Beige Book Report: Richmond
January 21, 1993
Overview
District business conditions were mostly improved during the past
six to eight weeks. Retailers reported increased activity for the
Christmas season. Both manufacturing and port activity held steady
from the previous period. Commercial and consumer loan demand
increased slightly, while mortgage loan demand declined. Both
residential and commercial real estate activity increased since
early November. Some District crops were threatened by unusually wet
weather.
Consumer Spending
Our regular mall survey indicated that District retail activity
improved in December. Retailers noted increases in shopper traffic
and sales, including sales of big-ticket items. Wages and prices at
the retail and wholesale levels also rose. Survey respondents
reported virtually no change in employment.
Retailers were optimistic about their prospects for the next six months. They expected shopper traffic, sales, wages, and prices to rise. They anticipated profits in the first half of 1993 to exceed profits in the same period of 1992. Few retailers expected major changes in employment in their companies or in their states.
Manufacturing
Manufacturers indicated that District factory activity held steady
during the past month. Respondents noted little change in most
indicators, although they reported small increases in shipments,
capital expenditures, and exports. Respondents cited health care
costs and government regulations as their most important problems.
Manufacturers were optimistic about their prospects for the next six months. Increases in all indicators were expected, and most anticipated a moderately lower unemployment rate in their states. Manufacturers also believed that profits in the first half of 1993 would be higher than they were in the first six months of 1992.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated that both imports and exports
remained about the same in December as in November and when compared
with a year ago. Exports were expected to increase at Charleston and
Hampton Roads but to remain the same at Baltimore during the next
six months.
Finance
District financial institutions contacted by telephone indicated
that credit conditions were varied over the last six weeks.
Respondents stated that commercial and consumer loan demand improved
slightly. Rates on commercial loans were unchanged, while consumer
rates were lower.
Mortgage loan demand was down significantly over the past six weeks. Weakness was reported primarily in refinancings. Mortgage loan rates fell slightly.
Residential Real Estate
Real estate analysts surveyed by telephone reported that the
residential market continued to improve in most of the District
during the past six weeks. Residential sales increased, while home
prices were mostly steady. Several respondents suggested that higher
consumer confidence spurred activity in their areas. Virtually all
respondents were optimistic about real estate prospects in 1993.
The residential market in North Carolina, particularly in the Raleigh area, continued to be stronger than in other District states. Building permits strengthened somewhat in Greensboro, North Carolina, where the market has been weak for the past few years. In West Virginia, home sales continued to improve, particularly in Morgantown and the Charleston/Kanawha Valley area.
Commercial Real Estate
Commercial real estate activity increased in the past two months,
according to our telephone survey of industry analysts. In some
areas, vacancy rates were said to be dropping quickly. In other
areas, brokers received more inquiries by businesses interested in
obtaining space, and the financial condition of those making the
inquiries was stronger than in prior months. The survey respondents
attributed the improved conditions to increased business confidence.
Most respondents said that demand was still insufficient in their
markets to generate significant new construction.
Agriculture
Unseasonably wet weather continued to plague District farmers in
December and early January. The harvesting of soybeans and cotton
was delayed further, increasing the risk of yield losses. The wet
weather assisted the emergence of small grains in the fall, but
recently threatened to drown these crops in s areas. Livestock were
also affected by the rains, because wet fields limited their ability
to graze on small grains planted for winter forage.