Steel producers report strong growth in orders, but stable raw materials prices have held the product price down. The demand from the auto industry is so strong that some producers report shipping their steel while it is still hot. Asian developments have not had a strong effect on final sales due to healthy domestic demand and long contract lead times associated with exports of higher-performance steel. Most retailers expect 1998 to be a stronger year than 1997. Retail sales in the District have met or slightly exceeded expectations for the first part of the year, with January sales significantly above target but February sales only marginally so.
Gains appear to have been led by strong demand for apparel and wireless communication.
There is a wide disparity in reported inventory levels, but the average seems to be slightly above the desired levels. January and February auto sales showed strength in the minivan, sport utility vehicle, and truck categories, but were flat for passenger cars. As a result of heavy inventory buildup in the slow months leading to the holidays, dealers have an ample supply of cars. There is some downward price pressure in the used vehicle market because large numbers of 1996 models are being returned from lease agreements. However, leasing prices are marginally higher as a result of lower residual values.