December 8, 1999
Federal Reserve Districts
|Skip to content
The District economy continues to operate at a high level. While there has been a reported pick-up in sales and production at manufacturers, some signs of moderate slowing in other sectors have been detected. Retail sales growth was below expectations in many instances, causing inventories to rise; warm weather was an oft-cited reason. Slowing in residential real estate markets is becoming more apparent as both sales and new construction taper off. While credit standards for all loan categories have remained unchanged, demand for C&I and residential real estate loans has dropped. Unusually warm and dry weather has hampered the germination and growth of the winter wheat crop.
Many District auto dealers report that sales have been down significantly (in some cases, by more than 10 percent) compared with the same period one year earlier. Pickup trucks and sport-utility vehicles remain the consumers' vehicles of choice. Several contacts have increased the sizes of rebates both to clear out last year's models and to help move current inventory. Almost all dealers report that inventories are at desired levels, although some truck inventories are still low. Contacts are optimistic about year-end sales. A few dealers, however, anticipate a slow start in 2000.
Manufacturing and Other Business Activity
Robust sales growth has been reported for medical supplies, plastics and automotive parts. A recent uptick in the demand for appliances has also been noted. The trucking services industry is continuing its trend of strong growth. Toyota announced that it will hire another 500 workers at its Indiana plant to help meet the ongoing robust demand for pickups and sport-utility vehicles. Sales at farm-equipment dealers, however, have been mixed. While one dealer reported exceptional sales due to pent-up demand, another saw sales decline more than 35 percent from one year ago.
Real Estate and Construction
Monthly residential building permits in almost all District metropolitan areas declined in September, although year-to-date they were above their year-earlier levels. Home builders report a sharp decline in both traffic and demand. The recent shortages of building materials seem to be abating, though, enabling builders to catch up on some of their backlog.
Banking and Finance
Agriculture and Natural Resources
The planting of winter wheat is winding down, ahead of its five-year average pace in all District states. Where the crop has emerged in southern parts of the District, it is rated in good-to-excellent condition. In northern parts of the District, unusually warm and very dry weather conditions, which continue to reduce soil moisture, have hindered the winter wheat crop's germination and growth. A contact in the cotton industry reports that this year's crop has declined in both quality and yield. Despite a strong U.S. economy, domestic cotton mill consumption has weakened since last year, while foreign demand has increased.