Byline: Carol Emert

WASHINGTON — Although the New York area was a significant exception, retail sales softened in most of the country in the early part of the year, according to the Federal Reserve’s Survey of Current Economic Conditions.
Problems plaguing various sections of the country included the devalued peso, which depressed consumer activity along the Mexican border, and unseasonably warm weather.
Apparel and textile manufacturers in several districts reported increased raw materials prices, squeezed margins and in some cases a drop in demand.
The report, issued every six weeks and known as the beige book, provides a snapshot of business conditions in the Fed’s 12 districts. The latest survey, released Wednesday, was taken between the last week of January and the first week of March. Retail weakness was cited in nine districts, while textile and apparel manufacturers in the South and Southwest also complained of sluggish demand.
The New York district sounded one of the bright notes in contrast to the generally pessimistic tone of the survey. Most retailers there reported sales above plan and growth ranging between 2 percent and 11 percent against the same period one year ago.
“Several retailers noted that sales of women’s apparel were strong after months of disappointing performance,” the report said, adding that men’s wear also sold well. “Inventories consist of current spring merchandise and are at planned levels.”
Kansas City also reported improved retail sales, but attributed them to heavy price promotions. In Chicago, steady retail growth was reported, and one large retailer cited a “new strengthening in women’s apparel.”
In the Dallas district, however, retail sales along the Mexican border continued to decline
in the wake of the peso crisis that began in December.
“Several national retailers said that Texas sales were among the weakest in the country,” the report said. “Sales growth was reported to be slower than expected, and contacts said they were less optimistic than a few weeks ago.”
The San Francisco district reported that retailers around San Diego, near the Mexican border, “report sharp declines in sales since the devaluation of the Mexican peso.”
The peso had little impact in Boston, but unseasonably warm temperatures hindered sales of winter wear, the report said. Other apparel categories also performed poorly. Retailers in general said sales were flat to 10 percent lower than during the same period of 1994, even though winter storms kept many shoppers home last year.
Mild temperatures also stalled sales of winter outerwear in the Cleveland district, pushing inventories above desirable levels. Women’s apparel specialty store sales were “down significantly,” the report said.
Retailers in the Minneapolis district reported a “slump” starting immediately after the holiday season, which was unusually strong, according to the report. General merchandise store sales during the survey period “were barely above year-earlier levels,” it noted.
Prices on apparel have declined slightly in the Northeast, according to the report, while vendor prices on other goods have risen between 2 percent and 10 percent.
Giving specifics on manufacturing in some districts, the report noted that orders for textiles in Boston remain sluggish; a few retailers in that district cited an overall rise of 2 to 3 percent in vendor prices and increases of over 10 percent on leather, plastic and paper products. By contrast, prices on apparel have dropped modestly.
In Dallas, apparel orders weakened among all categories other than jeans, according to the report.
Conditions in Atlanta were mixed. “Although there continue to be scattered reports of layoffs by small, niche-oriented apparel firms, a few large apparel producers are adding to employment rolls and expanding capacity as a result of strong product demand.”
Manufacturers of both textiles and apparel in the Atlanta region “report increasing prices paid for raw materials and are charging higher finished product prices than was the case late last year,” the Fed said.