![]() |
May 5, 1999
Federal Reserve Districts
|
||||
Skip to content
|
The Fourth District economy continues to perform at a high level. Some pickup in manufacturing production has been experienced while retail and construction activity remain quite strong. District temporary employment agencies indicate that a lack of workers continues to hamper their ability to meet demand resulting in some added upward wage pressures. Likewise, wage growth appears to have accelerated slightly for workers under collective bargaining agreements; the average increase has inched up from 3% to 3�%, reaching 4% in some cases. Inflation protection is not a major concern in current contract negotiations. Some cost of living adjustment clauses have been replaced with performance bonuses, while others are activated only when inflation exceeds 3% per year. The length of contracts is mixed, with some moving back toward the more standard 3-year duration, while others average between 4 and 5 years. Weather has been favorable for District farmers, with plenty of moisture for young crops. Most crops are reported to be ahead of schedule for the season.
Construction
Worker shortages are being reported in the Pittsburgh and Cincinnati regions, with masons, roofers, and framers in especially short supply. Some raw materials shortages, including drywall, lumber, and concrete have been noted, and prices have edged up in these markets.
Industrial Activity
Prices of industrial materials have shown mixed patterns in the past few months. A larger percentage of purchasing managers indicate some upturn in raw commodity prices recently, although some products, namely aluminum and certain steel products, continue to experience downward price pressures. Manufacturers report no significant labor market or wage developments in the past two months.
Consumer Spending
District auto sales in the first quarter were widely regarded as strong, generally exceeding sales volume for this period last year. Some dealers note a slowdown in April sales numbers following a "feverish" March pace. Some dealers are struggling to keep pace with the strong sales volume, noting a less-than-average inventory position. Shortages have been centered in sport utility vehicles and light trucks.
Banking and Finance
There is no change in credit quality. Consumer and commercial loan delinquencies remain low and generally unchanged over the past few months. No changes in credit standards have been reported. Still, the spread between borrowing and lending rates remains narrow, and competition for borrowers is considered fierce by industry sources.
|