Among those Districts whose respondents commented on costs or prices, wages were reported as rising in a range of 3 to 5 percent, in most cases excluding benefits. Reports on prices did not display as much consensus, with some reporting widespread increases and others noting difficulty in passing on cost increases and attendant pressures on margins. In some Districts retailers indicated they had become less optimistic about the outlook for the rest of the year, though in others they were anticipating a slight pickup in sales. Manufacturing activity is said to be flat, on balance, though healthy growth in tradable goods is seen in a number of regions. Reports on real estate construction and sales suggest, for the most part, that activity is remaining below levels seen in 1989, largely because of continuing high inventories.
Credit is said to be tight in some areas.
However, little uniformity of opinion about the reasons for this was evident in the reports. Contacts in the agriculture and natural resource sectors indicate a pretty good outlook at this point, reflecting better weather conditions in major crop and livestock producing areas and an improved energy sector. Consumer Spending Retail sales activity is described as soft to a little higher than a year ago, though contacts in Cleveland, Minneapolis, and Dallas noted strength in some areas. Retailers in New York City are less optimistic about the outlook given the continuing layoffs at banks and brokerage firms, while those in St. Louis expressed similar views in light of anticipated defense cutbacks. Several Districts reported that demand for women's apparel in recent months was described as strong, while that for men's was weak.