|
The district economy continued to grow moderately last month. Retail sales increased, manufacturing activity remained strong, and energy activity improved. Construction activity generally held steady. In the farm economy, the winter wheat crop remained in good condition, and an improved outlook for the cattle industry slowed liquidation of district cattle herds. Labor markets remained tight in much of the district, although there were fewer reports of wage increases than in previous months. Prices were generally stable at the retail level and for materials used in manufacturing and construction.
Retail Sales
Retailers report sales increased last month and were higher than a year ago. Sales of apparel were strong, especially men�s clothing. Total sales are expected to increase moderately in the coming months. Retailers have been trimming their inventories but report they are generally satisfied with current stocks and plan no major changes in the next several months. Automobile dealers report sales were up slightly last month and expect sales to increase somewhat in coming months. Sales of light trucks and sport utility vehicles remained particularly strong. Dealers have been holding inventories steady but expect to expand stocks somewhat in the next several months to meet increased sales.
Manufacturing
Manufacturers continued to operate at moderately high levels of capacity last month. Manufacturing materials were generally available, with lead times holding steady. Manufacturers have been trimming their inventories, and some say they plan further reductions because stocks exceed desired levels. A quarterly survey of district manufacturers indicated that production, shipments, and new orders all increased modestly from December to January.
Housing
Builders report housing starts generally held steady last month and were unchanged from a year ago. Builders expect construction activity to improve somewhat in the coming months. Sales of new homes increased last month. Most building materials were readily available and delivery times were normal. Mortgage lenders say demand last month was unchanged.
Banking
Bankers report that loans decreased and deposits increased last month, reducing loan-deposit ratios somewhat. Commercial and industrial loans, home mortgage loans, and residential construction loans declined, while agricultural loans edged up. Increases in NOW accounts and money market deposit accounts contributed to the rise in deposits.
Respondent banks held their prime lending rates steady last month and expect to leave rates unchanged in the near term. Banks also held their consumer lending rates steady and plan no changes in the near future. Lending standards were unchanged at most banks.
Energy
District energy activity improved last month. Oil and gas prices fell somewhat but remained well above year-ago levels. The high prices helped boost the district rig count 10.2 percent in February to a level 27.5 percent higher than a year ago.
Agriculture
The district winter wheat crop remains in good condition. Growing conditions have been favorable recently, with much of the crop receiving either a protective cover of snow or beneficial rainfall. Wheat pasture is also reported to be in good condition. Cropland rents are increasing in much of the district as farmers anticipate that crop prices will remain well above breakeven levels. While most crop prices have moderated from the record levels set in 1996, they are still high by historical standards.
Bankers predict that district cattle and hog producers will enjoy a profitable year in 1997, thanks to lower feed costs. The favorable outlook for the cattle industry may bring an early end to the liquidation phase of the cattle cycle. Bankers report that district ranchers appear to have stopped reducing their cattle herds, and some are making plans to expand.
Wages and Prices
Labor markets remained tight last month in much of the district, although there was less evidence of wage pressures than in recent months. Some manufacturers report skilled workers were in short supply, and some retailers say qualified salespeople were hard to find. Fewer companies than in previous months, however, report they raised wages to attract or retain workers. Prices held steady at the retail level and for most manufacturing and construction materials. Retailers expect no major price changes in coming months.
|
Minneapolis