| Skip to content
|
Economic activity in the Fifth District continued to expand modestly since our last report, with further softness in big-ticket sales and manufacturing shipments offset by stronger growth in services activity.� Retail sales weakened in recent weeks, partly because of lackluster sales of domestic automobiles.� Gauges of manufacturing activity again softened, with textiles and furniture firms reporting notably weaker demand.� In contrast, activity at District services firms expanded at a quicker pace, and contacts were a bit more optimistic about their prospects going forward.� District housing markets showed broader signs of firming, with sales edging higher in many areas.� Home prices, however, generally continued to be flat to slightly lower.� District labor markets remained tight, with skilled workers in short supply and some evidence of higher wages.� Price pressures were mixed, with higher energy prices a concern.� In agriculture, livestock were in generally good condition as were winter small-grain crops.
�Retail
Retail sales weakened since our last report, pulled down in part by declining big-ticket sales.� Contacts at apparel stores in Charleston, W.Va., and in Columbia, Md., said the pace of clothing sales slowed.� Sales also slowed at some pharmacies in the Carolinas.� In contrast, several District grocers reported that revenues grew more quickly over the period.� Reports on furniture sales were mixed--sales increased at a store in central Maryland, while the owner of a West Virginia furniture store said sales were flat in recent weeks.� Automobile dealers told us that domestic brands continued to lose market share to imports.� However, a central West Virginia dealer said he had increased his inventory of U.S.-made minivans; he expected demand for the vehicles to exceed local supply as manufacturers phase out production of those vehicles.� Retail wages grew more quickly, although retailers continued to trim jobs.� Retail price growth edged higher.
�Services
Revenue growth rose sharply at District services firms in recent weeks.� Contacts at some construction-related services businesses, such as floor finishing and HVAC firms, told us that demand for their services remained strong.� Demand for accounting and legal services strengthened and hospitals in central Virginia and in Maryland also reported increased demand for their services.� Employment at service-producing businesses grew on pace with our last report, while growth in wages escalated.� Prices in the sector also grew more quickly.
�Manufacturing
District manufacturing activity continued to lose momentum in January and February after contracting modestly in December.� Manufacturers told us that the decline in factory shipments, new orders and employment deepened since our last report.� Product demand was notably weaker in the apparel and textiles, fabricated metals, furniture and paper industries. A furniture manufacturer in North Carolina said the industry was in dire straits, and that price cutting was rampant.� A textile manufacturer in North Carolina expressed similar sentiments.� He told us that his firm had sold part of its business and was in the process of shuttering a plant in Virginia.� In contrast, a producer of electrical components in Maryland indicated that business at his firm was off to a good start--noting strong sales during the first two months of 2007.� Energy and other raw material prices rose in recent weeks after tapering off in January, while finished goods prices continued their downward trend.
�Finance
District bankers reported little change in lending activity in recent weeks.� Residential mortgage loan demand was characterized as steady throughout the District.� A Charleston, S.C., contact noted that interest rates "popped up" a bit in January, which he speculated may have constrained activity somewhat.� A Charlotte, N.C., banker said that a pickup in the demand for second homes was largely offset by a fall in speculative demand.� A few contacts noted that borrowers were moving from adjustable rate loans to fixed rate loans.� In addition, there were scattered reports of slight increases in late payments and delinquent mortgage loans throughout the District.� Commercial lending remained strong.
�Real Estate
Residential real estate agents reported that housing markets generally held up since our last report.� A number of respondents said residential sales were steady.� However, an agent in Washington, D.C., told us that sales in her area had been more active and that she had recently seen multiple offers on a few properties.� Contacts also reported that condominium sales and listings rose in the Washington, D.C., area.� Likewise, contacts in that area and in Asheville, N.C., reported that condominiums had become hot commodities, in part because builders were aggressively offering incentives to attract buyers.� House prices held steady across much of the District, although contacts in some areas reported somewhat lower prices.� While low- to middle-price homes remained the best sellers Districtwide, a contact in Washington, D.C., told us that finding houses in this category was difficult because of a lack of inventory.
�Commercial real estate agents gave generally mixed reports.� A Washington, D.C., contact said that retail leasing activity slowed in recent weeks due to "some resistance to high rents and less optimism going forward."� A northern Virginia agent noted softer demand for office space, though he said that rental rates remained strong despite recently higher vacancy rates.� In contrast, the Raleigh commercial market continued to strengthen since our last report.� The office and industrial segments were particularly active with lower vacancies and higher rents.� Most other areas in the District reported little change in recent weeks.
�Tourism
Tourist activity was somewhat weaker since our last report.� A manager at a ski resort in Virginia told us that his business was experiencing the worst ski season in 16 years.� He attributed the decline in the number of skiers to unusually warm weather in January, noting that even with colder weather in February, it was virtually impossible to catch up.� Tourism along the coast was mixed.� A contact in Myrtle Beach, S.C., reported that bookings for the Presidents' Day weekend were somewhat stronger than last year, while a respondent from the Outer Banks of North Carolina indicated that holiday bookings were flat.
�Temporary Employment
Temporary employment agencies in the District reported generally strong demand for workers in recent weeks.� An agent in Raleigh, N.C., expected demand for workers to rise over the next few months because of both business relocations as well as expansions of existing businesses.� In Richmond, Va., an agent told us that she anticipated a stronger need for temporary workers because of the area's low unemployment rate.� Workers with customer service, sales, accounting, bilingual and admin skills remained highly sought across the District.
�Agriculture
Weather conditions varied widely during most of January and February as warmer-than-normal periods of mild, dry weather were followed by ice and snow.� A contact in Maryland noted that the generally mild winter had been positive for livestock, and a contact in Virginia said that although some livestock were grazing pastures, most farmers continued the feeding of hay.� In addition, contacts reported that small grain crops were in good condition in most areas of the District.
|
Cleveland