Manufacturing activity remains depressed with new production cutbacks seeming to outweigh the few production increases. Additional, although slower, inventory liquidation seems likely. Construction, mining, and agriculture remain weak. There are some signs that inflation continues to abate. Consumer and real estate lending is weak, while business loan demand is mixed.
Bankers are concerned about delinquencies and loan quality.
The May improvement reported by most Districts was mostly in non-durable goods. Sales of household durable goods generally are weak, except in San Francisco. Several Districts report sales gains were achieved only because of strong promotions and large markdowns. Discount stores are doing better than full-price stores. Some Districts report continued improvement in early June while others report retail sales falling back from their May levels.