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Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND
September 24, 1957
to
September 30, 1957
PRICE INDEX
HITS NEW HIGH
The Government reported that higher food costs in
August lifted consumer prices to a new high for the
twelfth consecutive month. The price index calculated by the Bureau of Labor Statistics advanced O.'c'fa between July and
August to 121.0% of the 1947-49 average. The level was 3.6% above a
year earlier, the Agency reported. Government price experts previously had expressed hopes that August would mark a down-turn. However, food prices, which comprise 30% of the over-all price index,
went up instead of down. The Bureau estimated that 157,000 workers,
mostly in the aircraft industry and a few in the glass and metal
working fields, will get hourly wage boosts of two to three cents an
hour, effective October 1. (Wall St. J., 9/25 p.28)
IMPORTS UP
IN JULY
Rising imports of coffee and sugar are a factor in
boosting the inflow of foreign goods into this country during July to the highest level in history. Imports totaled $1,144,700,000--16% above the preceding month and
9% higher than in July 1956. Incoming products have been running
above year-earlier levels throughout 1957. (Wall St. J., 9/25 p.1)
REVAIDATION RUMORS
Neither the United Kingdom nor Germany will
change the par value of its currency, representatives of the two countries told the International Monetary Fund in blunt statements intended to quash the
speculative currency fever that is playing havoc with some European
countries. British Chancellor of the Exchequer Peter Thorneycroft
not only reiterated that the exchange parity of the pound will remain at $2 . 80 , but he immediately added that the United Kingdom will
start to draw on a $500 million credit established with the ExportImport Bank last February . The statements by Peter Thorneycroft and
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nor agreement with the views expresse d.
Hans Karl von Mangoldt-Reiboldt, representing Germany, supported by
a speech of Per Jacobsson, managing director of the Fund, directly
attacked what most observers believe to be the principal immediate
problem facing the eleventh annual meeting of the Fund. (Naumann.
J. of Comm., 9/25 p.1)
MACBINE TOOL ORDER
PROSPECTS DIM
Machine tool orders last month declined to
$4~.6 million, according to the National
Machine Tool Builders Association. This was
down 20% from July and roughly 50% below August 1956. The figures
heightened uncertainty among machine tool builders regarding their
autumn business prospects. Early this year, they had been counting on a substantial upturn in incoming business, come fall. But
a survey of 30 companies shows most now have relinquished hope of
such a development. They ascribe the lag in tool orders to overexpansion in some industries and growing doubts regarding business
prospects generally. (Wall St. J., 9/27 p.1)
STEEL SillGGISH,
OUTLOOK CLOUDY
The steel market appears confusing to some, incomprehensible to others. The picture one gets depends
upon the products referred to and the parts of the
country that are gauged for an outlook. Lack of luster, extreme
shortages, and worry by the consumer characterize this week's steel
pattern. Among most steel producers, flat rolled steel orders have
improved in volume, but the increase over a month ago has fallen
short of expectations. The flow of new orders from the auto industry has been slowed by a later changeover period for new model cars,
labor troubles at plants of the major auto maker, threats of wildcat
strikes at other auto plants and an "edginess" among auto producers
over the reception the public may give to 1958 models. Tight money
continues to play its part in steel ordering. Most medium-size
steel users want to turn as much of their inventory as possible into
cash. Many were still doing that this week and were expected to
follow such a trend as long as there appeared to be no difficulty
in getting steel. (N. Y. Times, 9/30 p.41)
WORiaNG CAPITAL
The net working capital position of U.S. corporations showed little change during the second
quarter of this year, despite tight credit policies of monetary authorities and business "readjustments". Net
working capital at the end of June amounted to $107 billion for a
$1 billion gain during the quarter, according to the latest quarterly report of the Securities and Exchange Commission. The improvement reflected a decline of $1.4 billion in current liabilities,
partly offset by a $400 million drop in current assets. Of partic-
TOTAL UP
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ular significance was a slowing up in the rate of inventory accumulation. Total inventories on June 30 amounted to $79.3 billion,
against $79.1 billion at the start of the second quarter and $74.8
billion a year earlier. This was the first time in two years that
inventories failed to show a quarterly increase of at least $1
billion, the Agency reported. (J. of Comm., 9/24 p.1)
The Standard Oil Company of New Jersey plans to
seek new equity capital for the first time in nearly thirty years. Directors decided yesterday to
raise- $250,000,000 to $300,000,000 later this year on an offering of
new common stock to their shareholders. Jersey Standard's last public financing was an issue of $150,000,000 of debt securities in
July 1949. Why the company is now switching to the sale of ownership shares was not dealt with in detail by the company. However, it
was stressed that Jersey had spent more than $7 billion since the
war in the search for oil and in expanding its facilities.
