged both from July and a year ago. Over half of the
respondents reported that fall bookings were about even with last
year's, and almost all expected tourist activity to remain about
even with a year ago in the months ahead.
Finance
District financial institutions contacted by telephone indicated
that credit availability was generally steady over the last six
weeks. Several banks, however, said they had tightened standards for
commercial loans. Commercial loan demand was reported soft, but the
demand for residential mortgages firmed as refinancing activity
increased. Most banks expressed a continued willingness to make new
consumer loans.
Banks indicated that they had lowered their rates on some types of loans following recent declines in money market rates. Almost half reported that they had reduced their rates on consumer and mortgage loans. None, however, said that they had lowered commercial loan rates.
Housing
Residential real estate activity remained sluggish in most of the
District according to a telephone survey of housing analysts and
real estate lenders. Most respondents reported little change in
prices, sales, or construction starts, though lower interest rates
were said to have slightly boosted sales in some localities.
Respondents in the Washington, D.C., area noted a glut of homes for
sale and for rent. Most respondents reported little speculative
residential construction. One exception to the generally sluggish
housing market in the District was Greenville, SC, where activity
was reported to be strong.
Agriculture
Recent rainfall generally improved the condition of District crops
according to farm analysts. Corn and soybean yields were expected to
be normal in Virginia, West Virginia and Maryland and somewhat above
normal in the Carolinas. Dry conditions were noted in some areas of
Maryland, however, and poor pasture conditions were reported in some
regions.
In the Carolinas, recent rains have damaged crops somewhat
and kept farmers in some localities from spraying their fields for
insects.