OVERVIEW OF BUSINESS ACTIVITY
2nd Quarter, 1997 (April, May, June 1997)
Second quarter 1997 reported an 8.7 percent increase and continued the string of quarters with strong gross income growth which started with 2nd Quarter, 1996. More importantly, all major industry sectors, except mining and quarrying, reported year-to-year gains. Contract construction in particular improved upon its 1st Quarter, 1997 gain of 13 percent with a 17.8 percent increase in second quarter.
All major industries within contract construction reported double-digit gains; these included general building contractors, up 20 percent, heavy construction, 30.3 percent, and special trade contractors, 12.7 percent. The heavy construction industry includes highway construction while special trade contractors represents a broad spectrum of what are typically referred to as "subcontractors."
Manufacturing was up 12.4 percent overall with most major industries reporting solid gains. Notable exceptions to that were food products, down 1.3 percent, paper and allied products, down 3.6 percent, and printing and publishing which reported a nominal increase of 0.5 percent. As was expected, the largest gross income segment within manufacturing, transportation equipment, reported an increase of over $1.5 billion for a 23.6 percent increase. However, a number of other manufacturing industries also reported double-digit increases. Chemicals and allied products was up 22.9 percent, fabricated metal products, 23.2 percent, and manufacturing of professional and scientific instruments was up 16.4 percent.
Transportation and allied services was up 3 percent; however, the increase in this sector was understated because of the reclassification of a business from air transportation (which accounted for the loss in that industry) to an industry classification outside of the transportation sector. Adjusting for this change would have given the sector an increase of nearly 6 percent.
Communication and utilities was up 4.5 percent with strong growth in communication (telephone, radio and T.V., and cable services) up 8.8 percent. The 13.6 percent increase for electric companies and the 66 percent decline for gas companies were due to reporting changes and industry reclassifications for a number of companies. Overall, the combined electric and gas company industries were up about 2 percent.
Wholesale trade was up 6.7 percent, somewhat below its 9.5 percent increase last quarter. However, any apparent weakness in wholesale trade growth was due entirely to nondurable wholesale goods which was down 3.3 percent. Weakness in paper products, farm-product raw materials and wholesale petroleum products were largely responsible for the decline in nondurable goods. Durable goods, however, reported strong growth with a 16 percent increase as a result of sharp gains in home furnishings, lumber and construction materials and continued strong performance in sporting and recreational equipment.
The retail trade sectors 7.4 percent increase closely paralleled first quarters 7.5 percent increase. Building materials and hardware was up 6.2 percent with the subcategories lumber and building materials up 10.3 percent, and nurseries and garden supplies, 15.6 percent. General merchandise turned in one of its better performances in recent memory with an 8.1 percent increase. The largest retail industry, automotive dealers and gas stations, was up only 3.6 percent. On the other hand, the strong growth in wholesale furniture and furnishings carried through to the retail sector with a 22.6 percent increase for furniture, appliance, and electronics stores. Eating and drinking establishments reported a 5.9 percent gain which was comparable to 1st Quarter, 1997s 6 percent gain; and, while not spectacular increases, are the largest gains for back-to-back quarters in this important retail industry since 3rd and 4th Quarter, 1994.
Finance, insurance and real estate was up 5.2 percent with a small decline (0.9 percent) for financial services; however, strong increases were reported for insurance and real estate, up 16.5 percent and 12.1 percent respectively.
The service sector reported a year-to-year increase of 8.4 percent, outperforming first quarters 7.4 percent increase. Hotels, motels was up 6.4 percent, business services, 8.1 percent, automotive repair services, 11.2 percent, and medical and health services 7.5 percent. Legal services was up 12.3 percent.
Overall, gross income growth showed solid gains within most industries for all business sectors. Any weakness was generally related to market conditions or product pricing within a specific industry.