January 19, 2005
Federal Reserve Districts
|Skip to content
For the final six weeks of 2004, economic conditions were mixed across major sectors of the Fourth District. Retailers' reports varied by retail segment, while activity among the District's durable and nondurable goods facilities was steady. Though residential and nonresidential construction continued to slow somewhat, the slowdown was probably partially due to seasonal variation. And while borrowing from banks in the District remained steady, demand for shipping services was "surprisingly strong." In general, input cost increases were modest and retail price pressures remained limited. Finally, staffing services companies reported an increase in demand for workers from manufacturing firms.
Nondurable goods makers generally reported that production levels were flat for the last six weeks of 2004. Some firms also reported a rebound in production in January, but noted that this may be from seasonal fluctuations in demand. Production levels were reported to be the same as or less than at this time last year. Regarding expectations, several chemicals producers expect the economic environment to improve in the near term; however, paper producers were less sanguine in their assessment of the outlook. Most firms indicated that they had little intention to hire in the coming months, or to add to their capital stock.
Input costs continued to increase in recent weeks for nearly all nondurable goods makers, and they are also higher on a year-over-year basis. By contrast, durable goods producers generally reported that their input costs were flat throughout the recent period, though their costs also remained above year-ago levels. Finally, many durable goods producers reported rising wages and indicated continued concerns about increasing health care costs.
Sales at District department stores were generally weak, while sales at specialty apparel shops were more mixed. A few firms noted strong sales in early January, though these firms indicated that they were sharply discounting some of their merchandise. In particular, apparel retailers reported aggressive promotional activity in the wake of sluggish sales. Discounters reported sales growth that was consistent with their expectations. And grocers reported strong sales during the holiday season, while restaurateurs reported weaker conditions. While personal care products generally sold well, furniture and other home products sold poorly.
Sales at auto dealerships improved in December after a weak November. New automobile sales strengthened throughout the month of December, as dealerships employed discounts and incentives in an attempt to move merchandise. Nevertheless, dealerships generally reported that their inventories of new cars remained above acceptable levels. Used car sales were generally flat for the last six weeks of 2004.
Accounting for the usual seasonal slowing in activity, nonresidential construction was largely flat throughout the last six weeks of 2004, though customer inquiries improved modestly during December. On a year-over-year basis, building activity saw a slight increase. Regarding specific sectors, education-related construction remained robust at year-end, and several contractors also indicated increasing demand from firms in the manufacturing sector. Input prices for nonresidential builders have been flat for several months. Few firms expected to add to their workforces in the coming months, and most contacts think that activity in 2005 will be at least as strong as in 2004.
Trucking and Shipping