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On balance, economic activity in the Fourth District showed a slight improvement during the past six weeks. Manufacturers reported that new orders and production levels were stable or marginally lower. An uptick was seen in residential and nonresidential construction, while retailers and auto dealers experienced a small rise in sales. Reports from energy producers and freight haulers were generally favorable. Demand by businesses and consumers for new loans remained weak.
The pace of new hiring has diminished, with only scattered reports of increased payrolls from manufacturers, nonresidential builders, and auto dealers. Overall, staffing-firm representatives noted little change in the number of new job openings, with available openings concentrated in healthcare and the skilled trades. Wage pressures continue to be contained. Apart from a rise in steel and agricultural commodity prices, raw materials and product pricing were generally stable.
Reports from District factories show that production levels were mainly steady or down slightly during the past six weeks. Changes in new orders mirrored those in output. Production was higher on a year-over-year basis, with several contacts citing double-digit increases. A large majority of respondents expect output will stay at current levels for the near term. Those anticipating a drop in production attributed it primarily to seasonal factors or the continuing slump in residential construction. Most steel producers and service centers reported that volume was stable or increasing. Shipments are being driven by energy-related, auto, and heavy equipment industries. Construction volume remains weak. Although underlying uncertainty exists, more than half of our steel contacts expect that the current level of business activity is sustainable in the near term. District auto production showed a large drop in July on a month-over-month basis, due to retooling for model changeovers. In terms of year-over-year comparisons, production rose substantially for both domestic and foreign nameplates.
Only minor shifts in inventories were noted, mostly on the up side. A majority of our contacts stated that utilization rates remain below pre-recession levels, with little change during the past few weeks. Capital outlays continue at relatively low levels, with any significant increases due to investment projects that had been previously delayed. Steel producers and service center representatives reported that raw material prices are rising, although most indicated that their product pricing remains reasonably stable. A few have announced price increases that will go into effect as early as September. Other than a sharp rise in agricultural commodity prices, raw material costs have been fairly steady. We heard only scattered reports of companies hiring new workers, although several firms have extended work hours. Wage pressures are contained.
An uptick was seen in new home construction during the past six weeks and it is on par with year-ago levels. Homebuilders expect construction to remain sluggish going into 2011. Tight credit markets continue to hamper contractors from purchasing land or constructing spec houses. Our contacts tell us that the move-up price-point category is outperforming the entry-level and third-time home-buyer categories. New home prices have shown little movement since our last report and on a year-over-year basis. Other than reductions in lumber prices, construction material costs held steady. General contractors and subcontractors continue to work with very lean crews.
Reports by nonresidential builders indicate some improvement in construction activity since our last report. When comparing to year-ago levels, activity is as good or better according to almost all of our contacts. Backlogs are reasonably healthy, though two builders noted that their backlogs are being depleted at a rapid pace. Inquiries and new projects generally fall within the industrial and education categories. Most of our contacts expect little change in business conditions during the next 6 to 12 months, citing some weakness in inquiries and uncertainty about economic growth. Reports of a small increase in construction material costs, especially for steel, were widespread, and the availability of project financing has improved slightly. General contractors cited an uptick in payrolls. Subcontractors remain underutilized and are taking on projects at cost.
For the period from mid-July through mid-August, retail sales generally showed some improvement when compared to the previous 30-day period. Purchases rose slightly on a year-over-year basis. Still, consumers remain cautious in their purchases and are focusing on value-priced seasonal items. Going into the fourth quarter, retailers expect conservative sales growth. Two of our contacts noted modest price increases by their suppliers, which they have passed through to consumers. Margins are up slightly for most of our contacts. Other than replacement workers, retailers plan no additional hiring until the holiday season.
Auto dealers saw new vehicle sales strengthen from mid-July through mid-August, when compared with the previous 30 days. Reports also showed improving sales on a year-over-year basis. Expectations call for vehicle purchases to stabilize at current levels in the upcoming months. Many dealers continue to say that their inventories are at low levels. Used vehicle purchases are beginning to soften. Interest rates for auto loans are competitive, although arranging financing for customers with less than high credit ratings remains a challenge. Several auto dealers noted that they are undertaking facility upgrades to comply with OEM demands, and they are doing incremental hiring to meet customer demand.
The market for business lending remains soft, with bankers generally characterizing the demand for new commercial and industrial loans as steady or slowly improving. Commercial real estate lending is particularly weak. Interest rates moved by only a few basis points. On the consumer side, conventional loan demand is weak. Those seeing an uptick attributed it mainly to consumers looking for home equity loans and competitive pricing. Most of our contacts said that the demand for residential mortgage refinancing is very strong, while new-purchase mortgage originations continue at a slow pace. Core deposits held steady or increased at almost all banks, with much of the growth occurring in transaction accounts. Reports on credit quality were mixed, while delinquency rates declined somewhat. Employment rolls and wages showed little change.
Reports indicate steady to moderate increases in oil and natural gas output during the past six weeks, with output expected to remain at current levels in the near term. A big push is on to lease large tracts of farmland in eastern Ohio counties for the Marcellus Shale play. Farmers are being offered well-above average market rates for drilling rights. Spot prices for oil and natural gas are flat or down slightly. Coal production has been stable since our last report, with little change expected. Although summer cooling demand grew significantly from year-ago levels, resulting in stockpiles being drawn-down to normal levels, utilities have not increased their coal purchases. Metallurgical coal shipments to Brazil and Asia were characterized as very strong. Prices for coal were mixed but are tending to the up side. Credit availability is affecting capital spending: A coal producer canceled a machinery purchase because he could not obtain financing, while an energy company is expanding drilling operations due to a successful refinancing. Staffing levels are steady, and little hiring is expected in the near future.
Freight transport executives reported continuing favorable volume trends, though the rate of growth seen in the past few months is slowing. Expectations call for current volume to be sustained in the near term. Two executives noted that they have been able to successfully negotiate rate increases, resulting in some improvement to their bottom lines. Several of our contacts reported that quoted prices for tractors and trailers have risen substantially, due mainly to complying with new environmental standards. However, these price increases may push back time tables for purchasing replacement equipment until sometime in 2011. Otherwise, only modest price increases were noted for materials and services used by freight haulers. Current hiring is for replacement only, not adding capacity.