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R-5S7 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM STATEMENT FOR THE PRESS The following summary of general business and financial conditions in the United States, based upon statistics for December and the first half of January, will appear in the February issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve banks For release in morning papers, Thursday, January 18, 1940. Industrial activity, after a rapid rise in recent months, declined less than seasonally in December, In the first half of January activity did not show the usual seasonal increase. Distribution of com- modities to consumers was maintained in large volume. Production Industrial output decreased in December, but by a smaller amount than is usual at this season, with the consequence that the Board's index, which allows for usual seasonal variations, advanced further from 124 to 128 per cent of the 1923-1925 average. As in other recent months, the rise in the index continued to reflect mainly increased activity in industries producing durable goods. Automobile production rose sharply in December owing to the reopening of plants of one large producer which had been closed for almost two months. Plate glass production also in- creased. At steel mills activity was maintained near the high level that prevailed in October and November; fourth quarter production of steel -2- . R-59? ^ ingots was greater than in any other three-month period on record. Output of zinc and deliveries of tin continued to increase in December, and lumber production declined less than seasonally. In the nondurable goods industries, where production had been at high levels throughout the autumn, changes in output in December were largely seasonal in character. At woolen textile mills, however, there was a consid- erable reduction in activity, and activity at silk mills declined to a low level, reflecting in part continued high prices of raw silk. Output of crude petroleum continued at a high rate in December, while coal production was reduced, following a large volume of output in the two preceding months, i In the first half of January steel ingot production Was at a somewhat , lower level than in December, while automobile assemblies were maintained at about the same high rate as in the previous month. Value of construction contracts awarded, as reported by the F. W. Dodge Corporation, increased further in December, owing to the inclusion in the December figures of a large amount for a dam under construction by the Tennessee Valley Authority, Contracts for private building, both residen- tial and nonresidential, declined seasonally. Employment According to reports from leading industrial States, factory employment decreased less than seasonally in December and pay rolls showed a further advance. Distribution Distribution of commodities to consumers increased further in December. Sales at variety stores showed about the usual sharp rise and sales -3- B-597 S l - ab department stores and. mail-order houses increased more than seasonally. Freight-car loadings declined by more than the usual seasonal amount from November to December, reflecting chiefly a further reduction in coal shipments and a decrease in loadings of ore, which had been at a high level in the previous month. Commodity prices Prices of wheat, which had advanced sharply early in December and continued at the higher level during the rest of the month, declined considerably in the first half of January. Smaller decreases occurred in some other commodities, including hides, tin, and zinc. Prices of most other basic commodities, such as cotton, wool, lead, and steel scrap, showed little change. Government security market Prices of United States Government securities continued to advance during December and were steady during the first two weeks of January, Bank credit Total loans and investments of reporting member banks in 101 leading cities declined in the four weeks ending January 10, following an increase during the first half of December. These changes reflected largely a temporary rise and a subsequent decline in loans to security brokers and dealers in connection with the Government's flotation of a new issue of bonds. Total holdings of United States Government obligations at city banks showed little net change during the period. As a result chiefly of further increases in gold stock as well as the post-holiday return of currency from circulation, excess reserves of member banks increased sharply in the four weeks ending January 10.
@FedFRASER