OVERVIEW OF BUSINESS ACTIVITY
3rd Quarter, 1998
(July, August, September 1998)
Gross income growth during Third Quarter, 1998 posted a year-to-year increase of 4.5 percent compared to an adjusted 4.8 percent increase in Second Quarter, 1998. Among major industry sectors, contract construction led the way with a 10.6 percent increase followed by manufacturing, up 10.1 percent, and the service sector up 8.7 percent.
Wholesale trade was down again this quarter with a 5.8 percent decline. Also down was transportation and allied services, 4.1 percent, and the finance, insurance and real estate sector, down 6.4 percent. Retail trade was up 7.8 percent, nearly the same as second quarter, and the services and other business sector was up 8.7 percent, compared to 5.8 percent in second quarter.
Contract construction was back into double-digit growth this quarter after only a 5.5 percent increase in second quarter. Within the construction sector general building contractors was up 14 percent and special trade contractors 10.1 percent; heavy construction was up 3 percent.
Manufacturing was up 10.1 percent in third quarter, compared to a 7.1 percent increase in second quarter. However, most of this growth was represented by the transportation equipment industry, up 30 percent (about $2 billion), which offset declines in other key manufacturing industries. Key industries with declines included food products, lumber and wood products, primary metals industries, and electrical machinery and supplies. On the other hand, the heavy machinery industry (SIC 35) posted a 10.4 percent increase.
Transportation and allied services was down 4.1 percent. Year-to-year declines continued this quarter for railroads and water transportation with railroads down 10.5 percent and water transportation down 22.3 percent. Air transportation posted a significant increase at 20.4 percent and motor transportation was up 3 percent.
After no gain in second quarter, communication and utilities gross income was up 4.4 percent in third quarter. Communication was up 3.7 percent, water companies 9.7 percent, and electric companies 14.8 percent. The 19.8 percent decline for gas companies represents very small dollar volume.
Wholesale trade was down 5.8 percent in third quarter compared to an adjusted second quarter that was nearly flat on a year-to-year basis. Wholesale durable goods was down 0.6 percent while nondurable goods was down 8.6 percent. Within durable goods the declines were spread among a number of industries with no single industry reporting a large decline. Nondurable goods, on the other hand, had substantial declines within a number of major industries. Paper and paper products was down 28.2 percent, farm product raw materials, down 77.8 percent, and petroleum and petroleum products was down 19.4 percent. For the most part, declines in these nondurable goods industries were due to weaker market demand for some commodities and resulting commodity price declines.
Retail trade sector growth was up 7.6 percent, comparable to the 7.8 percent increase in second quarter. Building materials and hardware was up 3.7 percent, general merchandise stores 8.6 percent, food stores 6.6 percent, and auto dealers 6.1 percent. Furniture and furnishings beat second quarters 11.1 percent increase with a 19.4 percent increase this quarter, and was led by a 23.9 percent increase for electronics/music stores. Eating and drinking establishments was up 4.6 percent. The service station industry was down 9.3 percent due to product price declines for gasoline. Strong consumer demand for electronics and home furnishings fueled much of the retail sectors' growth.
Finance, insurance and real estate was down 6.4 percent with financial activities down 18.7 percent; bank buy-outs and consolidation of banking activities have had an impact in this industry. Insurance was up 16.1 percent, and real estate (services and property management) up 16.6 percent.
The service sector was up 8.7 percent. The big gainers here were business services, up 10.7 percent, and medical and health services, up 9.2 percent. Automotive repair and services continued its strong growth with a 10 percent increase. Amusement services was up 12.4 percent.
Overall, third quarter data showed continued strong growth in key sectors such as construction, manufacturing, retail trade and the service sector. Declines in the wholesale sector were due largely to commodity price declines because of lower demand for nondurable goods such as paper and paper products, fuel, and farm products.