Page 10 Monthly Business Review January 1, 1950 SUMMARY OF NATI ONAL BUSI NESS CONDI TI ONS By the Board of Governors of the Federal Reserve System (Released for publication December 30, 1949) Industrial production increased moderately in November and the early part of December. Department store sales showed more than the usual sharp pre-holiday rise. Com  modity prices were generally stable. Prices of long-term Treasury bonds and common sto
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  Page 10  Monthly Business Review January 1, 1950 SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System (Released for publication December 30, 1949) Industrial production increased moderately in November and the early part of December. Department store sales showed more than the usual sharp pre-holiday rise. Com modity prices were generally stable. Prices of long-term Treasury bonds and common stocks rose to the highest levels in over a year. Industrial Production With settlement of the steel labor dispute and temporary full-scale operations at coal mines, the Board’s seasonally adjusted index of industrial production increased in Novem ber to 171 from 166 in October. Indications are that the December index will be slightly above the September figure of 174.Durable goods output rose about 3 per cent in November as large increases in production of steel ingots, lumber, and copper and copper products more than offset decreases in most metal fabricating activities. Reduced steel stocks re sulted in a substantial curtailment in output of fabricated iron and steel products and contributed to reductions in activity in machinery and transportation equipment indus tries. In the automobile industry assembly operations were substantially curtailed by model changeovers. In the ma chinery group, output of most types of producers equipment was reduced, while production of consumer appliances was maintained.In December steel ingot output was scheduled at 93 per cent of capacity, the highest rate since last May and sub stantially above the November level of 52 per cent. Auto mobile assemblies increased considerably in the middle of December.Output of nondurable goods declined slightly in Novem ber. There were small further gains in activity at textile, paperboard, and chemical plants and a sharp recovery in coke production, while output of manufactured food prod ucts and printing and publishing activity declined some what. Activity in the canning industry showed much more than the usual seasonal decrease. Output of most other nondurable goods was unchanged.Minerals output rose sharply in November as bituminous coal mines were returned to full-scale operations for three weeks ending November 30, and as output of crude petro leum and iron and copper ore increased. In December, minerals production decreased as coal miners returned to a reduced work-week and output of crude petroleum was curtailed about 3 per cent. Construction  Value of construction contracts awarded in November, according to the F. W. Dodge Corporation, declined sea sonally from the exceptionally high autumn level but was still about one-half again as large as in November 1948. The volume of new housing starts, as estimated by the Bureau of Labor Statistics, continued unusually large in November, totaling 93,000 compared with 100,000 in Octo ber and 64,000 in November 1948. Employment Total employment i n nonagricultural establishments showed a rise of about 120,000 from mid-October to mid- November, after allowance for seasonal changes. The re turn to work of 335,000 bituminous coal miners was partly offset by employment declines in industries producing non durable goods and in trade and Federal government estab lishments. Employment in other lines was maintained at October levels. Distribution Department store sales, which had shown a less than seasonal rise in October, increased by more than the usual amount after the middle of November. Value of sales in the first 24 days of December was about 3 per cent below the high level in the corresponding period in 1948; sales in the first 11 months of the year had been at an average level 6 per cent lower than in 1948. Prices at department stores are generally lower than they were a year ago.Railroad revenue freight traffic recovered considerably in November to about the levels prevailing before the steel and coal labor disputes. While coal shipments declined again in early December, loadings of steel products con tinued to rise and most other shipments showed largely seasonal changes. Commodity Prices The average level of wholesale prices continued to de cline slightly from mid-November to the third week in December, reflecting chiefly a decrease of 4 per cent in meat prices and a 34 per cent drop in egg prices. On December 21 it was announced that the Federal egg support level would be reduced about one-fifth in 1950. Prices of most steel products for domestic shipment were raised and there were also some selective increases in prices of other industrial commodities. Prices of steel scrap weakened and tin and lead were reduced further. Bank Credit Business loans, real estate loans, and loans to consumers   continued to expand at banks in leading cities during November and the first three weeks of December. Holdings of U. S. Government securities increased on balance over the period. Deposits at banks increased sharply from the middle of November to the middle of December and there was the usual pre-Christmas increase in currency in circula tion.The currency demand absorbed reserve funds and the growth in deposits required banks to hold additional re serves. While net expenditures by the Treasury supplied funds during the first half of the month, large Treasury receipts from quarterly income tax payments tended to reduce bank reserves after the middle of the month. Sub stantial purchases of Treasury bills and certificates by the Federal Reserve were necessary to supply banks with re serves required to meet these drains. Security Markets On December 1, the Treasury announced the offering of a new 1% per cent, 4 %  year note in exchange for bonds and certificates maturing on December 15 and of a new l!