Used car sales, in particular, have experienced the largest decline. An early blast of winter weather, coupled with economic uncertainty and an anticipation of lower interest rates, are believed to have kept buyers away from showrooms. About two-thirds of the dealers note that current inventories are above desired levels. Manufacturing and Other Business Activity Contacts in a variety of industries are experiencing a noticeable slowdown in demand. Slowing demand has helped ease labor markets somewhat, which has enabled firms to fill some of their vacant positions.
Contacts continue to cite high fuel costs as a major problem.
Although many firms pass on these higher costs to customers as surcharges, profit margins are still being squeezed. Weak demand for automobiles has caused two manufacturers to idle several plants for at least one week. The local steel industry continues to weaken, with several producers going out of business in the past few months because of lower demand and foreign competition. The wholesale trade industry in northeast Arkansas and the furniture manufacturing industry in northeast Mississippi are both experiencing reduced profits because of slower demand. The District's apparel industry continues to shrink, as a Fruit of the Loom plant in Arkansas closes to eliminate excess production capacity.