December 4, 1996
Federal Reserve Districts
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The District economy remains strong overall and is growing moderately in most areas. Price and wage increases are light.
Labor markets are characterized as "tight" in many parts of the District, but especially in central and southwestern Ohio and northern Kentucky. Many areas report unemployment rates under 4 percent, and in a few locations the rate has dipped below 3 percent. While several sources are expressing concern over the potential for substantially higher wage growth, there are few signs of any significant rise at present.
Employment agencies report the demand for temporary workers is strong, with low-skilled workers in short supply. In the past few months, a growing number of corporate clients have begun hiring temporary workers on a permanent basis.
In mid-November, a few large District auto assembly and manufacturing plants were temporarily shut down because of parts shortages stemming from the Canadian Auto Workers’ strike against GM. Some plants were closed for up to two weeks, resulting in nearly 7,000 layoffs Districtwide. Production has since returned to normal, although no makeup of lost production is currently scheduled.
The soybean crop is reported to be plentiful and in good condition. Potato and apple harvests in Pennsylvania and Ohio are nearly complete, and reports for these crops are also favorable. However, as of mid-November, the corn harvest was still about 20 percentage points below average in Ohio. In Kentucky, blue mold has affected the weight and quality of burley tobacco.
Despite some disappointments with the overall sales picture, retailers seem cautiously optimistic about the holiday shopping season. Inventories are being expanded in line with expectations of increased store traffic. Prices are reportedly stable, except in electronics, where deep discounts are common. Many stores have already hired seasonal help, but a few report difficulty finding qualified workers for some positions. A variety of chain stores have recently expanded into the District, particularly in Ohio.
Inventories remain near desired levels, with shortages reported only for the most popular models and for light trucks.
Banking and Finance
In general, bankers are experiencing a narrower spread between borrowing and lending rates. Profits, however, are substantially improved from this time last year. Refinancing activity is picking up as mortgage rates drop.