/8 per cent, 1year certificate in exchange for the certifi cates maturing January 1, 1950. During the first three weeks of December prices of long-term Treasury bonds rose to the highest levels in more than two years and yields on short term Treasury securities also declined. In the same period common stock prices rose in an active market to the highest level in more than a year, while prices of high grade corpo rate bonds increased only slightly.   January 1950  Page 8  Monthly Business Review August 1, 1950 SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System (Released for publication July 25, 1950) Industrial production and construction activity in-creased further in June to new peacetime peaks. Following the outbreak of hostilities in Korea near the end of the month, buying showed a marked upsurge and commodity prices generally rose con-siderably in both wholesale and retail markets. Common stock prices declined sharply for a time. Prices of U. S. Government securities generally showed little change. Bank credit continued to expand. On July 19 a largescale Federal program was proposed for expanding defense production and curbing inflationary developments. Industrial Production The Board’s production index rose another 4  points in June to 199. Although output of steel and some other basic materials had been at or close to capacity levels in May, continued strong demands resulted in further increases in production of most major groups of manufacturers and minerals in June. In early July output declined temporarily owing to holiday and vacation influences.Production of durable goods increased substan-tially further in June, mainly because of gains in the automobile and machinery industries. Auto-mobile assembly, which had been at a new record rate in May, increased 23 per cent further in June, and activity in machinery industries continued the marked rise which began in early spring. Steel pro-duction was maintained in June at the capacity level reached in April. Refinery output of nonferrous metals expanded considerably further, but supplies available, after increased takings for Government stockpiles, continued substantially below industry demands. Mine production of copper and iron ore also expanded.Output of nondurable goods increased somewhat further in June, reflecting mainly continued gains in rayon and woolen textiles, paper, petroleum, rubber and chemical products. Tire production was at a new record, and a substantial expansion in output of synthetic rubber was initiated. Activity at cotton mills declined somewhat. Construction Value of construction contracts awarded in June was maintained at the spring peak level reflecting continued expansion in awards for public work which offset further small declines in private awards. The number of housing units started in June was maintained at the record May level and for the first half of the year totaled 687,000 units, as com- pared with 449.000 units started during the first half of 1949. Employment Employment in non agricultural establishments rose  by about 300 thousand persons in June, after allow-ance for seasonal changes. About onehalf of this increase occurred in industries producing durable manufactures; there were also gains in employment in construction and transportation activities. Agriculture Total crop production this year, according to July 1estimates, is expected to be 6 per cent less than last year when stocks increased and exports were somewhat larger. Considerably smaller cotton and wheat crops are in prospect, but feed crops mayapproach last year’s large harvest. Marketings of meat animals recently have been in about the same seasonally low volume as a year ago, while produc-tion of milk and eggs has been larger. Distribution Consumer buying increased considerably begin-ning in the latter part of June, influenced largely  by international developments. Sales at department stores in midJuly were 24 per cent larger than in the corresponding period a year ago; sales in the  preceding 2 weeks were 9 per cent larger. New automobile sales *increased further and the volume was limited only by the supply available. Anticipa-tory buying was also evident for various other dur-able and semidurable goods and such foodstuffs as coffee and sugar. Distributors’stocks of most con-sumer goods, except passenger cars, had previously  been rising following the recovery in production last summer. Commodity Prices Wholesale prices have generally risen consider-ably during the past 4 weeks, following earlier marked advances in April and May. The sharpest increases have been in prices of farm and food prod-ucts, particularly livestock, meats, imported food-stuffs, and cotton. Cotton prices on July 21 were about onefourth above the Federal loan level.Prices of most industrial materials have advanced further in recent weeks, with especially marked in-creases in building materials, textiles, rubber, and tin. Prices of most metals have been maintained at earlier advanced levels.Prices of some additional finished industrial prod-ucts have been advanced during this period, and with retail food prices increasing sharply, a substan-tial further rise is indicated in the level of con-sumers’prices. Bank Credit Loans to real estate owners and consumers and holdings of corporate and municipal securities showed further substantial increases at banks in leading cities during June and the first half of July. Loans to businesses also expanded. Holdings of U. S. Government securities fluctuated consider-ably but declined somewhat over the period.Treasury deposits at the Reserve Banks which had been built up through tax payments in the latter part of June were drawn down during the first three reporting weeks of July, supplying reserve funds to member banks. These funds were absorbed  by reduction in Federal Reserve holdings of U. S. Government securities. The System continued to sell Treasury bonds and also sold bills and certifi-cates, and these sales were offset in part by pur-chases of notes. Security Markets Common stock prices fell 13 per cent from the latter part of June to the middle of July, reflecting developments in Korea, but recovered part of the decline during the third week. Demand for U. S. Government securities broadened throughout this  period. With virtually no change in prices of long-term Treasury bonds, a moderate decline in the  prices of highgrade corporate obligations resulted in some widening of the narrow spread between yields of these securities.   