Full text of Basic Business News : May 26, 1959 to June 1, 1959

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•• Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND
May 26, 1959
to
June 1, 1959

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MACHINE TOOL ORDERS
UP IN APRIL

Total machine tool orders in April rose to
$53,450,000 the National Machine Tool Builders
Association reported. Tool men report that
the order flow continues to come from a broad list of industries.
Among those actively seeking tools are companies in the automotive,
farm equipment and heavy construction equipment industries. Missile
makers also are showing interest as more of their business h~ads
into the production line stage. Shipments for the industry, however,
dropped t o $45,100,000. Machine tool shipments traditionally run
at least several months behind orders and the current shipping rate
reflects the low new order pace last year. (Wall St. J., 5/26 p.28)
BRITAIN RELAXES
CURBS ON IMPORTS

Britain announced (May 28) a relaxation of curbs
on imports of goods that must be paid for in dollars. This will enable United States producers
of scores of consumer items to compete on virtually an even basis
with West European suppliers for the first time since World War II.
The British Board of ~rade ended quantitative restrictions, or quotas,
on imports of about forty-five groups of consumer goods from dollar
areas and increased the quotas for several others, including automobiles. Tariff rates were not changed. For most of the items, the
effective date for the relaxation is June 8. For a smaller number,
the date is next January l. (Waggoner. N.Y. Times, 5/2!9 p.l)
DISCOUNT RATE UP
IN FIVE DISTRICTS

The Federal Reserve Board approved an increase
:from 3 to 3-1/2/, in the lending (discount) rate
to member banks in the New York, Chicago, St.
Louis, Minneapolis and Dallas districts. The new rate is effective
May 2$. The move had been expected for two weeks, or since commercial banks had increased their prime lending rate to business
borrowers from 4 to 4-1/'c!',,. The Reserve Board's action returned the
Selection of these items does not imply this bank's guaranty of their accuracy,


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nor agreement with the views expressed.

discount rate to its peak level of recent years, which prevailed
f'rom August to November 1957. (Kraus. N.Y. Times, 5/29 p.29)
MANUFACI'URERS' SALES
AND ORDERS SEr PEAKS

Manufacturers' sales broke their pre-recession
record in April, with the largest increase of
the recovery period, the Department of Commerce reported. The volume of new orders received also showed a big
increase and hit a new peak. Sales in April were $30.2 billion,
af'ter allowance · for normal seasonal trends. This compared with
$29.1 billion in March. New orders in April, af'ter seasonal adjustment, totaled $31 b illion, an increase of $800 million from the
March level. The value of manufacturers' inventories at the end of
April was $50 .8 billion, seasonally adjusted. At the end of March
it had been $50.3 billion. (N.Y. Times, 5/30 p.20)
CONSTRUCI'ION AT
RECORD PACE

Construction activity in this country is moving
a.head at a record setting pace, and there appears to be every likelihood that 1959 will be
the best year yet. F.W. Dodge Corporation reported that over-all
construction contracts for April were 31% above the same month last
year. Contracts valued at $3.8 billion set a new high for any April
on record, "and a new all-time high for any month when allowance is
made for seasonal influences." This rise advanced the Dodge index
of construction contracts to 299% of its 1947-49 base. (J . of Connn.,
5/27 p.1)
FANNIE MAE OFFERING
CARRIES 4.5% RATE

The Federal National Mortgage Association
(May 27) sought to borrow publicly $150 million--and is paying the second highest interest rate in its history. The Association is borrowing the money by
offering for sale $150 million of secondary market operations securities maturing in nine months. The issue carries a 4.5i interest
rate. FNMA announced that $100 million of the proceeds of the sale
will be used to pay off secondary market operations securities issued last August 11. The new securities will be dated June 10 and
will mature March 10, 1960. (Wall St. J., 5/27 p.12)
GREAT LAKES COAL, GRAIN,
ORE SHIPMENTS DOUBLED

Combined tonnage of iron ore , coal and
grain moved on the Great Lakes through
April was more than double the total a
year ago, when the rece ssion curtailed lake shipping activity. The
Lake Carriers Assoc iation reported that total shipments of the three
major commodities climbed to 8,960,000 net tons from the 4,085,000
through April of 1958. Shipments of iron ore were 2,978,000 tons
(on a long ton basis). Coal movement was 5,052,000 net tons. However, grain shipments, originating chiefly in the Lake Superior

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region, lagged behind a year ago because of severe ice conditions.
(Wall St. J., 5/28 p.20)
FARM PRICES
INCH UP IN MAY

