|
Business activity in the Sixth District expanded at a moderate pace during
February and March. Reports of hiring remained mixed, but declines in some of
the weaker sectors abated. Retail reports indicated that sales exceeded
year-ago levels, whereas auto sales were described as uneven. Tourism reports
were distinctly upbeat. Single-family housing markets remained robust and
small improvements were noted in some commercial real estate segments.
Manufacturing output increased from low levels and transportation contacts
continued to report increasing demand. Banking activity was described as
mixed. Rising prices for some key transportation, manufacturing, and
construction inputs were widespread, although instances where these increases
were being passed on to final users remained limited.
Consumer Spending
District retail contacts reported that February sales were up
strongly compared with a year-ago, followed by moderate increases in March.
Most merchants indicated that inventories were balanced. Women's and children's
apparel, and shoes sold well in March. Home-related sales were mixed.
Retailers remained upbeat and anticipate that second-quarter sales will also
exceed year-ago levels. Demand for light trucks and SUVs continued strong, and
contrasted with the weaknesses noted in most car segments even with strong
marketing incentives.
Real Estate
District single-family housing
markets remained robust overall in February and March. The majority of Realtor
contacts noted that sales exceeded year-ago levels, and most builders reported
that new home construction during March met or exceeded the prior year's
level. The strong demand for mid-priced homes continued, with some improvement
in demand for high-end homes. Demand continued to outstrip supply in several Florida markets. Housing inventories were mostly described as balanced elsewhere.
Contacts anticipate continued strength in the second quarter.
Reports
indicated there were modest improvements in commercial real estate markets in
February and March. Several retail expansions were underway, and although most
large-scale construction plans have remained on hold in other sectors, some
small to mid-size projects have moved forward. Concern that escalating steel
prices could hold up some projects was noted. Office markets remained
generally weak.
Manufacturing
Activity improved in several manufacturing industries. Strong sales in
February and March were reported from lumber, plywood, metal piping, heavy
trucks and trailers, and supply boats for the offshore drilling industry.
Carpet production was described as steady, but other areas of the textile
industry remained weak. The pulp and paper industry also continued to struggle
with overcapacity problems. Some manufacturers reported increased steel
product inventories as a hedge against additional price increases.
Transportation
District transportation contacts reported
continued strong demand for air, truck and rail transportation services.
Inter-modal centers in Atlanta and Huntsville reported record volumes of rail
cargo processed. Several District trucking companies reported very strong
demand for both industrial and consumer shipments.
Tourism and Business Travel
Contacts in the
District's tourism and hospitality industry reported high levels of activity in
several markets. South Florida recorded near record numbers of visitors, and
hotel occupancy rates in central Florida were up from last year. Passenger
traffic and fares were said to be increasing in the cruise industry. Gaming
revenues along Mississippi's Gulf Coast increased strongly from a year earlier.
Financial
Responses indicated that banking sector
activity was mixed in February and March. Residential mortgage activity slowed
somewhat, but there were some reports of new rounds of refinancing. Reports
also noted increased use of adjustable rate mortgages. Demand for new
commercial and industrial bank loans remained flat. Past dues and loan losses continued
at low levels and competition for deposits was vigorous. One report noted a
modest increase in venture capital activity in the District.
Employment and Prices
Most reports indicated that
hiring remained limited in March. Despite increased output, there were only
scattered reports of new hiring in the manufacturing sector. There was a pickup
in hiring because of new contracts in the defense industry. Contacts noted that
the use of temporary workers was increasing in some sectors.
More instances of higher input prices were noted in
March. One building contractor reported that the price of building materials
was "going through the roof." In some cases, rising building costs
were being reflected in new home prices. Sharply higher raw steel prices had
increased costs for metal fabricators in the District. Some transportation
firms indicated that they were able to pass on recent fuel costs increases. A
large paper producer announced price increases for several consumer products.
Agriculture
Dry weather conditions were the
main factor affecting District farmers during late March and early April.
Recent market conditions for regional crops such as cotton and soybeans were
bright. Vegetable prices were also firm. Overproduction of sugar was noted as
a concern of District sugar cane growers.
|
Richmond