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R-801 BOARD OF GOVERNORS OF THE FEDERAJ, RESERVE SYSTEM STATM.KNT FOR THE PRESS For release in morning papers, Wednesday, March 19, 1941. The following summary of general business and. financial conditions in the United States, based upon statistics for February and the first half of March, will appear in the April issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve Banks. Industrial activity and. employment increased further in February and the first half of March. Buying by producers and con- sumers continued in large volume and wholesale commodity prices, particularly of imports, advanced. Production In February volume of industrial output, on a daily average basis, rose more than seasonally, and the Board's adjusted index advanced from 139 to 141 per cent of the .1935-39 average. Increases in February, as in other recent months, were largest in the durable goods industries where a large proportion of defense program orders have been placed. Activity continued to rise sharply at machinery plants, aircraft factories, shipyards, and in the railroad equipment industries. Steel production fluctuated around 96 per cent of capacity in January and February and rose to 99 per cent in the first half of March. New orders for steel continued large and, despite the high rate of output, unfilled orders increased further. 1x9 R-801 -2- Many orders have been placed for delivery in the second half of this year, reflecting the prospect of heavy consumption and some uncertainty on the part of steel users regarding future availability of supplies. Output of pig iron, coke, and nonferrous metals was like- wise at near capacity rates in February and unfilled, orders for these products, too, were at exceptionally high levels. Demand fo1* 1 'who* continued large owing to a high rate of construction activity and output was sustained in large volume for this time of year. Automobile production increased in February and the first half of March to about the peak rate attained last November. Retail sales of new and used cars advanced to unusually high levels. In industries manufacturing nondurable goods, activity continued at the record levels reached in the latter part of 1 % 0 . There were further increases in the cotton textile, rubber, and chemical industries and activity at woolen mills also increased, following a temporary reduction in January. In most other lines activity was maintained at the high levels of other recent months. Coal production rose less than seasonally in February but increased considerably in the first half of March when, according to trade reports, there was some inventory accumulation in anticipation of a possible shutdown on April 1 at the expiration of the present contract between the mine operators and the miners' union. Copper and zinc production increased in February and recently domestic supplies' of copper have begun to be supplemented by imports from South -3- America. R-801 Output of crude petroleum continued at about the rate that had prevailed during the three preceding months. Value of construction contract awards in February declined somewhat more than seasonally, reflecting decreases in both public and private work, according to reports of the F. W. Dodge Corporation. Awards for public construction, although sharply re- duced from the high levels reached in the latter half of 1940, were somewhat above those of a year ago, and awards for private construction were nearly half again as large as in February of last year. Distribution Distribution of commodities to consumers increased more than seasonally from January to February. Sales at variety stores and by mail-order houses were the largest on record, making allowance for usual seasonal changes, and department store sales were also at a high level. Freight-car loadings increased by about the usual seasonal amount. Shipments of miscellaneous freight, consisting mostly of manufactured products, showed an increase while loadings of forest products rose less than seasonally and grain shipments declined. Wholesale commodity prices Prices of a number of basic imports rose sharply from the early part of February to the middle of March. Cotton yarns and gray goods and nonferrous metal scrap showed further increases in this period and there were also advances in prices of some other 121 -It- R-801 domestic commodities, including lead, wheat, cotton, and oils and fats. Br rue credit Commercial loans continued to increase at member banks in 101 leading cities in February and the first half of -larch and these banks also purchased additional Treasury notes and bills connection with the defense program. issued in As a result of the increase in loans and investments, bank deposits showed a further marked advance. United States Government security prices Prices of Government securities increased after February 15, following a sharp decline in the preceding ten weeks. The 1960- 65 bonds on March 15 were about 3-1/8 points above their price on February 15 and about 1-1/4 points below the all-time peak of December 10. The yield on this issue, which increased from 2.03 per cent at the peak in prices on December 10 to 2.30 par cent on February 15, had declined to 2.14 per cent on March 15.
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