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R—1-90 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM STATEMENT FOR THE PRESS For release in morning papers, Saturday, June 24, 1939. The following summary of general business and financial conditions in the United States, based upon statistics for May and the first three weeks of June, will appear in the July issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve banks. Industrial production, which had been receding on a seasonally adjusted basis during the first four months of this year, showed little change in May and increased considerably i& the first three weeks of June. The advance reflected principally larger output of steel and coal, which had previously shown considerable declines. Production In May the Board's seasonally adjusted index of industrial production was at 92 per cent of the 1923-1925 average, the same as in April. Volume of manufacturing production declined somewhat further, owing chiefly to reductions in output of steel and automobiles, but mineral production increased as most bituminous coal mines were reopened after the middle of the month. Steel ingot production, which had been a*, an average rate of 52 per cent of capacity in April, declined to 45 per cent in the third week of May. About this time prices of some types of steel were re- duced considerably and orders were placed in substantial, volume. 339 340 -8- R-490 Subsequently steel output increased and the current rate is about 55 per cent of capacity, approximately the level maintained during the first quarter of this year. In the automobile industry output was reduced by about one fifth at the beginning of May, and in the latter part of the month there was further curtailment partly as a result of a strike at a body plant which led to the closing of most assembly lines of one major producer. In the early part of June the strike was settled and by the middle of the month output had risen to a level higher than that prevailing during most of May. Lumber production increased further in May following less than the usual seasonal rise during the first quarter of this year. Output of nondurable manufactures in the aggregate was at about the same rate in May as in April. At woolen mills activity in- creased sharply, following a decline in April, and at cotton .and rayon mills output was maintained. • Mill consumption of raw silk showed a further sharp decline. At meat-packing establishments output increased more than seasonally, and as in March and April was considerably larger than a year ago, reflecting a sharp increase in the number of hogs slaughtered. Flour production continued in larger volume than is usual at this season, while at sugar refineries there was a decrease in output. Mineral production increased in May owing chiefly to the reopening of most bituminous coal mines. Anthracite production, which had been in large volume in April, declined in May, while output of R-490 -3- crude petroleum increased somewhat further. Value of residential building contracts, which had shown a considerable decline in April, increased in May, according to figures of the F. W. Dodge Corporation. Public residential awards were higher owing to a greater volume of United States Housing Authority projects; private awards also increased but on a seasonally adjusted basis were below the high level reached in February and March. Contracts for both public and private nonresidential construction declined in May, following increases in the preceding two months. Employment Factory employment and pay rolls showed little change from the middle of April to the middle of May, according to reports for a number of States. Distribution Department store sales declined from April to May, while sales at variety stores and by mail order houses showed little change. In the first two weeks of June department store sales increased. Freight-car loadings increased in the latter half of May, reflecting chiefly expansion in coal shipments. In the first half of June loadings of coal increased further and shipments of other classes of freight also were in larger volume. Commodity prices Prices of industrial materials, such as steel scrap, hides, wool, and print cloths, advanced somewhat from the middle of May to 342 -4the third week of June. R—490 Wheat, silk, and coal prices declined early in June, following increases in May, and there were further declines in prices of livestock and meats. Bank credit During the four weeks ending June 14 total loans and investments at member banks in 101 leading cities increased by $270,000,000, following a decline of $200,000,000 in the preceding four weeks. The major increase was in holdings of Treasury notes and bonds at New York City banks. Demand deposits increased sharply to new high levels both in New York and in the leading cities outside New York. During the first three weeks of June excess reserves of member banks showed little change from the new high level of |4,500,000,000 reached on May 24. Continued gold imports largely went into earmarked gold and into balances held for foreign account at the Federal Reserve banks. Money rates Prices of United States Government securities, which had advanced sharply from April 11 to June 5, reaching a new high level, eased slightly during the next two weeks. The yield on the longest- term Treasury bond outstanding declined from 2.49 per cent on April 11 to 2.26 per cent on June 5 and increased to 2.52 per cent on June 19. Other money rates showed little change.
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