October 30, 1996
Federal Reserve Districts
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Reports from businesses in the Third District during October suggested that the region's economy continued to expand but the pace of growth had eased recently. Manufacturers posted gains in shipments and orders in October, but the improvement was not as widespread as it had been in the summer months. Area industrial firms noted increased prices for some of their purchased inputs but there did not appear to be a general increase in the cost of raw materials. Retailers reported mixed results for early October. Apparel retailers said back-to-school buying carried over from late September into the first few weeks of the month, boosting their year-over-year gains; but, in general, merchants said sales growth was slow. Auto dealers said sales have been steady. Reports from several area banks indicated that growth in consumer lending had eased in the most recent few weeks while commercial lending had picked up slightly.
Employers in the Third District have had increasing difficulty finding qualified workers for certain job openings, especially clerical and administrative positions requiring computer skills. In addition, some firms reported that the recent implementation of stricter licensing or qualification standards by governments or industry groups has reduced the pool of qualified applicants for certain manufacturing and other jobs.
On balance, area industrial firms indicated that order backlogs were edging down. Looking ahead, one-third of the firms contacted said they expect orders to increase over the next six months while one-fourth anticipate further declines. In line with these modest expectations, manufacturers were trimming payrolls.
Industrial prices in the region, while mostly steady, have shown some signs of increasing. One-quarter of the firms commenting on prices noted higher costs in the past month for the goods they buy. Most, however, said the cost of raw materials has not increased despite the rise in prices for some other purchased inputs. With regard to the prices of the products they make, three-fourths of the surveyed firms are holding the line; only a few report they have raised prices.
Several retail executives noted that there appeared to be growing use of cash and debit cards rather than credit cards recently. They speculated that consumers may be starting to limit their buildup of debt and that this may portend slower growth in consumer spending.
Besides clerical workers, employers say there are inadequate numbers of truck drivers, computer programmers and other data processing workers, and skilled trades workers in high-tech manufacturing and construction. Some of these shortages are at least partially due to the recent implementation of higher skills standards for certain manufacturing trades and stricter licensing requirements for truck drivers, both of which have reduced the pool of qualified applicants for these jobs. Where feasible, some employers have established training programs to provide new workers with the required specialized skills, and some are cooperating with educational institutions to develop such programs.