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Business Conditions Seventh Federal Reserve District H.L Eugene M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Volume 17, No. 7 General Summary [ IND I ""“l—l Harris G. Pett, Manager Division of Research and Statistics MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO John H. Martin, AsjJ. Federal Reserve Agent, Detroit Branch George A. Pruch, Asst. Federal Reserve Agent June 30, 1934 ceeded that of last year in the same period, and distribu tion totaled smaller. As the result of an active demand OST phases of Seventh district industry and trade and limited offerings, grain prices rose sharply during continued to record a rising trend during May, with May; shipments of grain were in good volume in the month. the merchandising of commodities showing a greater than A considerable decline in the condition of crops occurred seasonal expansion in volume. However, owing to the between May 1 and the first of June, as the drouth be sharp acceleration that occurred in the month last year, came more intense. the margin of gain in the year-ago comparison was nar Distribution of commodities by reporting wholesale rowed considerably in many instances. trade groups expanded more than seasonally in May over Steel operations by the middle of June had attained a the preceding month, and the gain in the drug trade was rate higher than at the same time in any of the three pre contrary to trend for the period. Department store sales ceding years and close to that for 1930 in mid-June; both exceeded those of April by 7 per cent, which increase com new business and shipments aggregated heavier for May pares with a slight recession in the 1924-33 May average. than for April. Output from steel and malleable casting Increases in the retail shoe and furniture trades were foundries and that of stoves likewise exceeded that of a greater than seasonal in May. Chain store sales followed month previous. Shipments of furniture showed a nonthe upward trend of other retail groups. Distribution of seasonal gain, and orders booked were somewhat heavier automobiles at wholesale was smaller than a month pre than in April but under the year-ago volume. Automobiles vious for the first time this year, while sales to consumers and building furnished exceptions to the upward trends increased very slightly. recorded, some decline from the preceding month taking In financial phases may be noted a small increase be place in both these industries, although in the latter, evi tween May 16 and June 13 in the amount of reserve bank dence of activity was indicated in a greater movement of credit extended in the Seventh district, and a decline in materials and a more than seasonal increase in employ total loans and investments of reporting member banks; ment. Seventh district employment and payrolls as a net demand deposits of these banks gained in the period, whole increased somewhat further in May over April; while time deposits declined. Dealer sales of commercial manufacturing payrolls, however, were slightly smaller paper fell off in May from April following five months of owing to the curtailment in the automobile industry. expansion, but new financing by means of bankers’ ac Both the production and sales of meat-packing products ceptances rose sharply, though remaining substantially increased in May over April and totaled larger than a under the year-ago volume. year ago. Butter production and sales also rose about Credit Conditions and Money Rates seasonally in the monthly comparison, but although sales Total credit outstanding of the Federal Reserve Bank were heavier than in May 1933, the volume of produc of Chicago amounted to $431,679,000 on June 13, or prac tion was under that month. The increase in the manufac tically unchanged from the $431,558,000 on May 16. ture of Wisconsin cheese was smaller than usual, while the The volume of credit extended directly by this bank decline in sales was less than seasonal; production exwithin the Seventh district increased slightly over 1E FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF million dollars during the four-week period. Reversing CONDITION (Amounts in millions of dollars) the tendency of recent weeks, there was a movement of Change From Tune 13 May 16 June 14 more than 98 millions into the district because of inter 1 1934 1934 1933 Total Bills and Securities....................................... $431.8 $-2.3 $+126.7 district commercial and financial transactions during the Bills Discounted......................................................... 0.3 -0.8 -15.4 four weeks ended June 13. Demand for currency fell Bills Bought................................................................ 0.6 0 -0.5 U. S. Government Securities................................. 430.8 -1.5 +142.7 off 9y* million dollars. With these substantial additions Total Reserves........................................................... 1,091.4 +96.1 +160.5 Total Deposits........................................................... 724.7 + 101.2 to banking reserves, member bank balances increased 66 Yz +365.6 Federal Reserve Notes in Circulation................ 769.1 -7.7 -36.6 million dollars, and special and “all other” deposits were Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined................ 73.0% +2.0* -6.9* almost 30 millions larger, despite a small excess of United ♦Number of points. States Treasury collections over disbursements. M Changes Between May 16 and June 13 in Factors Affecting Use of Federal Reserve Bank Funds Seventh District (Amounts in thousands of dollars) Reserve bank credit extended.......................................................................... +1,621 Commercial operations through inter-district settlements...................... +98,007 Treasury and National bank currency......................................................... —4,595 Total supply...................................................................................... +95,033 Demand for currency......................................................................................... —9,514 Member bank reserve balances....................................................................... +66,629 Treasury cash and deposits at Federal Reserve Bank of Chicago........... +6,136 Special and "all other" deposits........................................................................ +29,769 Other Federal Reserve accounts..................................................................... +2,013 Total demand.......................................................................................... +95,033 Member Bank Credit Total loans and investments of licensed reporting mem ber banks in the Seventh district declined 57 million dol lars from May 16 to June 13, the greater part of which decrease, as shown by the accompanying table, took place in investment holdings. Net demand deposits gained 60 millions on June 13 over May 16, while time deposits recorded a decline of 15 millions. As against the aggre gates reported for June 14, 1933, loans and investments on June 13 of this year showed an increase of 258 million dollars; investments alone gained 330 millions, but loans on securities and “all other” (commercial) loans declined 62 and 10 millions, respectively. Net demand deposits on June 13 were nearly 500 million dollars in excesss of the June 14, 1933, aggregate, but time deposits were at a slightly lower level than a year ago. A range of 1J4 to 5 per cent, unchanged from a month previous, was reported by down-town Chicago banks as the prevailing rate on customers’ commercial loans during the week ended June 15. The average rate earned on loans and discounts by Chicago banks located in the down town area for the calendar month of May was 3.47 per cent, as compared with 3.18 in April and with 4.22 in May 1933. Detroit banks reported a range of 3J4 to 6 as the rate prevailing on customers’ commercial loans for the week ended June 15, as against 4 to 5 per cent for the corresponding week in the preceding month. Dealer sales of commercial paper in the Middle West, after gaining uninterruptedly from December 1933 through April 1934, fell off 5j4 per cent in May from the preceding month and were 54 per cent below the 1924-33 seasonal average. However, they aggregated 107 per cent heavier than a year ago and 44J4 per cent larger than for the corresponding period of 1932. As this reversal in trend was due to decreased borrowing rather than to a decline in demand, selling rates continued to ease. Quota tions for May, therefore, ranged from Y and Y Per cent for prime short-term obligations to 1 and per cent for paper less well known or of longer maturity; the bulk of transactions took place at Ya to 1 per cent. Outstand ings showed a seasonal decline of 4 per cent on May 31 from a month earlier and remained 66 per cent under the 1924-33 average for the date, but were 126 per cent heavier than at the end of May 1933. An expansion in both supply and demand was responsible for the sales CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) Total Loans and Investments.......................... Loans on Securities.............................................. All Other Loans.................................................... Investments........................................................... .. . . . . . . June 13 1934 $1,742 335 407 1,000 Change From May 16 June 14 1934 1933 $-57 +$258 -1 -62 -8 -10 +330 -48 Net Demand Deposits........................................ . . Time Deposits....................................................... . . 1,583 475 +60 -15 +492 -2 Borrowings from Federal Reserve Bank. .. . . . 0 0 0 Page 2 gain of 25 per cent in the first half of June over the corresponding weeks of May. Selling rates on June 15 remained within a range of Y& to 1J4 per cent. During the four weeks ended June 13, the supply of acceptances in the Chicago bill market decreased 5J4 per cent from that of April 12 to May 16, a result of the de cline in bills purchased locally more than offsetting a small gain in receipts from Eastern cities. All bills moved rapidly out of dealers’ hands through an increased de mand from out-of-town banks, although sales to Chicago banks declined and shipments to Eastern markets were almost nil. As in recent preceding periods, dealers were unable to accumulate any bills in their own portfolios. Selling rates remained within a range of and % Per cent to /z per cent. After totaling exceptionally light in the preceding period, new financing by means of bankers’ acceptances in the Seventh district rose 64J4 per cent in May over April to a level higher than for any previous month since last December, but was 27J4 per cent under a year ago and 12 per cent below the 1924-33 May average. The direct discounting of these bills at originating banks also showed a much larger expansion over a month earlier than is customary, although the gain was partially offset by a non-seasonal decline in buying of other banks’ ac ceptances. Total purchases recorded the usual increase over April and were not only 48 per cent smaller than last May but 8 per cent under the ten-year average for the month. Sales, though remaining almost negligible, gained over both March and April, while a sharp increase in maturities in portfolios was responsible for a counterto-seasonal decline in holdings to a level on May 31 below any preceding date in 1934. Furthermore, total matur ities exceeded new financing to such an extent that the liability for outstandings aggregated less at the close of May than for any reporting date since September 29, 1928. In the first half of June, an increased demand for funds by several industries which had not borrowed in the preceding period was more than counterbalanced by a sharp contraction in utilization of acceptance credits by industries that had been heavy borrowers a month earlier; the amount of new financing by means of bankers’ ac ceptances, therefore, fell off 58 per cent as compared with the corresponding weeks of May. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in May 1934 From April 1934 May 1933 +64.6 ”27.3 +18.9 —47.9 +82.9 —87.1 —9.4 —18.9 —10.3 —18.7 Total value of bills accepted —........... Purchases (including own bills discounted) Sales............................................................... Holdings*...................................................... Liability for outstandings*...................... ♦At end of month. Security Markets Demand in the Chicago bond market during May and the early part of June was largely confined to issues of outstanding quality, and the stronger prices among this class of bonds were in contrast to consistently weak prices VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From May 1934 Apr. 1934 May 1933 +17.6 -8.3 Chicago.............................................................. . . . . $2,239 +63.6 +2.5 Detroit, Milwaukee, and Indianapolis---- .... 950 Total four larger cities.................................. ___ $3,189 514 33 smaller centers............................................ . . . . -5.3 +8.3 +28.3 +29.9 Total 37 centers.............................................. ___ $3,703 -3.6 +28.5 on speculative obligations. Foreign bonds were quiet dur ing the period, and in most instances prices were slightly lower. Investment houses in the Seventh district report the major part of their current business to be from in stitutions. Prices on the Chicago Stock Exchange showed moderate fluctuations during May and the first half of June. The average price of twenty leading stocks* was $30.95 on June 16, as compared with $29.63 on the cor responding date in May. ♦Chicago Journal of Commerce Agricultural Products Intensification of the drouth during May in this dis trict, as in other sections of the United States, brought about a serious decline in the condition of crops. Follow ing the extreme deficiency of previous months, rainfall in May ranged between 22 per cent of normal in Illinois and 51 per cent in Wisconsin. Abnormally high tem peratures prevailed during considerable periods in May and early June. During the first two weeks of June fairly general and beneficial rains fell, but these came too late to prevent serious damage. Hay and pastures, small grains, and truck gardens suffered most severely. Corn has made good progress except in dusty areas where it failed to germinate. Condition probably averages poor to fair. A good deal of fodder corn is being planted to replace losses in other feed crops. The condition of oats is the lowest since 1893, and at the end of May a reputable private reporter forecast a crop of 339 million bushels for the five states including this district, with condition still declining at that time. Winter wheat condition declined during May, and the June 1 Government estimate was lowered 61 million bushels from the preceding month for the country as a whole and 7 millions for the five Seventh district states, to an amount one million larger than the 1933 production. Fruit trees continue in fair condition, with an increase over last year in this district indicated for pears, and a decrease for peaches and cherries. Commercial estimates for the United States at the end of May averaged 126 million bushels for spring wheat and 789 millions for oats. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on of June 1 condition. (In thousands of bushels unless otherwise specified) Five States Including Seventh District United States Forecast Final Forecast Final 1934 1933 1933 1934 Winter Wheat. . 67,584 66,319 400,357 351,030 Rye................... . 6,362 5,577 18,756 21,184 602(a) 1.965(a) Peaches........... . 48,673 45,326 1.010(a) Pears............... . 1.148(a) 21,425 21,192 28(b) 33(b) Cherries 1. . . . , 106 112 the basis 1927-31 Average 632,061 40,950 57,919 22,540 93 1 In thousands of tons, (a) Illinois, Indiana, Iowa, and Michigan, (b) Michigan and Wisconsin. contrasted with almost none in May last year. Prices of all grains moved sharply upward during the month, and by May 31 reached higher levels than any recorded since July and August of last year. Futures in May averaged higher than in April by 7 cents for wheat, 3 cents in the case of corn, and 5)4 cents for oats. There was a moder ate recession in all quotations during the first half of June. Shipments of corn and oats were in good volume dur ing May, corn exceeding the five-year monthly average for the first time since last November. Primary receipts, however, remained restricted in volume. Visible supplies of these grains continued the preceding month’s decline at an accelerated rate, in contrast to increases shown during the corresponding 1933 period, and by June 9 were only slightly larger than a year earlier. Movement of Live Stock Forced liquidation of many immature animals, because of drought conditions prevailing over large areas, was re sponsible for a greater than seasonal expansion during May 1934 in live-stock marketings in the United States. Receipts of cattle, hogs, and lambs at public stock yards, as a result, were above the average of the preceding four months and those of calves attained a level higher than for any corresponding period since October 1930. How ever, the number of hogs and lambs remained less than a year ago, and the marketing of hogs continued in less than seasonal volume. Trends in the movement to inspected slaughter (inclusive of animals that did not pass through public stock yards) varied from those of market receipts in several instances: the supply of hogs was in excess of the 1924-33 May average, that of cattle exceeded any pre vious month since November 1927, and the number of calves was greater than for any corresponding period on record (January 1920). An increase in reshipments to feed lots took place in May over April; the movement of cattle and calves re mained less than a year ago and the 1929-33 seasonal av erage, but that of lambs gained in both comparisons. Meat Packing Coincident with increased marketing of live animals from drought-stricken sections of the country, the volume of production of packing-house commodities at slaugh tering establishments in the United States rose 18 per cent in May over April to a level higher than for any month since January, and was not only )4 per cent greater than a year ago but 11)4 per cent larger than the 1924-33 May average. Demand proved sufficiently strong to absorb the sales tonnage offered—which was heavier than in April, 9 per cent larger than last May, 10)4 per cent greater than the 1924-33 average for the month, and slightly in excess of current production—at nearly the same general Grain Marketing Active demand developed for wheat and other grains during May, as information regarding drought damage to the new crops became more conclusive. In combination with limited offerings, this resulted in the strongest price situation since last summer. Wheat shipments more than doubled the record low volume of April, rising to nearly two-thirds of the fiveyear May average; and receipts increased somewhat more than seasonally, but totaled 47 per cent less than a year ago. Visible supplies were reduced 11 million bushels from April 28 to June 9, as compared with a 5-million bushel decline in 1933. Exports fell to about half the April volume and below any month since November, but LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, May 1934..................................... Federally Inspected Slaughter, United States May 1934..................................... April 1934.................................... May 1933..................................... Lambs Sheep Cattle Hogs 246 850 230 135 864 749 717 4,218 3,411 4,286 1,244 1,164 1,505 600 526 476 and Calves AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended Months of June 16 May April 1934 1934 1934 Native Beef Steers (average). . .. $7.50 $6.95 $6.40 Fat Cows and Heifers............ ... 4.65 4.70 4.75 5.25 Calves.......................................... ... 5.00 5.45 Hogs (bulk of sales)................ . 4.00 3.60 3.90 9.35 8.35 9.20 Lambs......................................... ... May 1933 $5.60 4.55 5.40 4.55 6.30 Page 3 price level as obtained in the preceding period, the de cline in quotations for pork products being largely offset by an advance in beef, lamb, and veal prices. Quotations, therefore, remained considerably higher than in 1933 but were much lower than the 1924-33 average. Under the influence of the foregoing trends, the value of sales billed to domestic and foreign customers aggregated greater than for any corresponding period since October 1931, being 9)4 per cent larger than in April and 22 per cent in excess of a year ago, but 27)4 per cent less than the 1924-33 average for the month. In addition, inventories of these commodities in the United States showed more than a seasonal decrease on June 1 from the beginning of May to a level 97,759,000 pounds below the 1929-33 average for that date but 56,009,000 pounds above a year ago. Payrolls at the close of the period con tinued to reflect a marked improvement over last year and showed an increase over April of 5)4 per cent in number of employes, 4)4 per cent in hours worked, and of 6 per cent in wage payments. Shipments for export increased rather sharply in May over a month earlier, principally owing to heavier con signments of lard to the United Kingdom and, in a lesser degree, to filling of orders for immediate delivery. In order to expand consumption of the increased supply, prices of American lard in the United Kingdom not only were held below Chicago parity but fell sufficiently to offset by a slight margin the advantage of processing tax refunds made by the United States Government on these exports. On the other hand, Continental trade in the commodity remained light—owing to strict import regula tions—at prices above the United States parity. With the exception of moderate buying of hams at attractive prices by British importers, the European demand for American meats continued in small volume. Several countries took action during May further to reduce ex change and import quotas. United States holdings of packing-house commodities in foreign markets (inclusive of stocks in transit) were reported as somewhat heavier on June 1 than a month earlier. Dairy Products Creamery butter production in the Seventh Federal Re serve district expanded seasonally, or 41 y2 per cent, in May over April and exceeded any previous month since August 1933, but aggregated 11 per cent less than a year ago and 17)4 per cent smaller than the 1924-33 May aver age. The sales tonnage gained 27)4 per cent over April— as compared with a seasonal increase of 2 5 per cent—and was 2 per cent heavier than last May, but showed a de cline of 5 per cent from the ten-year average for the month. After having recorded a less than customary gain in the preceding period, United States production of the commodity increased more than is ordinarily the case in May over April, though continuing 3)4 per cent under a year ago. Demand, however, proved sufficiently strong to result in slightly firmer prices than obtained a month earlier and to prevent the full seasonal expansion in in ventories. June 1 holdings of creamery butter in the United States, therefore, were 8,049,000 pounds under a year ago and 8,534,000 pounds lighter than the 1929-33 average for that date. Conversely, American cheese manufacturing operations in Wisconsin expanded a smaller than normal amount in the four weeks ended June 2, being 19 per cent heavier than a month earlier and 2 per cent greater than a year ago but 7)4 per cent below the 1929-33 average for the Page 4 period. On the other hand, the sales tonnage showed less than the customary recession from April. In decreasing only 3)4 per cent in the four weeks ended June 2 from the preceding period, distribution of this commodity from primary markets in Wisconsin showed a more seasonal relationship to current production than obtained a month earlier and aggregated only 5 per cent less than a year ago and 11)4 per cent smaller than the 1929-33 seasonal av erage. Prices were advanced approximately 3 per cent during the month. Total inventories of cheese in the United States gained less than the usual amount on June 1 over the beginning of May, but were 11,718,000 pounds in excess of the 1929-33 average for that date and 22, 712,000 pounds heavier than a year ago. Industrial Employment Conditions Continued gains in employment and payrolls were re flected in the May reports from Seventh district indus tries, employment rising a little more than one per cent and payrolls a little less than that amount, as compared with the preceding month. The gains, which were in line with the usual movement at this season, were small in comparison with the sharp advances that were taking place at this time a year ago, and increases over last May —49 per cent in employment and 64 per cent in payrolls —consequently fell below those shown in a similar com parison a month earlier. The current employment vol ume, computed by means of link relatives, was the high est since October 1930, and wage payments were larger than in any month since June 1931. The manufacturing group as a whole increased employ ment one per cent from April to May, but registered a fractional decline in payrolls. This decrease was mainly the result of curtailment in the automobile industry which affected not only the figures for the vehicles and the rubber products groups but also those for Michigan as a whole—the only state within the district not in line with the upward trend during May. The vehicles group maintained its volume of employment, while decreasing payrolls 4 per cent. Rubber products showed losses of 15 per cent in employment and 20 per cent in wage pay ments. The leather and textiles groups also receded from the April levels but at a more moderate rate, and increases were reported for all of the six remaining manufactur ing groups included in the survey, the metals group reachEMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of May IS. 1934 Industrial Group Report Firms No. Wage Earners No. Metals and Products 1. . . . Vehicles................................. Textiles and Products.... Food and Products............. Stone, Clay, and Glass.... Wood Products.................... Chemical Products............. Leather Products................ Rubber Products *.............. Paper and Printing............ 1,204 222 296 578 166 414 151 101 8 556 237,793 326,455 45,262 88,556 10,624 32,271 20,283 20,812 7,260 63,831 Total Mfg., 10 Groups___ 3,696 Merchandising 8................... Public Utilities.................... Coal Mining......................... Construction........................ 1,300 80 18 299 ing Earnings (000 Omitted) $ Change From Apr. 15, 1934 Wage Earn ers Earn ings % % 5,122 8,366 706 1,887 217 480 453 371 162 1,450 +2.4 +0.4 -0.2 +3.6 +6.5 +1.5 +1.2 -0.9 -15.0 +i.i +4.2 -4.1 -3.0 + 7.3 +10.1 +2.8 +3.4 -1.7 -19.9 +1.3 853,147 19,214 +1.2 -0.2 62,361 82,350 3,544 10,946 1,244 2,390 59 253 +1.5 +0.3 -17.1 +27.2 +1.6 +4.3 -11.2 +46.0 Total Non-Mfg., 4 Groups 1,697 159,201 3,946 +1.8 +5.1 Total, 14 Groups................. 5,393 1,012,348 23,160 +1.3 +0.7 1 Other than Vehicles. 2 Michigan and Wisconsin. 8 Illinois and Wisconsin. ing the highest point in employment and payrolls since May 1931. Of the non-manufacturing groups, coal mining alone showed a decline from the preceding month, the losses in this group amounting to 17 per cent in number of men employed and 11 per cent in amount of payrolls. The construction industries registered greater-than-seasonal in creases of 27 and 46 per cent, respectively, in men and payrolls. Gains in the large merchandising and public utilities groups contributed further to the aggregate rise of 2 per cent in employment and 5 per cent in payrolls shown for the non-manufacturing division as a whole. Manufacturing Automobile Production and Distribution Some curtailment was recorded during May in output of automobiles. United States production of passenger automobiles numbering 273,765 in the month, declined 5 per cent from the April volume, though totaling 50^ per cent heavier than in May last year when output showed a substantial gain over the preceding month. The de crease this May followed five consecutive months of ex pansion. The 57,876 trucks produced in the current pe riod represented a decrease of 12 per cent from the pre ceding month and a gain of 76 per cent over May a year ago. The decline experienced in May in Midwest distribution of automobiles at wholesale was the first to be recorded in the monthly comparison since last December, but sales continued to be above the year-ago level despite the stead ily rising trend shown at that time. Sales to consumers numbered fractionally greater than a month previous, as will be noted in the table, and likewise remained substan tially above last year. A further rise was shown in stocks of new cars on hand between the end of April and May 31, which represents an uninterrupted expansion since the first of the year. Stocks of used cars, on the other hand, totaled smaller in number than a month previous and were likewise below last year’s level. Although the pro portion of deferred payment sales to total sales of retail dealers reporting the item showed little change between April and May, the current ratio of 46 per cent compared with one of only 40 per cent reported by the same dealers for May last year. Iron and Steel Products Shipments of steel from Chicago mills aggregated sub stantially heavier during the month of May than in April, while new business exceeded that of the preceding month by a somewhat more moderate amount; both items re corded large increases over the same month last year. Fol lowing a steady rise in the rate of steel ingot production through the middle of May, some slowing-down took place in the following week, but in the last week of the month MIDWEST DISTRIBUTION OF AUTOMOBILES Included New Cars Wholesale— Number Sold...................................... Value.................................................... Retail— Number Sold...................................... Value.................................................... On Hand May 31— Number................................................ Value.................................................... Used Cars Number Sold..................................... Salable on Hand— Number................................................ Value..................................................... -12.6 -14.9 +14.0 +45.2 18 18 + 0.5 -0.1 +19.4 +9.5 54 54 +8.3 +13.0 +81.6 +77.2 54 -0.6 +4.7 54 -4.6 +1.8 -2.7 +3.8 Furniture A slight up-turn of 3 per cent from the lowered volume of April was recorded in May orders booked by furniture manufacturers reporting to this bank, in comparison with a gain of 11 per cent in the average for the period and of 30 per cent in May 1933 over April. The May volume of shipments totaled 28 per cent heavier than that of the preceding month, which increase was in contrast to a sea sonal contraction for May of 9 per cent and compared with a gain in the corresponding period of 1933 of 19 per lumber and building materials trade Class of Trade Changes in May 1934 From Previous Months Per Cent Change From April 1934 May 1933 output again rose and in the first week of June had at tained a rate of 69 per cent of capacity, which rate was maintained through the following week. Ingot production averaged 45 per cent of capacity in the middle of June last year, 20 per cent in 1932, and 40 per cent in 1931, while the rate in mid-June 1930 approximated 75 per cent of capacity. The daily average of pig iron production in the Illinois and Indiana district gained more than 25 per cent in May over April and exceeded the peak month (July) last year by approximately 15 per cent. The scrap market appeared somewhat steadier in the second week of June, after having shown a steadily declining trend for a number of weeks. Steel casting foundries of the Seventh district reported a further moderate decline in new business for May, the volume of orders booked totaling 6 per cent less than in April. Shipments and production showed a sharp accel eration, the volume of the former rising 63 per cent and of the latter 48 per cent above the tonnage figures of the preceding month. At malleable foundries, orders booked and production approximated the volumes reported for April, while shipments rose 6 per cent. The increases over a year ago reported by this type of foundries—48 per cent in orders, 85 per cent in production, and 112 per cent in shipments—were considerably smaller than those recorded a month earlier, owing to the expansion in busi ness that was taking place at the same time a year ago. At steel foundries, however, increases in the yearly com parison ranged from 218 per cent for orders to 310 for pro duction, the former gain being smaller than in a similar comparison for April but the latter totaling larger. In the manufacture of stoves and furnaces, orders ac cepted decreased 6 per cent in May from April, after a steady rise in the item since April 1933. Molding-room operations showed little change from the preceding month, while shipments increased 32 per cent and inventories gained 16 per cent. Current operations exceeded those of a year ago by 62 per cent, shipments and orders were, re spectively, 83 and 58 per cent larger, and inventories showed a gain of 87 per cent in this comparison. April 1934 May 1933 Sales in Dollars............................... Sales in Board Feet........................ Accounts Outstanding 1................ +22.7 +19.5 +13.8 +20.8 -10.8 +25.1 Total Sales in Dollars................... Lumber Sales in Dollars............... Lumber Sales in Board Feet.... Accounts Outstanding 1................ +21.8 +29.1 +26.2 +4.5 Wholesale Lumber: Retail Building Materials: 54 54 54 May 1934: Per Cent Change From Wholesale Trade................................. Retail Trade......................................... Number of Yards 10 8 10 +28.2 178 +25.7 63 +8.1 72 +2.5 170 Ratio of Accounts Outstanding 1 to dollar sales during month May 1934 April 1934 May 1933 158.0 310.3 170.4 362.5 152.3 391.1 Page 5 cent; moreover, for the first time this year shipments ex ceeded the current volume of orders. This reversal in the ratio of new orders to shipments, occasioned by the con siderably greater increase in shipments than in orders, effected a contraction in the volume of unfilled orders— moderated by a heavy recession in cancellations—so that those outstanding at the close of May totaled IS per cent under a month previous, and registered a decline in the ratio to current orders of 20 points from the 111 per cent obtaining at the end of April. Although shipments con tinued for the thirteenth consecutive month in excess of those made during the corresponding period a year ago— the 13 per cent margin comparing favorably with that a month previous of only 2 per cent—the volume of new orders failed for the first time since October 1933 to show an increase in the comparison, actually declining 14 per cent. The rate of operations averaged 56 per cent of ca pacity currently, 6 points greater than the ratio obtaining in April and 11 points above that of May 1933. Shoe Manufacturing, Tanning, and Hides Shoe manufacturers in the Seventh district continued operations at an unusually high rate during May, output falling seasonally below that of the preceding month but remaining, except for the March and April volumes, above any recorded since August 1933. District production dur ing April, for which final figures are now available, showed a decline of iy2 per cent from March, was 23 per cent heavier than in April 1933, and 30 per cent above the ten-year (1924-33) average for the month. In the tan ning industry, production increased slightly over April, while sales declined and prices weakened. The movement of green packer hides in the Chicago district was some what larger in May than April, but sales were made at steadily declining prices, quotations at the beginning of June showing a drop of two cents from those of a month earlier. Building Materials, Construction Work Seasonal or better expansion took place during May in most lines in the Seventh district building materials field. The weather continued generally favorable for outdoor work, which is reported to be under way in moderate vol ume, with considerable variation between localities. Operations at wholesale lumber yards increased by 23 per cent over April in dollar sales and 19 y2 per cent in board feet, as compared with five-year average increases of about S per cent in each item. Aggregate sales of re porting retailers gained 22 per cent over a month previous, and their lumber sales expanded 29 per cent—consider ably better than the seasonal trend for both items. In the year-ago comparison, both wholesale and retail yards re ported smaller gains than in recent months, which is ac counted for by the sharp increases which occurred in the same period of 1933 under the stimulus of rising prices. The ratio of accounts to dollar sales recorded declines for both wholesalers and retailers, as is typical when de mand is expanding. WHOLESALE TRADE IN MAY 1934 Commodity Groceries.............. Hardware............. Dry Goods.......... Drugs.................... Electrical Supplies............ Per Cent Change From Same Month Last Year Ratio of Accts. Outstand Net Sales Stocks Accts. Outstand. Collec tions Net Sales +22.7 +30.0 +27.8 +25.7 +14.5 +34.6 +59.2 +11.5 +6.7 +8.9 +3.4 -10.5 +20.0 +51.8 +39.6 +21.7 94.9 175.8 217.2 178.5 +60.5 +37.4 +14.3 +92.9 146.7 Page 6 The market for brick and tile was restricted in rural sections, but a slight expansion was reported for Chicago. Stocks are being held at the lowest level consistent with prospective near-future demand. There was considerable improvement in cement operations, partly attributed to greater activity in road-paving this year than at the same time a year ago. Producers’ stocks are moderately heavy, but dealers are reported to be carrying excessive supplies. The price level in all lines continued stable, under the in fluence of the various codes. Building Construction Building activity in the Seventh Federal Reserve dis trict again declined somewhat during May from the pre ceding month, according to total building contracts awarded which amounted to only slightly over 22 millions, a drop of more than 2 million dollars from the April vol ume. Residential awards amounted to 17 per cent of all contracts, and the volume was the largest reported for that classification since October 1931. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Total Contracts Period May 1934........................................................ $22,185,752 -10% +113% $115,725,207 Change from same period 1933............ +210% ♦Data furnished by F. W. Dodge Corporation. Residential Contracts $3,798,574 +30% +34% $12,189,413 +71% The Seventh district trend in estimated cost of proposed construction, according to building permit figures in 99 cit ies, continued upward during May. The increase over April, partly seasonal in nature, amounted to 25 per cent, while as compared with a year ago, a gain of 90 per cent was registered. The number of permits issued during May increased 9 and 20 per cent, respectively. All of the five larger cities in the district—Chicago, Detroit, Milwaukee, Indianapolis, and Des Moines—followed the group trend in estimated cost of proposed construction in the monthly comparison. Merchandising The gains shown for May over April in reporting groups of wholesale trade were greater than seasonal in extent, and in drugs the increase was contrary to trend. Grocery and electrical supply sales each expanded 19 per cent over the preceding month, hardware 12 per cent, and dry goods 9 per cent, as against gains in the average for the period of 4 per cent each in groceries and electrical supplies, 3 per cent in hardware, and one per cent in dry goods, while the increase of 2 per cent in the drug trade compared with a decline of 2 per cent in the 1924-33 av erage for May. In the grocery trade, the gain of 23 per cent over last May was the largest shown in the year-ago comparison so far in 1934, but the increases in other lines, noted in the table, were for the most part smaller than in DEPARTMENT STORE TRADE IN MAY 1934 Locality Per Cent Change May 1934 From May 1933 Ratio of Per Cent Change May Col First Five Months lections to 1934 From Same Accounts Outstanding Period 1933 End of April Net Sales Stocks End of Month Net Sales 1934 1933 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. +13.6 +25.4 +11.4 +8.6 +27.2 +21.1 +30.4 +48.6 +24.0 +20.7 +18.9 +47.2 +22.1 +21.4 +33.1 30.5 45.8 39.9 38.4 32.8 29.7 34.6 38.2 32.0 28.9 7th District. +17.5 +25.1 +27.0 37.0 32.0 ing to * r * previous months this year. In the first five months of 1934, electrical supply sales exceeded those of the corresponding period of 1933 by 80 per cent, hardware sales were greater by 62 per cent, dry goods by S3 per cent, drugs by 32 per cent, and groceries by 21 per cent. In all groups, ratios of accounts outstanding at the end of May to sales during the month were smaller than a month previous or a year ago. In the drug, grocery, hard ware, and electrical supply trades, prices appear to be steady to upward, but dry goods prices trend slightly downward. Seventh district department store trade increased 7 per cent in May over the preceding month, in contrast to a recession of one-half per cent in the 1924-33 average for May. The total for stores in smaller cities of the district and that for Chicago showed the heaviest gains in this comparison, sales in the former group expanding 16 per cent over the April volume and those by Chicago stores aggregating 12 per cent greater, while sales of Indianapolis and Detroit firms were only 4 and 2 per cent larger, re spectively, and Milwaukee trade declined 9 per cent. As in the monthly comparison, stores in smaller cities were largely responsible for the size of the increase recorded over a year ago—17 per cent—their aggregate sales being 27 per cent larger than for last May, while Milwau kee stores showed the smallest gain—9 per cent. The fractional recession from a month previous in stocks on hand at the end of May was less than seasonal, and for the second successive month stock turnover failed to equal that for the same month of 1933; however, turnover for the year to date continued to be in excess of that last year. Although the May ratio of collections to accounts outstanding was higher than that for May last year, the difference was not so great as in the preceding month. The dollar volume of shoes sold during May by report ing dealers and the shoe departments of department stores totaled one-third heavier than in April when a non-seasonal decline was recorded. The expansion in the current period was the largest for May in any of the years 1926 through 1933 and compared with a gain of but 3 per cent in the average for those years. As a consequence, sales aggregated 27 per cent above those for the corresponding month last year, whereas in a similar comparison for April, the increase amounted to only 3}4 per cent. In the first five months of 1934, the sales volume exceeded that of the same months of 1933 by 28 per cent. Similarly, the retail furniture trade experienced a more than seasonal expansion in May, with an increase in sales of 12 per cent as against one of S per cent in the 1927-33 May average. However, in the comparison with a year ago, sales totaled only 10 per cent larger, whereas in April the gain over a year previous was 42 per cent. As in the preceding month, installment sales by dealers showed heavier increases than did total sales, gaining 21 per cent in the monthly and 40 per cent in the yearly comparison. A 10 per cent increase over April and one of 14 per cent over a year ago were shown for May in aggregate sales of reporting chains. Musical instrument sales were smaller in both these comparisons and grocery sales totaled less than for last May, but all other groups which include fiveand-ten-cent store, drug, shoe, cigar, and men’s clothing chains, had heavier sales than either a month previous or a year ago. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-1924-1925 as otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of ~' • -' " ' May Apr. Mar. Feb. Jan. Dec. May Apr. Mar. Feb. Firms 1934 1934 1933 1933 1933 1933 1934 1934 1934 1933 Meat Packing—(U. S.)— Sales (in dollars).................................... 62 68 62 63 63 60 54 56 48 45 44 Casting Foundries—• Shipments: Steel—In Dollars............................... 13 44 31 28 22 21 18 12 10 11 10 In Tons................................... 13 47 31 28 13 10 12 21 21 20 11 Malleable—In Dollars..................... 21 41 38 36 28 23 23 16 12 10 11 In Tons......................... 21 62 58 36 22 58 44 38 29 16 20 Stoves and Furnaces— Shipments (in dollars).......................... 10 108 84 82 78 54 44 38 35 63 45 Furniture— Orders (in dollars)................................. 14 27 25 31 35 32 24 19 28 18 24 Shipments (in dollars)......................... 14 30 23 23 27 23 24 29 21 20 20 Flour— Production (in bbls.)............................ 21 101 92 108 106 107 121 104 114 110 91 Output of Butter by Creameries— Production............................................... 67 121 85 80 72 78 80 135 94 93 85 Sales........................................................... 69 115 87 90 92 93 93 101 113 96 91 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 28 77 64 67 62 63 56 58 61 63 51 Hardware............................................. 11 70 62 52 39 54 39 38 46 28 22 Dry Goods........................................... 9 44 40 34 37 28 34 23 42 26 21 Drugs.................................................... 13 66 64 71 64 70 67 54 49 49 49 Retail Trade (Dept. Stores)— Net Sales (In dollars): Chicago................................................ 