
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, August 4, 1994                   TAG: 9408050044
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: Knight-Ridder Newspapers
DATELINE: WASHINGTON                                LENGTH: Medium

RETAIL PRICES STEADY

Prices are holding steady at the retail level despite broad-based commodity price increases, the Federal Reserve said Wednesday in its Report on Current Economic Conditions, commonly called the Beige Book.

``Virtually all districts report that competitive pressures are holding prices down at the retail level,'' the nation's central bank said.

``Presumably, retail margins are being squeezed'' because prices are increasing for a broad range of business materials, including finished steel and steel scrap, copper, wood, paper and paperboard, building materials, including brick and glass, and wool and other textile products.''

Labor markets tightened in several districts, but actual labor shortages were noted only in a few skilled occupations, resulting in limited cases of faster wage growth.

Recent U.S. economic activity expanded ``at a solid pace'' in most Federal Reserve districts, ``with only scattered observations of weakness,'' the Fed said.In its last beige book, released in late June, the Fed reported that competitive pressures were keeping retail prices stable. However, increases were noted in manufacturers' raw materials prices. In that report, the Fed said economic expansion continued, but that growth in some areas had recently moderated.

The Fed beige book is released every six weeks, shortly before meetings of the policy-making Federal Open Market Committee, which recommends changes in key interest rates. The next FOMC meeting is scheduled for Aug. 16.

Wednesday's report was prepared by the Cleveland Fed based on information obtained from the 12 Fed districts before July 25.

Manufacturing activity in a broad range of industries continued to expand. Construction activity is holding steady with a ``drop-off'' in residential building reported in many districts partially offset by moderate stronger commercial building.

``Higher mortgage interest rates are commonly blamed for a slowdown in home sales and new construction,'' the Fed report said.

Retail activity picked up recently, particularly sales of autos, building materials and appliances. Apparel sales improved in some districts as well.

``Retailers are guardedly optimistic about prospects over the remainder of the year, with continued strength anticipated in the new car market,'' the report said.

Jobs growth in manufacturing was uneven across regions and industries, the report said. Companies continue to use temporary workers and have their employees work a lot of overtime. The continued resistance of firms to add new permanent workers was noted in several districts.

Still, ``reports of job cutbacks are more rare,'' although they continue in the aerospace industry and the New York financial and retail industries.

Consumer borrowing was at high levels in virtually all districts, the Fed said. Lending activity expanded moderately even in California, ``where the business trend remains flat,'' it said.

by CNB