Dealers were generally optimistic about sales in coming months, although some expressed concerns about the availability of domestic vehicles. Manufacturing District factory activity edged lower in May, with somewhat fewer firms reporting high levels of capacity utilization. There were more reports of material availability problems than in previous surveys, particularly for steel products and semi-conductors. Lead times increased slightly. Many plants trimmed inventory levels in May, due in part to strong product sales.
Most managers expect to continue trimming stocks in the next few months.
Real Estate and Construction Housing activity has slowed since the previous survey, while commercial construction remains strong. Most home builders reported in May that housing starts were down 10 to 20 percent from last year's record pace, and expectations of future residential building have cooled considerably. Home sales have fallen in much of the district, and inventories of unsold homes have edged up from previously low levels. Mortgage demand was flat in May, and lenders' expectations of future demand have fallen considerably following recent interest rate increases. In contrast to housing, reports suggest continued strength in the nonresidential market, particularly for office buildings.