However, order backlogs continued to fall. Most of the major manufacturing industries in the region experienced some respite from the first quarter's downward trend in shipments, but producers of chemicals and transportation equipment reported continued decreases. Manufacturers continue to face high costs for fuels and electricity. They report that their ability to raise prices for their products is limited by competition from Asian and European firms that benefit from the low value of their currencies in relation to the U.S. dollar. In addition, several firms indicated that their major customers were looking for price reductions as a condition of further purchases.
Manufacturers expect business conditions to improve during the next six months.
Firms in all major industrial sectors except chemicals, transportation equipment, and instruments expect increases in orders. Despite the forecasted increase in business, area manufacturers project no rise in order backlogs. The region's manufacturers intend to limit capital expenditures, on balance. Nearly half of those contacted for this report will maintain steady rates of capital spending during the next six months, and the number of firms planning increases is offset by an equal number reducing capital spending budgets. Retail Retail sales in the Third District rose slightly in mid-April after dropping in March.