The Department of Agriculture reported that prices
of farm products increased four-tenths of 1% in
the month ended May 15. This left the general level of such prices 4% below those of a year earlier. The mid-May
prices were about 22-1/c!/o below the record high reached in February
1951. Prices paid by farmers for goods and services used in production and in family living and for taxes remained unchanged from
the record high of the preceding month. (N.Y. Times, 5/3 p.20)

TREASURY TO ASK RISE
IN U.S. DEBT LIMIT

The Treasury will soon ask Congress for an
increase in the national debt limit, probably
to $295 billion. This would be $12 billion
above the present "permanent" ceiling. Despite increasing hope that
the budget will be balanced in the next .f iscal year, beginning
July 1, the Treasury's seasonal borrowing needs, plus allowance for
emergencies, will require at least a "temporary" ceiling of
$295 billion. The Treasury now expects it will have to borrow $6 billion to $7 billion in the period from July 1 to December 31, when
tax collections are lowest. This is an upward revision of some
unofficial earlier estimates, despite optimism about the budget
outlook. (Dale, Jr., N.Y. Times, 5/29 p.1)
STOCKS OF NEW CARS

Stocks of unsold new cars have climbed to the
highest point in industry history. Right now,
slightly more than 910,000 American-made automobiles are sitting in open lots and dealers' showrooms. Add stocks
of foreign imports and the total is around a million cars. This pileup hints of· trouble for car sellers later this year, when the 1960
models arrive. But officials in Detroit say that, although the total
number of cars is high, the sales pace has been climbing every month
this year. Today's stock represents about 45 days' sales of new cars;
last year at this time, the stockpile, though smaller in number, was
a 50-day supply. {Wall St. J., 6/1 p.3)

ARE VERY HIGH

CORPORATE OFFERINGS

The Securities and Exchange CoIImJ.ission reported that new stocks and bonds sold in the
first quarter of this year totaled $2.3 billion, about 5% less than were sold in the preceding quarter. The
SEC said this reflected "lack of any substantial rise in business
spending for expansion and the relatively liquid position in which
many companies started the year." (N.Y. Times, 5/28 p.42)
DOWN IN FIRST QUARTER


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To encourage bigger orders, British steel makers will
reduce the price o:f steel in June by about 'c$ on
shipments o:f ten tons or more.
In recent months, many steel consumers, because o:f less rosy
business prospects, have been reluctant to stockpile the metal.
They have been ordering on a hand-to-mouth basis. By getting bigger
orders, the steel companies will be able to make longer production
runs and thus reduce costs. Also, the price of iron ore, a big
factor in the price of finished steel, has fallen recently. It is
about 15% cheaper than it was a year ago. (N.Y. Times, 5/30 p.20)
BRITISH CUT
STEEL PRICES

PRICES cur FOR FIR
LUMBER AND PLYWOOD

Some so:ftening has shown up in Northwest fir
lumber and plywood prices. Key grades o:f green
fir two-by-fours have dropped about $2 a thousand board feet at Northwest mills because of increased price resistance from dealers. Unsanded fir plywood used generally for concealed sheathing in home building al.so has slipped about $2 a thousand square feet. (Wall St. J., 6/1 p.5)

General Electric Company and Sylvania Electric
Products, Inc., announced that they will increase
household and industrial. light bulb prices late in
June. The boosts will add two to four cents to the retail price of'
popular household bulbs. Both companies cited increasing costs of
labor, materials, and shipping as reasons for the price rises. Another large manufacturer of light bulbs, Westinghouse Electric Corporation, said it was considering price increases, but had made no
decision. (Wall St. J., 5/28 p.4)

PRICE OF LIGHT
BULBS TO RISE

HOUSE COMMITTEE
varES DEFENSE FUNDS

The Department of Defense was voted $38.8 billion by the House Appropriations Committee for
fiscal 1960--$400 million less than it had
asked. While the reduction from the budget request amounted to only
about 1i of the total, it represented a victory for the Administration
in its fight for economy in Federal spending. Early this session,
the Military Funds Subcommittee had indicated substantial increases
would be sought. (Wall St. J., 5/29 p.1)
SLOW TRADING

Electronics stocks took off again last week on
another spectacular rise, pushing the market
averages into new high ground. But for the rest
of the market, it was more of the same--stocks moved irregularly in
slow trading. In addition to the electronics, however, chemicals
and a selected number of specialties garnered most of the trading
interest. (Forest. N.Y. Times, 5/31 Sec. III p.1)

ON STOCK MARKErr1


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