(N. Y. Times, 9/28 p.22)
JERSEY STANDARD
PLANS NEW ISSUE
Business concerns increased their dependence on
outside sources for long-term funds during the
first half of the year, the Department of Commerce has reported. Companies raised more funds through the s a le of
new stock than in any f irst half-year since World War II. Funds
from outside sources in the first half of this year totaled $8 .5 b illion, compared with $8 billion in the same period last year. The
amount of stock represented in the total for this year was more than
$2 billion and almost double the amount of a year ago. Debt issue s
accounted for $3.5 billion, and bank loans for $2 billion of the
total. Funds from internal sources decreased from $20.5 billion i n
the first half 0£ 1956 to $18 billion. (N. Y. Times, 9/26 p.35)
BUSINESS INCREASES
OUTSIDE FINANCING
STOCK MARKET
CONTINUES DOWN
Events last week gave considerable reinforcement to
the belief that the Administration was determined
to check the inflationary spiral, regardless of
consequences. This points up the fact that the stock market, just
as much as the rest of t he economy,-has been on an inflationary b i nge.
The New York Times industrial average is still more than 30 point s
above the 1929 peak.
On Monday, the market suffered the sharpest decline in nearly
two years, with the volume of trading the heaviest for 1957 so far .
The list rallied somewhat on Tuesday, only to sag to a new low of
290.01 on Wednesday, the lowest point since May 25, 1955. In the
remaining two sessions,stocks moved irregularly higher in quieter
trading. (Forrest. N. Y. Times, 9/29 III p.1)
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Sales of the country's chain stores in August pushed
8 .5% ahead of the like 1956 month, according to a Wall
Street Journal survey of 47 concerns. Merchants credited the gain to seasonably cool weather, which encouraged fall buying, and to the fact that the Saturday before Labor Day--when backto-school sales are high--fell in August. Sales for the first eight
months of this year were 6.7% higher than for the corresponding period in 1956. Stores selling wearing apparel showed gains during
August that ran above this 8.5% average. The average gain of seven
women's wear chains, for example, was 12.9% for the month. (Wall
St. J., 9/24 p.6)
CHAIN STORE
SALES RISE
Shoe production in August is estimated at 54.3 million pairs, off 1.5% from last year, by the National
Shoe Manufacturers Association. The trade organization estimates, on the basis of reports from a sample group of shoe
manufacturers, that output for September will run around 50 million
pair s, an increase of 11% over September 1956. Including these
est imates, the association puts shoe production for the first nine
mont hs of 1957 at a record 455,218,000 pairs. (Wall St. J., 9/24 p.12)
SHOE OUTPUT
ESTI MATES UP
You may not have to pay any more for spring and summer suits next year after all. Early this year,
clothing manufacturers were predicting retail prices
of men'~ suits would have to be hiked about 5% next spring to reflect
price hikes posted by wool mills. However, a number of big suitmakers now are unveiling their 1958 spring-summer togs at prices unchanged from last year or with only scattered and relatively slight
whol esale increases. In most cases, these won't cause any changes
in s tore-window price tags next year. Biggest force keeping suit
pri ces down, clothing men say, is that they're afraid any substantial
hikes would cut into sales volume. (Church. Wall St. J., 9/24 p.30)
MEN'S SUIT
PRICES STABLE
The aluminum industry has made its first major
entry into the multi-million-dollar can field.
Reynolds Metals Company and Esso Standard Oil
Company announced yesterday the signing of the first contract for
the manufacture of aluminum cans to be used in the oil industry.
In Europe, aluminum has been used for many types of cans, but this
repr esents the breakthrough in this country for the metal in the
fie l d. J. Louis Reynolds, executive vice president of Reynolds
Meta ls, commented on the significance of the new development: "This
cont ract with Esso is the first large-scale order for aluminum cans
in t he history of America's aluminum and petroleum industries. It
is only the beginning, an initial bid for the United States market
of more than 40 billion cans a year." (N. Y. Times, 9/25 p.39)
AWMINUM CANS
FOR OIL INDUSTRY
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