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R-6l6 84 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM STATEMENT FOR THE PRESS For release in morning papers, Monday, February 19, 1940 The following summary of general business and financial conditions in the United States, based upon statistics for January and the first half of February, will appear in the March issue of the Federal Reserve Bulletin and in tho monthly reviews of the Federal Reserve banks. In January and the first half of February industrial activity declined from the high level reached in the latter part of 1939* < Retail, trade, which had been in large volume, decreased more than seasonally, while merchandise exports wore maintained. Production Volume of industrial production declined somewhat from December to January, and consequently the Board's index, which allows for a considerable seasonal increase, dropped sharply from the high level of 128 reached in December to 120 in January. Data available for the first half of February indicate a further sharp reduction in the index. Steel ingot production, which had been above 90 per cent of capacity during most of the fourth quarter of 1939, has declined steadily since the turn of the year and by the middle of February was at about 69 per cent of capacity. Plate glass production, which also had reached high levels in the latter part of 1939, was reduced in January and lumber production showed a considerable decrease owing in part to unusually cold R-616 -2- 85 weather in the Southern regions. Automobile production in January was larger tb n n is usual at this season. In the latter part of the month, however, and in the first half of February, as retail sales of new cars declined seasonally and dealers' stocks, which had been lower than usual at the beginning of the year, rose rapidly, the output of cars declined. In the machinery industries activity was generally sustained at the advanced levels reached in December. Output of cotton textiles in January continued at about the high rate of other recent months but production of woolen textiles declined further from the peak levels of October and November, and output of silk products remained in small volume. Activity at meat-packing es- tablishments was maintained in January at the high level prevailing for several months. Coal production rose sharply, following a marked reduc- tion in December, and was at about the high level reached last October. Output of crude petroleum continued in large volume. Value of contracts awarded for both public and private construction declined considerably in January, according to reports of the F. W. Dodge Corporation. Awards for private residential building showed a greater than seasonal reduction and were lower than the level prevailing a year ago. Contracts for other private work declined somewhat but re- mained in larger volume than in the corresponding period last year. Employment Factory employment and pay rolls, which had risen sharply during the latter half of 1939, declined by somewhat more than the usual seasonal r-6I6 amount from the middle of December to the middle of January, according to reports from leading industrial States. Distribution Sales at department stores, variety stores, and mail-order houses in January declined more than seasonally from the high level of December. Total freight-car loadings showed a seasonal decline; shipments of miscellaneous freight and grain decreased, while coal loadings increased considerably. Foreign trade Exports of United States merchandise, which usually decline in January, were maintained this year at the high level reached in December. Shipments of cotton, which have been large in recent months, rose further, while exports of many industrial products declined. Exports to the United Kingdom increased sharply, owing mainly to larger cotton shipments. Reflecting principally acquisitions of foreign gold, the country's monetary gold stock increased by $287,000,000 during January and by $132,000,000 in the first two weeks of February. Commodity prices Prices of copper, lead, and silk showed marked declines from the middle of January to the middle of February and there were smaller decreases in prices of some other basic industrial materials, such as steel scrap, wool, and textile yarns. Prices of foodstuffs, on the other hand, showed little change in this period. Government security market Prices of United States Government securities declined slightly -4- R-6l6 during the latter half of January from the recovery peak reached early in the month but regained part of these losses during the first half of February. Bank credit Total loans and investments at reporting member banks in 101 leading cities rose during the five weeks ending February 7 as a result of increases in holdings of Government securities at New York City banks Loans to security brokers and dealers and commercial loans declined. Demand deposits continued to increase during the period.
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