Overall demand for steel is strong, but the industry continues to struggle with high inventories stemming from a surge in imported steel. Strength in the housing market has helped to boost sales of equipment for residential construction. A notable weakness in the District's manufacturing sector is aerospace-related production, which has softened following a very strong fourth quarter. Prices of industrial materials have shown mixed patterns in the past few months. A larger percentage of purchasing managers indicate some upturn in raw commodity prices recently, although some products, namely aluminum and certain steel products, continue to experience downward price pressures.
Manufacturers report no significant labor market or wage developments in the past two months.
Retail contacts are optimistic that this sales strength will continue through the remainder of the spring. A large percentage of the District's retailers report expansion plans for 1999. These plans may be hindered, however, by a labor market that many see as very tight. District auto sales in the first quarter were widely regarded as strong, generally exceeding sales volume for this period last year. Shortages have been centered in sport utility vehicles and light trucks.