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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM STATEMENT FOR THE PRESS For release in morning papers, Monday, July 25, 1938. The following summary of general business and financial conditions in the United States, based upon statistics for June and the first three weeks of July, will appear in the August issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve banks. Industrial activity showed little change in June and increased in the first three weeks of July, although there is usually a considerable decline at this season. Prices of most staple commodities advanced sharply in the latter part of Juno and early July and there were substantial increases in prices of stocks and lower grade bonds. Production Volume of industrial production, as measured by the Board's seasonally adjusted index, was at 77 percent of the 1923-1925 average in June as compared with 76 in May and an average of 79 in the first quarter of the year. Available data indicate that in July the index will show a considerable rise. In June activity in the textile industry increased, reflecting chiefly a further rise at woolen mills. Output at cotton and silk mills, which usually declines at this season, showed little change. Shoe pro- duction declined, following a considerable increase earlier in the year. Automobile output decreased further in June; sales of new cars continued in excess of production, however, and stocks were further -2reduced. R-282 Steel production declined seasonally in June, and lumber produc- tion showed little change, although some increase is usual. plate glass rose sharply from an exceptionally low level. Output of Coal production remained in small volume in June, while output of crude petroleum, which had been sharply reduced in May, declined somewhat further. In the first three weeks of July activity at steel mills increased, although there is usually a decline in that period, and in the third week of the month ingot production was estimated at 36 percent of capacity as compared with an average rate of 28 percent in June. Crude petroleum output also rose sharply, reflecting chiefly a return to production on a six-day week basis in Texas. Automobile production declined seasonally. Value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed a decline in June, following a considerable increase in May. Changes in both months reflected chiefly fluctuations in awards for publicly-financed construction. Awards for private resi- dential building were maintained in June at about the same daily rate as in May, although there is usually some decline at this season, and were in slightly larger volume than a year ago. Other private construction work remained at recent low levels. Employment Factory employment and payrolls decreased further from the middle of May to the middle of June. Employment in the automobile, steel, machinery, and clothing industries continued to decline, while at woolen mills there was an increase and in most other manufacturing lines changes were small. In trade employment was reduced, while in other non- manufacturing industries changes in the number employed were largely seasonal. 37 R-282 -3- Agriculture A total wheat crop of 967,000,000 bushels was indicated by July 1 conditions, according to the Department of Agriculture. A crop of this size would be considerably larger than average and a Government program was announced for loans at close to current market prices. Cotton acre- age on July 1 was estimated at 26,900,000 acres as compared with 34,500,000 acres last year when, with exceptionally high yield per acre, a record crop was harvested. Production estimates for most other major crops were slightly under the large harvests of last season. Distribution Distribution of commodities to consumers was maintained in June at about the May level, although a decline is usual at this season. Sales at department and variety stores showed little change and mail order sales increased. In the first half of July department store sales de- creased less than seasonally. Freight-car loadings showed little change from May to June and were slightly above the low level of April. Commodity prices Prices of industrial materials, particularly rubber, hides, nonferrous metals, and steel scrap, showed advances from the middle of June to the third week of July, and there were also increases in prices of livestock and products. in June. Wheat prices declined, following a rise early Prices of iron and steel were reduced and there were also de- clines in uome other industrial products. Bank credit Excess reserves of member banks increased substantially in June and R-282 the first half of July, rising to above &3,000,000,000, as compared with $1,750,000,000 just prior to the reduction in reserve requirements the middle of April. The largest gain in excess reserves occurred at city banks through the retirement of Treasury bills and the continued growth of bankers' balances. Total loans and investments of reporting member banks in 101 leading cities, which had increased sharply in the first week of June, declined during the remainder of June, reflecting largely redemption of Treasury bills held by Now York City banks and a decrease in loans to security brokers and dealers. During the first three weeks of July total loans and investments at reporting banks showed little net change. Money rates Rates on Treasury bills and notes were slightly firmer in July but continued at exceedingly low levels. showed little change. Yields on Treasury bonds
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