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Business Conditions S R F i eventh ederal eserve DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 19, No. 7 June 30, 1936 GENERAL SUMMARY USINESS activity in the Seventh Federal Re May; corn receipts declined more than is usual in the month, while those of oats increased less than serve district for the most part was well maintained through May, and in the majority of customarily, but reshipments of these two grains gained substantially. Crop conditions in the Seventh reporting groups decidedly favorable margins were recorded over a year ago when a declining trend district were mixed in the middle of June, cor was in evidence. responding closely to rainfall received in May and Demand for steel was steady during May and early June in the various sections. continued thus into June, operations rising in the Sales in the several reporting lines of retail trade early part of this latter month. Shipments from recorded a greater than seasonal gain in May over April and substantial increases were shown over last steel casting foundries and from stove and furnace May, this trend being true of the department store, factories likewise increased in May, although those of malleable castings receded somewhat. A seasonal retail shoe, and retail furniture trades. In whole gain took place in building construction, with the sale groups, the gains over the preceding month in volume of contracts awarded in the district the the hardware and electrical supply trades were heaviest for the year to date, and the demand for heavier than usual, while the decline in drug sales building materials continued to expand steadily. The was slightly greater than seasonal in extent and decline in shipments of furniture was seasonal in that in groceries contrary to trend, sales in this last line likewise totaling below those of a year ago. nature as was that in shoe production. A further gain was shown during May in industrial employ In the period May 20-June 17, total loans and ment and payrolls. investments of reporting member banks in the dis In food industries, the manufacture and distribu trict rose 87 million dollars, increased holdings of tion of butter and cheese expanded in May over U. S. Government direct obligations constituting April, while production of packing-house commodi the major portion of this amount, although loans ties decreased non-seasonally by a small amount and investments in other securities (except those with tonnage sales slightly higher and their dollar guaranteed by the Government) also increased. value a little lower than a month earlier. Produc Gains in both demand and time deposits in these tion in this last group and of cheese exceeded that banks were recorded in the period. Commercial of a year ago, but the manufacture and distribution paper sales by dealers and new financing through of butter were smaller as were sales of packing bankers’ acceptances expanded in May over a month house commodities in dollars. The movement of earlier. wheat rose sharply though less than seasonally in B FEDERAL RESERVE BANE OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Total Bills and Securities.................................. Bills Discounted.................................................. Bills Bought.......................................................... U. S. Government Securities............................ Total Reserves..................................................... Total Deposits...................................................... Federal Reserve Notes in Circulation............ Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Com bined................................................................... •Number of Points. June 17, 1936 $ 323.7 0.0 0.4 321.2 1,676.8 1,073.6 889.8 85.3% Change From May 20, June 19, 1935 1936 $ —0.2 S —39.6 0 —0.1 —0.2 —0.2 0 —39.5 +112.2 +231.8 +95.1 +91.2 +16.5 +100.3 +0.9* +3.8* Credit Conditions and Money Rates Between May 20 and June 17, member bank reserve balances at this bank increased, as shown in the ac companying table, by slightly more than 4)4 million dollars. This relatively small gain in the period reflects a reduction in the volume of reserve balances during the week of June 11 to 17, amounting to about 84)4 million dollars, largely the result of Treasury opera tions and which offset to a large degree the increased volume in each of the preceding weeks of the period. Treasury receipts exceeded disbursements from May 20 to June 17 by about 56 million dollars, and there was recorded a rise of more than 15j4 million dollars in demand for currency; these changes were more than counterbalanced by a net inflow of nearly 80 million dollars of funds into the district through com mercial and financial transactions with other districts. Changes Between May 20 and June 17 in Factors Affecting Use of Federal Reserve Bank Funds—Seventh District (Amounts in thousands of dollars) Reserve Bank credit extended (exclusive of amounts to other districts). Commercial operations through inter-district settlements......................... Treasury and National bank currency............................................................ —1,516 +79,254 —4,347 Total supply.................................................................................................... +73,391 Demand for currency........................................................................................... Member bank reserve balances......................................................................... Treasury cash and deposits at Federal Reserve Bank of Chicago........... Special and “all other” deposits....................................................................... Other Federal Reserve accounts...................................................................... +15,768 +4,649 +51,781 +1,255 —62 Total demand................................................................................................ +73,391 Money rates continue at low levels. Banks located in the down-town area of Chicago reported a range of \]/2 to 5 per cent as prevailing on customers’ com mercial loans during the week ended June 15, un changed from the week ended May 15. The average rate earned by Chicago down-town banks during the calendar month of May was 2.80 per cent, whereas in April the item had been 2.68, and in May a year ago, 3.06 per cent. In Detroit, banks situated in the busi ness section reported a prevailing range of 1 ]/2 to 4J4 per cent on customers’ commercial loans during the week ended June 15, as against lj4 to 5 for the like week of May. Sales in commercial paper by Seventh district dealers increased 10 per cent in May over April and by the same percentage over those of May 1935; the current total, however, was 44 per cent below the 1926-1935 average for the month. Demand continued to exceed supply by a wide margin, reports indicating some cessation in demand from city banks, offset by an in crease on the part of country banks. Outstandings at the close of May exceeded the end-of-April volume by 13 per cent, and were one per cent in excess of the May aggregate a year ago, but totaled more than 36 per cent below the 1926-1935 average for the end of May. Rates recorded no change over April: prime short-term paper was quoted at J4 to $4 of 1 per cent, less well known at % to 1 per cent, with the bulk of sales at ^ to % of 1 per cent. During the first half of June, sales of commercial paper were about 55 per cent less than in the corresponding period in May, with demand in excess of supply and rates substantially those shown above for May. CONDITION OF LICENSED REPORTING MEMBER BANES SEVENTH DISTRICT (Amounts in millions of dollars) June 17, Change From Mat 20, June 19, 1936 (2,916 272 1936 $ +87 +4 1935 $ +484 +12 5 63 204 31 68 10 431 1,545 —4 +13 +3 +29 —20 —9 +2 0 +13 +68 +87 +344 146 413 -10 +12 —8 +69 Demand deposits—adjusted............................. Time deposits....................................................... 2,160 846 +61 +29 +252 +48 Borrowings............................................................ 0 0 0 Total loans and investments............................. Total loans on securities................................. To brokers and dealers: In New York............................................. Outside New York.................................. To others (except banks)............................ Acceptances and commercial paper bought. Loans on real estate......................................... Loans to banks................................................. Other loans........................................................ U. S. Government direct obligations......... Obligations fully guaranteed by U. S. Government.................................................. Other securities................................................ Page 2 —5 —1 +i —3 Chicago bill dealers during the period May 14 to June 17 reported increased purchases over the pre ceding period, and receipts from Eastern offices were likewise in greater volume, effecting a gain of about 29 per cent in supply. Total distribution gained by the same amount—reflecting entirely a considerably heavier volume of sales to local banks—and holdings at the end of the period, therefore, were nil. Rates were unchanged at % to 3/16 of 1 per cent. New financing by means of bankers’ acceptances in this district during May showed a seasonal gain of about 21 per cent over April; the aggregate, however, fell short of the May 1935 volume by slightly more than 3 per cent and of the 1926-1935 average for the month by about 56 per cent. Direct discounting of bills at originating banks likewise followed a seasonal trend, recording a 16 per cent increase over April, and purchases of bills of other banks gained approximately 5 per cent. Total purchases aggregated 14 per cent greater than in April, but were about 3 per cent less than in May of last year and nearly 66 per cent under the 10-year average. Sales during May were nil, while maturities exceeded purchases, effecting a reduction of + about 5 per cent in month-end holdings. Liabilities for outstandings at the close of the month were one per cent less than at the end of April, 4 per cent under a year ago, and 57 per cent below the 10-year average for May. During the first half of June, financing by means of acceptances was less by 68 per cent than in the corresponding period of May. TRANSACTIONS IN BANKERS ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANES IN THE SEVENTH DISTRICT Per Cent Change in Mat 1936 From April 1936 Mat 1935 Total value of bills accepted............................................ +21.5 Purchases (including own bills discounted)...................... +14.2 Sales............................................................................................. 0 Holdings *.................................................................................. —5.1 Liability for outstandings*............................................... —1.3 a —3.2 —2.9 0 —25.2 —4.0 *At end of month. Security Markets Reflecting principally a lessened volume of new issues, the Chicago bond market was somewhat less active in May than in April, with prices showing a moderate upward trend. Institutional buyers continue + the principal source of demand, although reports in dicate that corporation issues bearing a rate slightly higher than the average find some purchasers among individuals. During the first half of June prices ad vanced slightly, and demand was strong for the very high-grade issues and less active for the second- and third-grade bonds. Stock prices in Chicago moved upward; the average price of twenty leading stocks on the local stock exchange* on June 16 was $52.38 as against $50.54 a month earlier. This average reached ^ a low in the period May 16 to June 16 on May 20 when $49.40 was reported, since which date the trend has been upward, subject to minor fluctuation. ♦Chicago Journal of Commerce Agricultural Products On June 16, crop conditions throughout the Seventh Federal Reserve district corresponded closely to local rainfall received in May and early