25 71 63 66 54 64 57 54 105 56 44 Detroit.................................................. 5 93 91 92 67 58 74 65 114 45 40 Indianapolis........................................ 4 81 78 73 84 56 62 119 70 52 47 Milwaukee................ ,........................ 5 74 82 71 58 58 111 68 70 51 46 Other Cities........................................ 43 75 65 73 52 60 53 102 57 44 38 Seventh District............................... 82 76 71 73 57 55 108 66 61 51 43 Automobile Production—(U. S.)— Passenger Cars....................................... 94 99 94 64 39 17 62 52 33 31 Trucks.............................. ........................ 154 174 150 117 115 78 87 69 47 41 Building Construction— Contracts Awarded (in dollars): Residential.......................................... 13 10 8 6 4 3 10 5 5 2 Total..................................................... 32 36 37 40 24 48 15 10 12 6 Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... 68 54 39 34 31 49 31 18 18 21 United States...................................... 67 59 53 46 40 39 29 21 18 20 Steel Ingot Production—(U. S.)*. . . 88 94 78 69 56 55 56 25 34 41 a base, unless the following Jan. 1933 Dec. 1932 46 46 12 12 11 20 10 10 11 18 22 45 25 19 16 18 103 108 93 . 89 86 89 52 22 25 58 65 30 25 60 45 48 54 47 40 46 92 108 106 101 84 95 38 51 29 56 3 12 3 14 19 19 30 19 18 25 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS PRODUCT (By the Federal Reserve Board) NDUSTRIAL production increased slightly in May, while factory employment and payrolls showed little change. The general level of wholesale prices, after Iremaining practically unchanged since the middle of February, advanced sharply in the middle of June, reflecting chiefly increases in the prices of live stock and live-stock products. Production and Employment Index number of industrial production, adjusted for seasonal variation (1923-1925 average = 100). FACTORY EMPLOYMENT 1929 1930 1931 1932 1933 1934 Federal Reserve Board’s index of factory employment, adjusted for seasonal variation (1923-1925 average — 100). Industrial production, as measured by the Board’s seasonally adjusted index, advanced from 86 per cent of the 1923-1925 average in April to 87 per cent in May, as compared with a recent low level of 72 last November. Activity at steel mills increased further from 54 per cent of capacity in April to 58 per cent in May, while output of automobiles showed a decline. Lumber production continued at about one-third the 1923-1925 level. In the textile industries, output declined somewhat, partly as a consequence of seasonal developments. At mines, coal production showed little change in volume, while output of petroleum continued to increase. In the first three weeks of June, activity at steel mills continued at about the May level, although a decline is usual at this season. Maintenance of activity reflected in part, according to trade reports, considerable stocking of steel. Output of automobiles declined somewhat, as is usual at this season. Employment in factories, which usually declines slightly between the middle of April and the middle of May, showed little change, while employment on the rail roads, in agriculture, and in the construction industry increased, as is usual at this season. Increased employment was shown at manufacturing establishments pro ducing durable goods, such as iron and steel and non-ferrous metals, while em ployment declined at establishments producing non-durable manufactures, such as textiles and their products. Value of construction contracts awarded, as reported by the F. W. Dodge Cor poration, has shown a decline in the spring months, reflecting a reduction in the volume of contracts for public projects. The volume of construction work actually under way has increased as work has progressed on contracts previously awarded. Department of Agriculture estimates, based on June 1 conditions, indicated un usually small crops of winter wheat and rye and exceptionally poor conditions for spring wheat, oats, hay, and pastures, largely as a consequence of a prolonged drouth. The winter wheat crop was estimated at 400 million bushels, as compared with a five-year average of 630 million bushels and an exceptionally small crop of 350 million bushels last season. Rains in early June somewhat improved prospects for forage and grain crops not already matured. WHOLESALE PRICES Distribution Commodities Total freight traffic increased in May by more than the usual seasonal amount, reflecting in considerable part a larger volume of shipments of miscellaneous prod ucts. At department stores the value of sales showed an increase, as is usual at this season. Commodity Prices Farm Products Indexes of the United States Bureau of Labor Statis tics. By months 1929 to 1931; by weeks 1932 to date (1926 = 100). During May and the first three weeks of June, wholesale prices of individual farm products fluctuated widely, while prices of most other commodities showed little change. Wheat, after advancing rapidly during May, declined considerably in the first three weeks of June. Cotton continued to advance in the early part of June. In the middle of the month, hog prices increased sharply from recent low levels. Automobile prices were reduced in the early part of June, and copper prices advanced. Bank Credit MEMBER BANK CREDIT U. S Govt. Securities ^ All Other LOUS lo*M on Securities Wednesday figures for reporting member banks in 91 leading cities. Latest figures are for June 13. Pa£e 8 During May and the first half of June, there was little change in the volume of reserve bank credit outstanding. As a consequence of expenditure by the Treas ury of cash and deposits with the Federal Reserve banks and a growth in the coun try’s monetary gold stock, member bank reserve balances advanced further to a level $1,800,000,0)0 in excess of legal requirements. In the week ending June 20, how ever, excess reserves dropped to $1,675,000,000, reflecting an increase in Treasury deposits at the reserve banks in connection with June 15 tax receipts and sales of Government securities. Total loans and investments of reporting member banks increased by $80,000,000 between May 16 and June 13, reflecting a growth in holdings of investments other than United States Government securities and in open-market loans to brokers and dealers, while loans to customers declined. Net demand deposits increased by about $400,000,000 during the period. Money rates in the open market continued at low levels. The rate on prime com mercial paper declined to Y\-1 per cent in June, the lowest figure on record.
@FedFRASER