Beige Book Report: Richmond
September 13, 1995
Overview
The rate of expansion in the Fifth District appears to have changed
little in late July and August. Retailers and service producers
reported that growth slowed in their sectors, but manufacturers and
financial industry contacts reported that growth picked up.
Residential and commercial real estate contacts reported little
change in their sectors. Contacts at area ports reported increased
activity, and employment agencies saw stronger demand for temporary
workers. Tourism industry sources reported that business was down
from July. Government contacts reported slower state revenue growth.
Agricultural conditions deteriorated somewhat.
Retail Trade
Indicators of retail activity growth decreased slightly in August
from their July levels, according to preliminary results from a mail
survey of District retailers. Survey respondents reported that their
sales, including those of big-ticket items, changed little. They
indicated that employment decreased slightly; wages grew more
slowly; shopper traffic decreased; and inventories were higher.
Survey respondents reported that retail prices rose somewhat faster
in August than in July. They foresaw decreased demand for their
products, and they expected their prices to be unchanged during the
next six months.
Service Production
Indicators of service-sector activity growth decreased in August
from their July levels, according to preliminary results from a mail
survey of District service producers. Survey respondents indicated
that employment and wage growth slowed and that revenues changed
little. They reported that their prices rose faster in August than
in July. They expected the growth in demand for their services to
fall during the next six months, and they expected their prices to
rise faster.
Manufacturing
Indicators of factory growth increased in August from their July
levels, according to preliminary results from a mail survey of Fifth
District manufacturers; this was the first such increase since
March. Survey respondents reported that shipments, new orders, and
the workweek increased; order backlogs and employment changed
little. They were more optimistic about growth in the workweek and
wages during the next six months, but their expectations about
shipments and employment changed little from July. Manufacturers
indicated that finished goods and raw materials prices rose more
slowly in August than in July, and at rates below the general
inflation rate. Respondents expected their prices to rise somewhat
more slowly during the next six months than they had expected in
July.
Tourism
A telephone survey of hotels, motels, and resorts throughout the
District indicated that tourist activity in August was below that of
July but above that of a year ago. At coastal areas, visitors were
driven away by Hurricane Felix and other tropical storms. Fall
bookings were up compared to a year ago, and contacts expected
better-than-normal business and unchanged prices during the next six
months.
Port Activity
Representatives at District ports indicated that import levels in
July were higher than those in June and a year ago. Export levels in
July were unchanged from June but were higher than those a year ago.
Contacts expected that both exports and imports would increase
during the next six months.
Temporary Employment
A telephone survey of Fifth District temporary employment agencies
indicated that the demand for temporary workers was higher in August
than in July or a year ago. Contacts expected demand during the next
six months to be greater than usual. Temporary workers' wages rose
faster than the general price level during the past year, although
most contacts continued to expect wages to stabilize during the next
six months.
Finance
District financial institutions reported that credit market activity
increased somewhat during the past six weeks. Interest rates fell
slightly for consumer, commercial, and mortgage loans. Demand
increased for consumer and commercial loans and fell slightly for
mortgage loans.
Residential Real Estate
According to a telephone survey of District real estate agents and
homebuilders, residential real estate activity was unchanged in late
July and August. Housing starts, building permits, and buyer traffic
were stable over the period. Home sales were steady, but contacts
indicated that lower- to middle-priced homes continued to sell
better than expensive homes. Lumber prices rose, but other building
material prices changed little. One contact in North Carolina
reported that skilled labor was in short supply.
Commercial Real Estate
District contacts reported that commercial real estate activity
changed little in late July and August. Leasing activity was
unchanged, although vacancy rates declined. Commercial rents were
unchanged, except in South Carolina and Virginia, where they
increased. The availability of prime office space tightened in most
District cities, and contacts reported shortages of such space in
North Carolina. Contacts continued to report little new
construction.
State Revenues
State government contacts reported lower tax revenue growth in July.
Compared with June, real revenue growth was lower in the District of
Columbia and West Virginia and was unchanged in the other Fifth
District states.
Agriculture
District agricultural conditions worsened in recent weeks according
to agricultural analysts. Near-record temperatures and below-normal
rainfall reduced soybean, cotton, and peanut yield prospects,
although analysts expected near-record corn yields. Tobacco poundage
and quality were below average, especially in the Carolinas.
Pastures were in poor condition in some areas of the District. In
South Carolina, recent heavy rains caused flooding and minor crop
damage; the state also suffered the worst outbreak of southern pine
beetle on record, causing the loss of $70 million of pine timber.