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R-195 BO.ARD OF GOVEHNORS OF THE FEDE.RAJ., RESERVE SYSTEM STA'l'Elvll<J\"TT FOR '11-IE PRESS For release in morning papers, Saturday, February 26, 1938. The following summary of general business and financial conditions in the United States, based upon statistics for January and the first three weeks of February, will appear in the March issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve banks. The decline in business activity, which had been rapid during the last quarter of 1937, continued in January but at a slower rate. Production Volume of industrial production, as measured by the Board's seasonally adjusted index, was at 81 percent of the 1923-1925 average in January as compared with 84 percent in goods continued to decline, December. Output of durable reflecting chiefly considerable decreases in production of automobiles and plate glass and a further decline in output of ltunber. Steel ingot production increased somewhat, the out- put for January averaging 30 percent of capacity. In the first three weeks of February, activity at steel mills showed little change at about 31 percent of capacity, while production of automobiles was at a lower rate than in January. In the textile industries, activity at silk and rayon mills in January showed a sharp rise from the low levels reached in December. At cotton mills, however, there was less than the usual seasonal increase and output of woolen products continued in Sllk'1ll volume. Shoe production, 11rhich also had been at a low rate in December, increased considerably in Janue..ry, and activity at meat-packing establishments 155 R-195 -2rose somewhat further. Output of tobacco products remained at a high level, while sugar meltings declined. At mines, bituminous coal pro- duction was considerably smaller th'm in December, und there a reduction in output of nonferrous metals. tinued ~i.t V>JaS also Petroleum production con- the high level of other recent months. Value of construction contract.s uwarded in January wus smaller than in December und somewh<.:..t below the level maintained durtng the last four months of 1937, •.:.ccording to figures of the F. W. Dodge CorporJ.tion. Contracts awarded for :public projects increased somewhat further, while awards for private work continued to decline, reflecting a further decrease tn residentinl building and a sharp reduction in awards for 1'actory construction. In the first half of February awards for private projects were at about the same rate as in January, whHe those for pubUc work showed a sharp decline. Employ1nent Factory 8rrtploymer..t and payrolls declined substantially further between the middle of December and the middle of January. In the dur- able goods industries, decreases in employment were general and were particularly large at factories productng cutomobilos, steel, and machinery. Employntent in nondu:ruble goods industries showed a somewhat smaller decline than in previous months. There was some increase in the number employed at shoe factories and little change in the food industries as e group, but in other nondurable goods industries employmont continued to decrease. Employment on the rnilroads, in mining, :::md in the construction industry ulso declined. 156 R-195 -3- 157 Distribution Dep[lrtment stores sales shovmd a seasonal decreo.se from December to Janu.'lry, whiJe sales at v.:1rioty stores and mail order sales declined by more than the usual se:tsono.l amount. Freight-c£tr loadings continued to decline in January, reflecting principally a reduction in shipments of coal. Corrnnodi tv prices Prices of steel scr11p and nonferrous motD.ls declined from the middle of January to the third week of Fubruary, following some adv.::tnce in Decombor and the early p.:trt of Jnnum..f. . There were further docroo.scs in some other basic commodi tics, vrhile prices of cotton and silk advanced. Livestock products continued downward and a number of finished industrial products declined further. Prices of pig iron .'J.nd most finished stool products have boon reaffirmed for second quarter dedi very. Bank credit During tho first three weeks of Fobruo.ry excess reserves of member banks were little changed from tho level of $1,40o,ooo,ooo roached o.t the end of January following the post-holiday return of currency from circ~uation. During January there were substantial reductions in commercial lo~ms and brokers 1 loans m1d moderate increases in investments porting member banks in ~t re- 101 leQding cities. In the first three weeks of Fcbrunry loans and investments of these bnnks showed little change. Money ratos Rates on Treasury bills and yields on Treasury notes and be-nds continued in February at the low .lovols roached in the latter part of Jo.nua~;.
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