Meanwhile, the Third District is reportedly five months into a general downturn in manufacturing activity. Chicago reports high operating rates, but declining order backlogs at most capital goods producers. The capital goods sector in the Cleveland District is still experiencing backlogs amidst some concern that they might soon face reductions in orders. San Francisco sees most sectors except auto and construction related ones doing well. Despite the prevailing level of interest rates, more stringent non- price lending terms, and tighter credit standards business loan demand continues to expand in most areas.
Funds apparently remain available to businesses who are taking advantage of that availability.
The most common characterization of business loan activity is a moderate slowing in the rate of growth. Kansas City and Atlanta report credit demand dampened by interest rates and Boston perceives a softening in commercial loan demand, but these cases appear to be exceptions. Mortgage lending, on the other hand, seems to be severely and broadly depressed. In regions where mortgage money is available interest rates and down payment requirements have increased sharply in recent weeks. Some district report non-price rationing of funds, while other find some lenders having withdrawn completely from mortgage lending activity.