OVERVIEW OF BUSINESS ACTIVITY 3rd Quarter, 1996 (July, August, September 1996) Gross income during Third Quarter, 1996 was up 7.1 percent from last year. This compares to an 8.6 percent increase in Second Quarter, 1996 and a 4.8 percent increase in First Quarter, 1996. Manufacturing was the leading sector for third quarter with a 12.3 percent gain, replicating the 12.2 percent increase in second quarter. Retail trade was up 6.8 percent, slightly better than the 5.5 percent increase last quarter. Strong growth was seen in a number of manufacturing industries. Manufacturing of food products was up 10 percent with all food product categories reporting gains except bakery and confectionery. Grain mill products was up over 27 percent with strong grain prices during the quarter. Other double-digit gains were seen in apparel and textiles, up 16.4 percent, fabricated metal products 15.1 percent, machinery 10.4 percent, and transportation equipment 28 percent. The large increase in petroleum refining was due to SIC changes. The largest single manufacturing industry, aircraft and parts, was up 35 percent. Contract construction rebounded from second quarter to post an overall gain of 6.1 percent. General building construction (including highways) was the big gainer here with a 9.3 percent increase, compared to an 8.9 percent decline in second quarter. Special trade contractors was up 5.8 percent; within special trade contractors, the plumbing and heating contractors category was up 12.4 percent. Transportation and allied services continued strong growth with a 10.6 percent overall increase. Air transportation services was up 18.3 percent, motor freight and warehousing 18.2 percent, and local and suburban transit 15.3 percent. Railroads reported an 8.4 percent decline. Communication and utilities reported nominal growth with a 3.5 percent increase. The largest utility within this sector, communication, was up 1.8 percent. Water utilities and other utilities were up 5.8 percent and 8.3 percent respectively. Wholesale trade was up only 4 percent compared to a 7.2 percent increase in second quarter. However, within wholesale trade, durable goods continued strong growth with an 8.1 percent increase. Lumber and construction materials was up 13.1 percent and sports equipment continued very strong with a 22.8 percent increase on top of an 18.6 percent gain in second quarter (perhaps the Olympic games during Third Quarter, 1996 was a factor in the sports equipment gains). On the nondurable goods side, things were definitely negative. All categories reported declines except drugs and sundries which was up 3.8 percent. Farm-product raw materials had a large decline, down 10.9 percent, closely followed by paper and allied products, down 10.7 percent. Retail trade recovered somewhat from several quarters of lackluster performance with a 6.8 percent increase. General merchandise stores had the largest increase in this sector with a 14.1 percent gain. Miscellaneous retail stores was up 10.1 percent, and the largest retailing industry, automotive dealers and gas stations, was up 8.1 percent. Furniture, furnishings and equipment sales growth slowed to 5.5 percent as the hot electronics/music store category was up only 8.1 percent after several quarters of double-digit growth. Retail appliance sales reported a 1.4 percent decline. Finance, insurance and real estate was up 9.3 percent led by a 34.1 percent increase in insurance. Finance, representing over two-thirds of the gross income in this sector, was up 3.9 percent. Services and other business was up 6.6 percent with the largest industry in this sector, business services, reporting an 8.2 percent increase. Within business services, computer services was up 10.1 percent. Medical and health services was up 5.6 percent. Although gross income growth during third quarter was not as strong overall as second quarter, retail trade was stronger and wholesale trade was slightly higher in spite of declines in wholesale nondurable goods. The nondurable goods weakness was mainly due to price declines in paper products and farm-product raw materials. Manufacturing continued strong, steady growth.