Beige Book Report: Richmond
March 10, 1993
Overview
District economic activity strengthened somewhat during the past six
to eight weeks. Retail sales continued to improve, and manufacturing
activity picked up after several months of little change, although
employment was flat in both sectors. Tourist activity increased, the
demand for loans rose slightly, and both residential and commercial
real estate activity improved modestly. Coal production fell in West
Virginia as the result of a coal miner strike. At District ports,
imports and exports declined. Agricultural harvesting was completed
after having been delayed by wet weather; in the seafood industry,
the oyster harvest was poor.
Consumer Spending
Our regular mail survey indicated that District retail activity
improved in late January and the first two weeks of February.
Retailers reported increased shopper traffic and sales, including
sales of big-ticket items. Capital expenditures by retailers
strengthened, but inventories were unchanged. Employment was steady
to slightly lower.
Survey respondents were optimistic about their prospects for the next six months. They expected sales, shopper traffic, and employment to rise. In addition, they anticipated some increases in wages and in wholesale and retail prices.
Manufacturing
Manufacturers indicated that District factory activity improved
during the past month after remaining flat since November.
Respondents to our regular mail survey reported increases in most
indicators of manufacturing activity, although they noted that
employment and levels of raw materials inventories were little
changed. Manufacturers continue to be optimistic about the next six
months, expecting most indicators, except inventories, to increase.
Tourism
Hotels, motels, and resorts throughout the District indicated that
tourist activity in recent weeks was higher than in December and a
year ago. Respondents, especially those at mountain resorts where
skiing weather was good, reported that bookings and tourist spending
were above a year ago. Over half of the respondents expected tourism
to improve further during the next six months.
Finance
District financial institutions contacted by telephone indicated
that credit conditions improved over the last six weeks. Respondents
said that commercial and consumer loan demand strengthened slightly
and that commercial and consumer loan rates were steady. Banks noted
that residential mortgage demand--both for new loans and
refinancings--picked up when home mortgage rates fell sharply over
the last six weeks.
About half of the commercial loan officers surveyed reported that regulatory requirements had hindered their ability to make loans, while most of the residential mortgage and consumer loan officers reported that regulation had not restricted their activity.
Ports
Representatives at District ports--Baltimore, Charleston, and
Hampton Roads (Norfolk)--indicated that imports and exports were
lower in January than in December and a year ago. Exports were
expected to pick up at all ports during the next six months.
Residential Real Estate
Real estate analysts surveyed by telephone reported that residential
activity remained strong during the past six weeks. Housing sales
were steady in most price ranges but higher for homes in the mid-
price range. Housing starts declined, mainly because of an unusually
wet January. One analyst reported that large builders in some parts
of the Carolinas were unable to meet demand for low-priced homes
because of a shortage of building lots.
Home prices rose in some areas of the District. Most District analysts noted that new home prices had not yet reflected higher lumber prices except In South Carolina. Analysts expected higher lumber prices to push up new home prices soon, however, and they anticipated that some homebuyer Interest would then shift from new to existing homes.
Commercial Real Estate
Commercial real estate activity in the District picked up during the
past six weeks. Vacancy rates declined, particularly in the office
and industrial markets. Despite lower vacancy rates, relatively
little new construction was reported. Where building activity was
underway, virtually all of the space was pre-leased. District
commercial leasing and construction activity continued to be
strongest in the Carolinas, particularly in the Charlotte, Raleigh,
Columbia, and Greenville/Spartanburg areas.
State Government Revenues
Government analysts contacted by telephone reported that recent
state revenue collections had met projections in most District
states. Inflation-adjusted revenues were growing in all District
states except West Virginia, where they were flat, and in the
District of Columbia, where collections were down.
Coal and Timber
Coal production for the week ending February 13 in West Virginia was
10 percent below year-ago levels because of a strike by coal miners.
The decreased production had not affected electric utilities,
however, because of the large coal stockpiles held by both the
utilities and the coal companies.
In West Virginia and the Carolinas, industry contacts reported that the demand for softwood and hardwood lumber remained strong. Even though timber-cutting was active, some wood product firms apparently cut back their operations because of difficulty in obtaining logs.
Agriculture and Seafood
Conditions in agriculture and in the seafood industry were mixed.
Dry conditions in late January helped farmers complete harvesting
activity that had been delayed by persistent rains during December
and early January. Also, a cold snap in mid-February apparently
benefited fruit trees in the Carolinas by preventing a premature end
to their winter dormancy. Crop prices, however, remained below year-
ago levels, and farmers were concerned that continued low crop
prices would depress their 1993 crop cash receipts. In the seafood
industry, the winter harvest of oysters was unusually poor,
according to District watermen.