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X-9897 282 OF THE _________ __ _ FEDER!ili RESERVE SYSTEM J.lOARD ..QE_GOVERNOI\.S _.,.,... ... S'rATEMEN'f J.<'OR THE PRESS For release in morning papers, Thursday, May 27, 1937 The following summary of general business and fimmcial conditions in the United States, based upon statistics for April and the :first. three weeks of ~ay, will appear in the June issue of the Federal Reserve Bulletin and in tne monthly reviews of the Federal 'Reserve banks. Industrial acti Yi t;r in April arld the first half of ;'/lay was maintnined at the relatively high level of recent months. The general level of wholesale commodity prices declined somewhat, reflecting considerable reductions in prices of many raw materials and semi-finished products. Production, employment, and trade The Board's seasonally adjusted index of industrial production in April continued at 118 percent of the 1923-1925 average. Ivianufacturing production rose further, reflecting increased output of durable goods. Activlty at steel mills was at a rate slightly higher than in March and about equal to that in the peak month of 1929. tinuod to expand. Automobile production con- In the first three weeks of iv!ay output in these indus- tries was maintained at the levels reached at the close of April. In- creases in output in April were also reported for lumber e.nd plate glass. At textile mills where output has beon at a high level in recent months there was a slignt reduction in activity. At bi tuminorw coal mines output declined sharply following an incre~cse in March, 11hen consumers accumulated stocks of r!oal in anticipation of a 283 :X-9897 -2strike. Crude p~t,ruleurn output, which had risen sharply from November to March, showed further growth in April. Production of most metals also increased. Value of construct:i.on contracts awarded, as reported by the F. W. Dodge Corporation, increased more than se::tsonally from rfJ.arch to April and continued higher than a year ago, reflecting, a~ in e.:J.rlier months of the year, a larger volume of residential building and of other privatelyfinanced work. Contracts awarded for publicly-financed construction have been considerably smaller in the first four months of thL.J yoar than in the corresponding period of 1956. Employment rose further between the middle of March r'.nd the middle .., of April. There was a consid8rablo grov,tn in the number of persons em- played in manufacturing and on the railro:<.ds, little change in those employed in the public utility industries u.nd in trade, and a decline at bituminous coal mines. At factories the principal incre':tses in employ- mont ·were reported by the steel, machinery, und automobile industries, while the number employed in the clothing industry declinc.>d. Working forces at textilu mills were maintained, although a decrease is usual at this season. Factory payrolls increased more than employment, reflE:cting chiefly further increases in wage rates. In April sales ~tt d.epc.rtment stores showt:ld little change anCI rno.il order sales were also mc:.intoi:ned at tho M;:.rch level, iVhile S[).les at vrtriet;;.r stores ·:iE:clin;;d. Commodity prices The gener<.l.l level of wholesale commodity prices, as measured by the 284 -3- X-G897 index of the Bureau of Labor St.D.tistics, declined from 88. 3 percent of the 1926 average at the beginning of April to 86.9 in the middle of May. Prices of nonferrous metals, steel scrap, cotton, and rubber· dt::clined considerably and there were also decreases in the prices of grains, cotton goods, silk, hides, and cheruicals.r while prices of shoes and clothing showed further small advances. Since the middle of May prices of hogs and pork have advanced sharply and grain prices have also risen. Bank credit Following upon the final increase in r?serve requi:r.-Gments, which became effective on May 1, excess reserves of member banks declined from $1,600,000,000 to e.bout $900,000,000, and in the first three weeks of May fluctuated around the new level. .Adjustments by banks to the new require- ments were reflected in a decrease in interbank bulanc.el3 and in a stnall increase in borrowings. The Federal Reserve System in April purchased $96,DOO,OOO of United States Government securities, for the purpose of easing the adjustment to the nev. requirements and preserving orderly conditions in the monuy mar~cet. Total loans and investments of reporting member banks showed a small decline from t!m m:LadJe of April through May 19. Holdings of United Ste> tes Government obligationJ and (;ther securities e:1ov;cd some ciaclinc, v,hich v;as offset in part by increases in louLs •. While domdftir; i:'1terbank and United Stutes Gov9rnment depcsits c1eclined further, b~lltmces of foreign banks und other demand and time depos- its at reporting member banks increased. 285 X-9897 -4- Money rates The open-market rate on 90-day bankers' acceptances, which between Januar.y and the latter part of March had advanced from 5/16 to 1 9/16 percent, was reduced to 1/2 percent on May 7, and the rate on nine-months Treasury bills declined to .62 percent on M~ 24 compared with a high point of .74 percent on May 5. Other short-term rates have shown little change in recent weeks. Yields on long-term Trea- sury and other high-grade bonds have declined somewhat.
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