Beige Book Report: Philadelphia
September 13, 1995
Reports from major economic sectors of the Third District suggest some improvement in activity in August. Manufacturers generally indicated a steady rate of orders and a slight upturn in shipments for the month following several months of declining business. Retailers reported the usual increase in sales for the back-to-school shopping period. Auto dealers said sales have been running at a steady pace. Bankers generally described overall lending as flat to up very slightly, with gains in consumer lending being nearly offset by a decline in borrowing by businesses. Tourist officials in the District said the summer season has been a relatively good one.
Manufacturing
Third District manufacturers generally indicated that the pace of
business appeared to be steady in August, as there were signs that
the decline in manufacturing activity that began in the spring might
be leveling off. On balance, manufacturers reported a small upturn
in shipments and a nearly steady flow of new orders. Producers of
nondurable goods experienced somewhat better conditions than
producers of durable goods during the month. While just over half of
the companies contacted said their inventory levels were unchanged
from the prior month, one-third had cut back stocks. Overall, the
workweek at Third District plants was steady, but some cuts in
employment were reported.
The balance of opinion among Third District manufacturers is that business will improve over the next six months. About half of the plant managers polled expect new orders and shipments to rise, while one-fourth anticipate they will be steady, and one-fourth anticipate declines. On balance, surveyed companies expect both the workweek and total employment to remain at current levels during the next six months.
Retail
Third District retailers surveyed in late August said sales had
picked up for the usual back-to-school season. Discount merchants
continued to report somewhat better year-over-year gains than other
types of stores, but in general, merchants indicated that their
sales expectations were being met. Store executives are cautiously
optimistic that the pace of sales will continue to improve into the
fall months.
Auto dealers in the District reported a steady rate of sales in August. Sales of four-wheel-drive vehicles appear to have fallen below expectations, however, and price cuts and other incentives to reduce inventories of these vehicles were common. Dealers said sales may pick up as model-year-end promotions are put into place, but most expect the overall sales rate to remain flat through the end of the year.
Finance
Most of the Third District bankers contacted for this report said
overall lending activity was flat or just inching up. In general,
bank lending officers indicated that commercial and industrial loan
volumes were edging down; current customers were retiring debt and
little new business was being generated despite active marketing by
the banks. Real estate lending was moving up modestly as home sales
in the region were on the rise. Stronger loan growth was noted in
consumer credit, especially credit card loans. After being
relatively slow in June and early July, credit card lending began to
rise in mid-July and the pickup has extended into August.
Tourism
Tourism officials in the three states of the Third District
(Delaware, New Jersey, and Pennsylvania) indicated that the summer
season has been a relatively good one. While some noted that
business at beach resorts had been adversely affected by the threat
from Hurricane Felix in mid-August, they said that a strong start in
the early summer should result in healthy results for the season as
a whole. Several contacts in the tourism industry noted that long-
term motel and cottage rentals at resorts were below expectations
but that business generated by visitors on day-trips had increased
from prior years.
In Philadelphia, hoteliers and retailers said summer business attributable to tourists and conventioneers had generally met their expectations. City hotel occupancy rates were said to be slightly above rates attained last year despite a large increase in the number of rooms available, and the average room rate had increased from last year as well.