November 4, 1992
Overview
District business conditions were uneven but, on balance, improved
between mid-September and late October. Retail sales rose, and
manufacturing activity edged higher. The residential real estate
market improved somewhat, although the commercial real estate market
remained sluggish. Tourism declined and was expected to remain weak
throughout the fall. Activity at District ports fell. Loan
conditions were unchanged, and District governments reported that
tax revenues were meting their projections. In agriculture, slow-
maturing summer crops delayed harvesting activity and the fall
planting of small grains.
Consumer Spending
Our regular mail survey indicated that District retail activity
improved in recent weeks. Respondents reported that sales and
shopper traffic increased and that retail prices rose. Retailers
indicated that employment was steady, but employee wages increased.
Inventories apparently declined.
Respondents were optimistic about their prospects for the next six months. They expected increases in all indicators except employment, which they believed would be unchanged.
Manufacturing
Manufacturers indicated that District factory activity strengthened
slightly during the past six weeks. Respondents saw little change in
most indicators, but they reported increases in shipments, new
orders, and exports. Prices paid for raw materials rose, but the
prices received by manufacturers were unchanged. Excess capacity
continued to plague District manufacturers.
Manufacturers were upbeat about their prospects for the next six months. Manufacturers expected increases in orders, shipments, and backlogs. Increases in employment, capital spending, and prices were also anticipated.
Tourism
Hotels, motels, and resorts throughout the District indicated that
tourist activity for October declined compared to September and to a
year ago. Respondents reported that fall bookings were below those
of a year ago, primarily because of fewer convention bookings.
Looking ahead, respondents expected tourist activity to remain weak
throughout the fall.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated that both imports and exports
were lower in September than in August. Compared with a year ago,
however, imports and exports were generally higher. During the next
six months, exports were expected to increase at Charleston but to
be unchanged at Baltimore and Hampton Roads.
Finance
District financial institutions contacted by telephone indicated
that credit conditions were little changed in recent weeks.
Respondents reported that commercial and consumer loan demand were
steady. Rates on commercial loans were unchanged while rates on
consumer loans were lower. Banks noted that residential mortgage
activity, consisting mostly of refinancing, strengthened in
September but weakened in October. Respondents reported that
mortgage loan rates began to rise significantly in mid-October.
Residential Real Estate
Residential activity picked up modestly during the past six weeks
according to a telephone survey of District realtors. Home prices
were stable, and respondents noted that sales of homes in the mid-
to-low price range, particularly to first-time homebuyers, were
strong. The market for upscale homes, however, apparently remained
soft. The residential market in Raleigh, North Carolina, was
characterized as particularly strong, and the strength was
apparently spilling over into the nearby Durham market.
Commercial Real Estate
Commercial activity remained sluggish, but realtors suggested that
leasing activity had picked up somewhat in many areas of the
District. The absorption of commercial space improved, particularly
in suburban areas, but respondents noted that little new commercial
development was underway. Leasing activity in Washington, D.C.,
however, decreased because of reduced demand for space by government
agencies.
State Budgets
Government analysts contacted by telephone indicated that third
quarter tax revenues were close to estimates in most District
jurisdictions, lessening the likelihood of budget shortfalls.
Revenue growth in West Virginia and in the District of Columbia,
however, remained weak.
Tax receipt growth varied by jurisdiction and type. Personal income withholding tax collections increased substantially in most District states. Sales tax collections, compared to a year ago, were stronger in Maryland, North Carolina, and Virginia, steady in South Carolina and West Virginia, and weaker in the District of Columbia. Corporate tax receipts, however, were reported to be lower in several jurisdictions.
Agriculture
District agricultural analysts reported that the harvest of summer
crops was progressing more slowly than normal in some states.
Harvesting of corn continued to be hampered by the slow maturing of
the crop because of unseasonably cool weather. Soybeans also were
maturing late, delaying their harvest and increasing the risk of
frost damage. Tobacco harvesting was almost complete, and yields
were about normal. Small grain planting was underway, but progress
was slowed by the delays in harvesting summer crops.
Livestock was reported in good condition. A large hay crop and good pasture conditions were expected to provide adequate forage for the winter months.