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60 R-970 BOARD OF GOVERNORS OF THE FED&l1.AL RESERVE SYSTEM STATl:<lVllNT FOR THE PRESS For release in morning papers, Monday, March 23, 1942 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. Industria:l activity increased further in February and the first half of March. Retail trade yras sustained at high levels and comrnodi ty prices continued to advance. Production In February the Board's seasonally adjusted ind'3X of industrial production rose from 171 to 173 per cent of the 1935-39 average. As in other recent months, activity in the durable goods manufacturing industries, where t'1e !TLajority of military products are mad~, continued to advance, ·,vhLl.e in industries making nondurable goods and at mines activity ·was maintained at about the levels reached last autwnn. Steel production rose to 96 per cent of capacity in February and increased further to 98 per cent irr the third week of N.iarch--w~1ich corresponded to aYJ. annual rate of nearly 87 million net tons. Lumber production also increased, following less than the usual seasonal decline during the previous twc months. In the machinery and transportation equipment industries, now engaged mainly in armament production, activity continued to advance rapidly as plant utilization increased and capacity expanded. Conversion to armament production in the automobile industry, where output of civilian products was discontinued in early February, is apparently being effected much more rapidly than had been anticipated earlier. There were further increases in output at cotton textile mills and at chemical factorie3, reflecting an increasing amount of work on military orders. At meatpacking establishments activity vras maint~:dned near the high rate reached in January. Shoe production increased by less than the usual seasonal amount. Anthracite production rose sharply in February and bitwninous coal production was maintained near the high rate of other recent months. Output of crude petroleum, which had been at record levels in December and January, declined somewhat in the latter part of February and in the first half of March, reflecting transportation difficulties. -2- R-970 61 Construction Value of construction contract a~~rds increased considerably in February, according to figures of' the F. YV. Dodge Corporation, owing mainly to a sharp rise in awards for public projects. Total a~vards in February were half again as large as last year, and public awards were about three times as large. · In nonresidential building, awards for public yrojects increased materially, while those for private projects continued to decline. There was a slight rise in awards for public utility construction. In residential building, contracts for·privat~ work changed little from January, while those for publicly-financed projects increased sharply and amounted to about half of the total for the first time on record. For the past six months there has been a noticeable f!hift in privately-financed housing activity from building for owner-occupancy to building for sale or rent; in February, awards for the former constituted only about· one-fifth of the small-homes total. This shift is attributable mainly to the activity in defense areas and to legislation enacted last spring making possible the insurance of mortgages taken out by builders. Distribution Value of retail trade continued large in February. Sales at general merchandise stores and variety stores increased more than seasonally, while sales at department stores declined. In the first ho.lf of March department store sales increased by about the usual seasonal amount. Freight-car loadings, which in January had been unusual~ large for this time of year, declined somewhat in February owing to smaller shipments of coal, grain, and miscellaneous freight. Commodity prices lJVholesale prices continued to advance from the middle of february to the middle of March, particularly those for finished consumer goods such as meats, .fruits and vegetables, shoes, clothing, and household items. Temporary maximum price orders were issued covering wholesale prices of some of these products, including pork, canned fruits and vegetables, finished cotton and rayon fabrics,. cotton rugs, and bedding equipment. These orders, according to statute, used as rna:x'imums the prices prevailing within five days prior to issuance. They are effective for only 60 days and nk~Y be replaced by regular schedules. Treasurx financing and bank credit In March income tax receipts by the Treasury for the first time reflected the higher schedule of rates. The effect of these receipts on the money market was largely offset by redemption of Treasury bills previously issued to mature during the tax collection period, by tax-anticipation notes -3- R-970 turned in on payment of taxes, and by continued heavy. Treasury expenditures. As a consequence a record volmne of Treasury operations was effected with little influence on conditions in the market. Excess reserves of member banks showed no large change and on March 18 amounted to about $3.2 billion. United States Goverrunent obligations held by member banks in leading cities showed little change during tne first three weeks of March following a. sharp ri.se in February. · Conunercial loans increased further. United States Government security prices Prices of United States Government bonds advanced steadily from the middle of February to the middle of'March. Long-term taxable bonds yielded 2.35 per cent compared with an average of 2.39 per cent in February. Prices ·· of short-term securities have held steady since the first of the year, with Treasury bills selling at around .20 per cent.
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