October 23, 1991
Overview
District economic activity was generally weak in late September and
early October. Financial institutions reported that the demand for
commercial and consumer loans was lackluster. The residential real
estate market remained sluggish, though lower interest rates were
said to have spurred activity in some areas. Retail activity slowed
further, and dry weather reduced prospects for crop yields somewhat.
Manufacturing remained steady, and exports increased at District
ports.
Consumer Spending
Our regular survey indicated that retail activity continued to slow
in September. Shopper traffic and sales, including sales of big
ticket items, apparently fell, as did employment and capital
expenditures. Retailers reported increases in wages and in wholesale
and retail prices.
Respondents were optimistic about the six-month outlook for the economy in general and for their own businesses. They anticipated increases in shopper traffic and sales. Most foresaw little change in employment but expected wages, wholesale prices and retail prices to rise.
Manufacturing
Responses to our regular survey of manufacturers indicated that
District factory activity was stable in September. Manufacturers
reported almost no change in most indicators, although shipments,
new orders and prices of raw materials increased. Besides poor
sales, manufacturers cited excess capacity as their single most
important problem.
Manufacturers remained optimistic about general business conditions and about their own prospects over the next six months. Half the manufacturers foresaw increases in shipments and new orders, and few expected decreases. Respondents also anticipated increases in order backlogs, employee hours, exports and prices, but they expected little change in inventories, employment or capital expenditures.
Port Activity
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated that exports were higher in
September than in August and that imports remained about the same.
Compared with a year earlier, exports were higher and imports were
lower. Exports were expected to increase faster than imports during
the next six months.
Housing
Real estate analysts and lenders surveyed by telephone indicated
that the residential market remained sluggish in much of the
District. Respondents blamed slow sales on potential homebuyers'
insecurity about their jobs and income levels. Several, though,
suggested that lower interest rates were beginning to spur activity
in their areas. Despite large inventories of homes for sale, several
noted that prices were steady.
Finance
District financial institutions contacted by telephone reported that
credit availability and credit standards were unchanged over the
last six weeks. Banks reported that demand for consumer and
commercial loans remained weak and that commercial demand had
softened further. Most banks contacted had lowered loan rates over
the last six weeks; as a result, demand increased for the
refinancing of home mortgages, as in the previous survey. All of the
surveyed banks had reduced their prime lending rates in recent
weeks.
Agriculture
According to District agricultural analysts, a drier-than-normal
September had reduced yield prospects for some District crops but
had not curtailed fall planting activity. Slightly lower yields were
projected for corn, soybeans, peanuts and some types of tobacco, and
pastures were said to be in generally poor condition. The apple crop
in West Virginia was termed poor, although in the Carolinas, the
weather apparently did not affect the apple crop or reduce cotton
yields.
Dry weather had not yet affected the planting of winter wheat or other small grains underway across much of the District. Planting progress was reported to be somewhat better than normal, but analysts said more rain was needed soon to keep planting activity on schedule.