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On balance, economic activity in the Fourth District held steady during the past seven weeks. Manufacturers reported that the rise in production which began late last year is leveling off. Contacts in nonresidential construction cited fewer inquiries and a small drop in backlog, while residential builders noted that new home construction has slowed. Retail sales were flat to up slightly, whereas auto dealers reported a slight downturn in new vehicle purchases. Energy production increased modestly, and reports indicated a continuing upturn in freight transport volume. Demand by businesses and consumers for new loans remained weak.
A small pickup in employment was limited to the manufacturing sector. Staffing-firm representatives reported some improvement in the number of new job openings, with opportunities concentrated in the healthcare field. Wage pressures continue to be contained. Apart from a downward trend in steel and lumber prices, raw materials and product pricing was generally stable.
Reports from District factories show that production levels were mainly steady or down slightly during the past seven weeks. Manufacturers who cited increased output attributed it to seasonal factors. Production was higher on a year-over-year basis, with many contacts citing double-digit increases. A large majority of respondents believe that demand growth seen earlier this year is tapering off, and they expect production will stabilize at current levels or show a modest decline. Most steel producers and service centers reported a slight downturn in volume, which was expected. Shipments are being driven primarily by energy-related and metal fabrication industries. Construction volume remains very weak. Although this time of year is traditionally slow for the steel industry, our contacts are not overly confident that shipments will pick up in the fourth quarter. District auto production was fairly stable in June on a month-over-month basis, while year-over-year it rose substantially for both domestic and foreign nameplates.
Little movement was seen in inventories, although we heard a few reports that finished durable goods inventories were beginning to rise. A majority of our contacts stated that their capacity utilization rates are below pre-recession levels, with little change during the past few weeks. Capital outlays continue at relatively low levels, and business owners are approaching spending decisions with caution. Steel producers and service center representatives reported that their prices are on the decline, reflecting a downward trend in steel production input costs. Other raw material costs have been fairly stable. Companies continue to expand payrolls and extend work hours, but at a slower pace. Wage pressures are contained.
In general, new home sales have slowed during the past seven weeks and on a year-over-year basis. Most of our contacts cited tight credit as one of the primary factors contributing to the slowdown. Homebuilders are not expecting a turnaround in new home construction this year, with several anticipating a further decline in sales. Our contacts tell us that entry-level homes are beginning to regain sales momentum, with lessening activity in the move-up and third-time home-buyer categories. Little change was noted in the list prices of new houses, and reports indicate that the rise in construction material costs is leveling off, especially for lumber products. Skeleton crews remain the norm for general contractors and subcontractors.
Signs of a pickup in nonresidential construction cited in our past two reports are beginning to diminish. Although building activity remains steady, several of our contacts reported declining inquiries and a slight drop in their backlogs. Most inquiries and new projects underway fall within the industrial and government-funded infrastructure categories. The glut in commercial space shows no signs of lessening. Half of our contacts expressed a heightened level of uncertainty about construction activity in the near term, though others remain cautiously optimistic. Little change in construction material costs was reported. We heard numerous accounts of contractors and clients struggling to obtain financing. Other than seasonal hiring, employment rolls are steady. Many subcontractors remain underutilized and are taking on projects at cost.
For the period from mid-May through mid-June, retail sales were generally flat or up slightly when compared to the previous 30-day period. Purchases of apparel and food products are doing well, while spending on discretionary items has weakened. Retailers are somewhat less optimistic about future sales than in our last report; however, they still expect buying to show a small improvement going into the fourth quarter. Vendor and store pricing has been stable. Most auto dealers saw new vehicle sales slow from mid-May through mid-June, when compared with the previous 30 days. Dealers indicated that the rising sales trend present in the spring has leveled off, and they are not expecting a return to robust growth in the near term. Many dealers said that their inventories are low, which was attributed to seasonal factors. Used vehicle purchases were characterized as holding up reasonably well. Our contacts told us that they are finding it more challenging to arrange financing for customers with less than the highest credit rating. Reports show little change in staffing levels at retailers or auto dealers.
The market for business lending remains soft, with bankers characterizing the demand for new loans as flat to improving slightly. Interest rates are stable. On the consumer side, loan demand is generally weak. Those seeing a slight uptick attributed it to draw-downs on home equity lines of credit. We heard a few reports of downward pressure on auto loan rates. The residential mortgage market continues at a slow pace, with several bankers noting that activity is below expectations, given current mortgage rates. Core deposits are steady or up at most banks, with much of the growth occurring in transaction accounts. Reports on credit quality were mixed. Delinquency rates declined or held stable for nearly all banks; still, several of our contacts noted that delinquencies remain above historic norms. Employment rolls and wages are stable.
Reports show little change in oil and natural gas output during the past seven weeks, with output expected to remain flat in the near term. Spot prices for natural gas rose slightly, while oil prices dropped. Reports on coal production have grown more positive. Export producers are experiencing increased demand for both steam and metallurgical coal, while unseasonably warm weather increased the demand for coal by electric utilities. Prices for coal were mixed but are tending to the up side. Production equipment and materials costs were generally flat. Staffing levels are steady, and little hiring is expected in the near future. Wage pressures are contained.
Freight transport executives reported continuing favorable volume trends, with only moderate gains to their bottom lines. Although most of our contacts are cautiously optimistic in their outlook, they expect that the rate of volume growth experienced in the second quarter will begin to moderate. One contact noted industry-wide concern over the strength of consumer demand. Several respondents commented that they are attempting to negotiate rate increases, with some degree of success. Major capital purchases remain at or near replacement rates. However, due to aging fleets and growing demand, the need to replace equipment may grow toward year-end. Several of our contacts noted that quoted prices for tractors and trailers are rising. Current hiring is primarily for replacement only. If volume continues to build, freight executives expect to add capacity in the near term.