Beige Book Report: Richmond
December 6, 1995
Overview
Indicators of Fifth District economic expansion changed little since
the last Beige Book. Growth decreased in manufacturing and in state
revenue collections. Employment agencies saw stronger demand for
temporary workers, and port contacts reported that their business
was up. Retail, service-production, real estate, and finance
contacts reported that activity was mixed in their industries.
Tourism and agriculture sources say little change in their
industries' activity.
Retail Trade Indicators of retail activity growth were mixed in October, according to results from a mail survey of District retailers. Sales revenue growth was unchanged overall. Several respondents reported a slow market for apparels, however; one wrote that corporate downsizings were depressing the demand for business attire. Inventory, employment, and wage growth increased. Big-ticket sales and shopper traffic growth slowed. Survey respondents indicated that retail prices rose more slowly in October than in September. They expected their prices to rise more rapidly during the next six months than they had expected in September.
Service Production
Service-sector growth was mixed in October, according to results
from a District mail survey. Revenue growth was unchanged.
Employment and wage growth increased. Service producers reported
that their prices rose more slowly in October than in September.
They expected their prices to rise more slowly during the next six
months than they had expected in September.
Manufacturing
Indicators of manufacturing growth decreased in October from their
September levels, according to results from a mail survey of Fifth
District manufacturers. Survey respondents reported that growth in
shipments and new orders decreased; backlog, workweek, and
employment growth changed little. Many respondents reported a
scarcity of available labor, particularly skilled labor.
Manufacturers indicated that finished goods prices rose at about the
same rate in October as in September, but that raw materials prices
rose more slowly. Respondents expected their prices to rise less
during the next six months than they had expected in September.
Tourism
A telephone survey of hotels, motels, and resorts throughout the
District indicated that tourist activity in October and early
November was unchanged from that of September and a year ago and
that winter bookings were up compared to a year ago. Contacts
expected better-than-normal business during the next six months, and
they expected their prices to rise faster than the general rate of
inflation during that period.
Port Activity
Representatives at District ports reported that export levels in
October were higher than those in September and a year ago, while
import levels were unchanged. Contacts continued to expect exports
and imports to 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
October and early November than in September 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, and contacts expected wage increases during
the next six months. One contact said. "Labor is very scarce....
It's getting harder for us to find qualified people."
Finance
Contacts at District financial institutions reported that credit
conditions were mixed during the past four weeks. Demand rose
slightly for consumer and commercial loans but fell for mortgage
loans. Interest rates were down for consumer, commercial, and
mortgage loans.
Residential Real Estate
According to a telephone survey of District real estate agents and
homebuilders, residential real estate activity declined in October
and early November. Housing starts, permits, and sales were down
over the period. Many contacts in Maryland and Virginia reported
that the government budget crisis slowed the market. Buyer traffic
declined slightly, and several contacts blamed low consumer
confidence. Construction wages and materials prices were steady, and
home prices were unchanged.
Commercial Real Estate
District contacts reported that commercial real estate activity
increased in late October and November. Leasing activity and
commercial rents increased, and vacancy rates decreased. Prime
office space availability continued to tighten in most of the
District, and many contacts reported shortages. Most contacts
continued to report little new construction.
State Revenues
In a mail survey, state government contacts indicated that tax
receipts suggested slower economic growth in October. Compared with
September, revenues for October suggested slower growth in North
Carolina and Virginia; steady growth in the District of Columbia,
Maryland, and South Carolina; and slightly higher growth in West
Virginia.
Agriculture
District agricultural activity progressed at a slightly slower-than-
normal pace in recent weeks, according to agricultural analysts
surveyed by telephone. Contacts said that below-normal temperatures
and an early snowfall slowed fall harvesting and winter crop
planting in some areas of the District. They indicated that
livestock conditions were good and that hay supplies appeared ample.
Respondents reported that farm equipment sales were slow in dairy-
dependent communities but were above normal in most other areas of
the District.