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R-714 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 143 Statement for the Press For release in morning papers, Thursday, October 17, 1940. The following summary of general business and financial conditions in the United States, based upon statistics for September and the first half of October, will appear in the November issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve Banks. Volume of industrial production increased sharply in September, owing mainly to a continued rise in output of durable manufactured products, and this month a further increase is indicated. Prices of bas- ic industrial materials advanced in September and the first half of October. Production The Board's seasonally adjusted index of industrial production, which for three months had been at a level of 121 per cent of the 1935-39 average, advanced to about 125 per cent in September. goods industries increases in output were general. In the durable Steel production rose to 93 per cent of capacity, and in the first half of October the rate was slightly higher as new orders continued in large volume both from domestic and foreign sources. Steel exports amounted to about 20 per cent of ingot-producing capacity in August, the latest month for which data are available, with nearly three quarters of these shipments going to the United Kingdom and Canada. Activity in the machinery, aircraft, and ship- building industries advanced further in September following considerable R-r3Z/-t —2— increases in August, and automobile 144 output increased sharply as volume production of new model cars was rapidly attained. Plants producing railroad cars and locomotives also showed an expansion in activity. Lumber production continued to rise under the impetus of a growing volume of demand for defense program purposes. Changes in output of nondurable manufactured goods and minerals in September were mixed. At wool textile mills activity advanced sharply further to near the peak reached last autumn, reflecting in part expanding production on Government orders. At cotton mills, however, activity showed less than the usual seasonal rise, following a sharp increase in August, and rayon deliveries declined somewhat owing partly to a strike at plants of one large producer. in September. Shoe production also declined Paper production remained in reduced volume following a high rate of output during the early summer accompanying some inventory accumulation at that time. September. Output of most metals continued large during Crude petroleum production, which had been curtailed sharply during the summer, rose considerably, but coal production, which for several months had been maintained at high levels, showed a smaller increase than is usual at this season. Value of new construction work started in September was lower than in July and August, according to reports of the F. W. Dodge Corporation and the San Francisco Federal Reserve Bank. The decline occurred chiefly in contracts for defense projects which had been large in the previous two months. Awards for private residential building showed 145 —3 — little change from recent high levels. R—714 Awards for other private work de- clined somewhat but continued considerably above the level of a year ago. Distribution In September and the early part of October department store sales showed somewhat less than the usual seasonal increase from the exceptionally high level reached in August. Freight-car loadings rose somewhat more than seasonally in September, reflecting to a large extent increased shipments of miscellaneous freight. Loadings of coal, which have been large in recent months, showed less than the usual seasonal rise. Commodity prices Prices of most industrial materials, particularly lumber, steel scrap, nonferrous metals, hides, and wool, continued to advance from the middle of September to the middle of October, and there were also increases in some manufactured products, notably cotton and woolen goods. Wheat prices were higher while prices of most other foodstuffs showed little change. Bank credit Commercial loans at reporting member banks in New York and 100 other leading cities continued to increase during the four weeks ending October 9, reflecting in part seasonal demands. Holdings of United States Government obligations decreased further with the result that total loans and investments of these banks showed little change. United States Government security prices Prices of United States Government securities advanced in the second half of September and the first week in October, rising close to the high level of the year reached early last April.
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