August 1950  Page10  Monthly Business Review September1,1950 SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System (Released for Publication August 25, 1950) Under the stimulus of heavy consumer and business   buying after the invasion of Southern Korea, prices,   activity, and incomes have increased considerably beyond   the advanced levels reached in June. Consumer purchases   of goods, although reduced from the July peak, are still   at a high level. Prices of agricultural commodities, after   a marked rise in the early part of July, have shown little   net change, while prices of industrial products have advanced further. Common stock prices have recovered most   of the declines from June to mid-July. Bank credit to   private borrowers and State and local governments has   expanded rapidly. Industrial production The Board’s industrial production index in August is   expected to be about 204 per cent of the 1935-39 average,   as compared with 199 in June, and 197 in July when   vacations and plant closings not adequately allowed for   lowered the index.Steel production declined slightly in July but returned   to capacity levels in the first three weeks of August.   Scheduled output in the fourth week was reduced by   about one-tenth as a result of a railway labor dispute in   steel-producing districts. In July production of nonferrous   metals and lumber declined somewhat.Production of finished durable goods was generally   maintained in July. There were marked gains in output   of aircraft and various types of construction and industrial machinery. While little change in output of railroad   equipment was noted, new orders for freight cars were   the largest in many years. Motor truck production declined in July but in August was close to record levels.   Passenger car assemblies were reduced somewhat in July   and early August from the peak June level by holiday   influences, some model changeovers, and labor disputes.Nondurable goods output was only slightly lower in   July as declines in production of textiles and some other   goods, as a result of vacations, were less marked than in   other recent years. Production of paper and paperboard   in mid-August was about 5 per cent above the record   June level. Output of rubber products and petroleum   refining activity continued to rise in July. Crude petroleum output increased 3 per cent and was 12 per cent   above the average level of the past 15 months. Employment Employment in nonagricultural establishments rose by   about 150,000 persons in July, after allowing for seasonal   changes. Most of this expansion was in industries manufacturing durable goods and in construction and retail   trade activities. Construction Construction activity continued to increase in July and   contract awards were maintained at advanced levels. The   number of dwelling units started was estimated to be   144,000 as compared with 142,000 in June and 96,000 a   year ago. Agriculture The official cotton estimate released August 8 indicated   a crop of 10.3 million bales as compared with a harvest   of 16.1 million last year; including the increased carryover, however, supplies this season will be about 4.5 million bales less than last season but about as large as in   most other recent years. Other crops developed favorably   in July and the total harvest of feed and food crops is expected to be about as large as last year. Distribution The Board’s seasonally adjusted index of department   stores sales rose by one-fifth in July to 362 per cent of    the 1935-39 average as anticipatory purchases of some   items like major household appliances more than doubled   the already high volume of sales prevailing in June.   Demand for passenger automobiles was very heavy. Also,   purchases of various nondurable goods which were in   short supply during the past war expanded considerably   in July. Anticipatory buying has decreased in August   from the July peak. Commodity prices The average level of wholesale prices, which advanced   5 per cent during July, has shown little change in the   first three weeks of August. Prices of farm products and   foods have declined slightly but prices of industrial commodities have advanced further. The most marked increases have been in prices of imported materials. Prices   of scrap metal and copper and lead products have also   advanced considerably.In retail markets average food prices have apparently   shown little change following marked increases in July.   Prices of a number of other consumer goods, including   fuels, textile furnishings, tires, and used automobiles, have   advanced further. Bank credit Total loans and holdings of corporate and municipal   securities at banks in leading cities showed an exceptionally large increase of P  / 2  billion dollars during July and   early August. Real estate and consumer loans continued   their rapid rise and business loans also expanded sharply   during this period. Banks sold a large volume of shortterm Government securities to the Federal Reserve and   to nonbank investors and purchased a small volume of    Government bonds.An outflow of gold and large sales of long-term Treasury bonds by the Federal Reserve System to nonbank    investors also tended to drain reserve funds from banks   during July and the first half of August. Banks met this   drain and accumulated additional reserves more than   enough to support the expansion in private credit mainly   by their sales of short-term securities. Security markets Yields on Government securities showed little change   during the first three weeks of August. On August 18, the   Federal Reserve announced a rise in the discount rate to   l 3/ i   per cent at New York and a change in open market   policies and the same day the Treasury announced new   refunding offerings. Following these announcements, shortterm market rates rose while yields on longer issues remained firm. Yields on high-grade corporate bonds   declined in the first three weeks of August and common   stock prices increased gradually to a level about 4 per   cent below the June peak.   September 1950  October 1, 1950 Monthly Business Review  Page 9 SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System (Released for Publication September 28, 1950) industrial output has shown a further marked increase in August and September above the record peacetime level reached in June. Business and consumer demands, however, have continued to be in excess of output and additional sharp rises have occurred in prices. Numerous industrial materials have risen by about as much since March as dur ing the six-month period following the elimination of war time price controls in 1946. A very rapid expansion in private credit and some drawing on liquid assets have been important factors, along with increased incomes, in financ ing the expanded rate of buying. Consumer credit controls became effective on September 18 under authority of the Defense Production Act, enacted September 8, which also authorized additional restrictions on real estate credit. Industrial production The Board’s index of industrial production showed a marked rise in August to 207 and a further rise of about 5 points is likely in September. Output in August increased substantially in all major groups of industries except pri mary metals, automobiles, and foods.Nondurable manufactures rose to a new all-time high of 191 per cent of the 1935-39 average, which was 6 per cent above the level prevailing in the first half of this year. The sharpest increases in production were at textile mills, where cotton consumption rose one-sixth above the June rate, and at paper and paperboard mills. Rubber consumption con tinued at a record level in August, but was apparently reduced in September by a Federal order establishing maxi mum limits for use in civilian output during the last four months of this year.Production of durable goods showed a considerable in crease in August, reflecting mainly marked increases in output in the furniture, machinery, and iron and steel fabricating industries. Activity at aircraft plants and ship yards also expanded rapidly. Production of primary metals, bricks, cement, and lumber continued to show little change from the advanced levels reached in the spring of the year. Demand for these materials — especially metals — has re mained far in excess of market supplies. In mid-September the National Production Authority instituted regulations aimed at limiting inventory buying of most metals and various other industrial materials. Construction Contract awards for new construction expanded further in August to a new peak about one-tenth above the pre vious record reached in July and almost three-fourths higher than in August 1949. This expansion reflected large increases in the value of awards for most types of private construction which more than offset a small decrease in awards for publicly financed construction. The number of housing units started in August was close to earlier record levels and two-fifths greater than in August 1949. Distribution Buying at department stores in the four-week period ending September 9, although below the seasonally ad  justed peak reached in July, was about one-tenth above year-ago levels. Sales of durable goods spurted again in mid-September reflecting in part buying in anticipation of the instalment credit controls. August sales at all retail stores were only slightly less than in July, on a seasonally adjusted basis, and 17 per cent greater than in August 1949. Commodity prices The rise in the average level of wholesale prices has con tinued through the first three weeks in September, reflect ing further sharp increases in prices of commodities other than farm products and foods. These commodities, as a group, are about one-tenth higher than in March and prices of numerous materials are up 20 to 60 per cent. Since mid- September buying of these materials has been less urgent and prices have shown some decline.Retail food prices have been maintained at the advanced levels reached in July and prices of a number of other consumer goods have been raised since that time. Bonk credit Since midyear, credit to private borrowers and State and local governments has expanded by over V/z   billion dollars at banks in leading cities, which is an exceptionally large amount for this season of the year. From mid-August to mid-September, business loan expansion accelerated and loans to real estate owners and consumers continued to show large increases.Following mid-August the Federal Reserve System pur chased from banks and other investors a substantial volume of the bonds and certificates involved in the Treasury’s current refunding program. Reserves supplied through these purchases were offset by System sales of other types of Government securities, by cash redemptions of System- held maturing Treasury bills, and by currency and gold outflows. As a result, member bank reserve balances were unchanged over the five-week period, August 17—Septem ber 20. Because of the credit expansion, required reserves increased somewhat further, while excess reserves declined.Following an increase in the Federal Reserve discount rate and a rise in short-term money rates in August, interest rates to bank customers increased somewhat. Security markets Common stock prices rose moderately during the first three weeks of September. Railroad shares continued to show pronounced strength, while public utilities issues recovered slowly. Yields on long-term Treasury bonds and highgrade corporate obligations increased slightly.   October 1950


Jul 25, 2017

Facts 30

Jul 25, 2017
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