June. Precipita tion was ample in most of Iowa, Wisconsin, and in "* the northern tier of Illinois counties; in Michigan it rose from 28 per cent of normal in May to 105 per * a, * -*> * cent in the first half of June. On the other hand, considerable deficiency existed over a broad belt ex tending across northwestern Indiana through north central Illinois into six southeastern counties of Iowa. Rainfall of the five States averaged 58 per cent of normal in May and 79 per cent in the first half of June. Despite poor seed, corn made a good stand, except in southeastern Iowa and a few other localities where the ground was too dry for successful germination. Progress of the crop ranged from fair to excellent. The earliest was knee high and a major part of the crop showed very good growth, but some was very small and needed rain to prevent deterioration and much of the replanted was not above ground. Fields were exceptionally free of weeds, owing to intensive cultivation. Acreage was indicated as being larger than a year ago. Winter wheat filled out well and was in excellent condition on June 16, except that some deterioration occurred in Illinois and Indiana after the first of June. Oats and other small grains ranged from poor in very dry areas to fair and good in localities benefited by early June rains. Straw generally was short. Pastures had improved in Iowa, Wisconsin, and Michigan but had deteriorated in the greater portion of Illinois and Indiana. Haying was progressing under favorable weather conditions. Early alfalfa appears to have turned out well, but poor yields were indicated for timothy and the clover crop was variable. Early potatoes were in fair to good condition in major pro duction counties and in need of rain in Illinois and Indiana. In some localities, prospects for tree fruits had been reduced further by a heavy drop in June. On the other hand, berries in Michigan, Wisconsin, and Iowa improved following a poor outlook at the close of May. Grasshoppers, cutworms, locusts, and other insect pests were reported as being unusually active early in June. CHOP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of June 1 condition. (In thousands of bushels) Five States Including United States Seventh District Forecast Final Forecast Final 1928-32 Average 1935 1935 1936 1936 Winter Wheat.............. Rye................................ Peaches........................ Pears............................. ............. ............. ............. ............. 76,834 7,914 1,210* 1,076* 78,972 481,870 12,731 33,429 6,232* 40,615 1,611* 22,544 433,447 57,936 52,808 22,035 618,186 38,655 56,451 23,146 *Michigan, Illinois, Indiana, and Iowa. On the basis of June 1 condition a local statistician estimated the oats crop of the five States including the Seventh district at 473,387,000 bushels for 1936 as compared with the 1935 harvest of 480,983,000 bushels and the 1928-32 average of 563,854,000 bushels. Most commercial estimates placed United States oats pro duction at 1,085,000,000 to 1,165,000,000 bushels. A continuation of drought conditions in the Dakotas probably has reduced spring wheat output in the VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Apr. 1936 May 1935 —2.7 +14.2 —1.7 +14.4 —10.8 +4.5 +9.2 —0.0 Chicago............................................. ..................... Detroit................................................ .................... Milwaukee.......................................... .................... Indianapolis............................................................ Mat 1936 $2,785 847 247 169 Total four larger cities................... ..................... 37 smaller cities................................ .................... $4,048 734 —2.9 +2.7 +13.3 +11.6 Total 41 centers............................... .................. $4,782 —2.1 +13.1 United States to below 200,000,000 bushels and pos sibly to a point as low as 175,000,000 bushels. These estimates compare with the 1928-32 average produc tion of 242,384,000 bushels for spring wheat and 1,217,647,000 bushels for oats. Grain Marketing After totaling relatively light in April, the move ment of wheat at interior primary markets in the United States rose sharply—but less than seasonally— in May to a level higher than at any time since last autumn. Furthermore, reshipments exceeded current receipts by more than a normal amount, though both items remained considerably below the 1926-35 May average. Imports expanded over April and continued above the corresponding period of 1935. Prices de clined 5 per cent from a month earlier. Visible supplies of wheat in the United States fell off more than seasonally on June 13 to a level Zl/2 per cent under a year ago and 72 per cent below the 1926-35 average for that date. By June 20, quotations had recovered to levels obtaining in the second week of May. Corn receipts, subsequent to the smaller than normal decline in April, contracted more than seasonally dur ing May, while reshipments, after having recorded less than the usual gain in the preceding period, rose to a level above any month since November 1934, thereby narrowing the deficiency from the 1926-35 average. Prices advanced approximately l l/2 per cent in May over April. Visible supplies of corn in the United States decreased less than an average amount on June 13 from a month earlier but were 21 y2 per cent under a year ago and 71j4 per cent below the 1926-35 mid-June average. Receipts of oats at these centers of accumulation in creased less than seasonally in May over April. On the other hand, res'hipments rose more sharply than is usual for May to a level above any other month since May 1934, and both recorded a smaller decrease from the 1926-35 average than during April. Prices declined 2j4 per cent from a month earlier. Visible supplies of oats in the United States not only decreased less than customarily on June 13 from May 9 but also exceeded the 1926-35 average for that date by 98j4 per cent and a year ago by 235^ per cent. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES Per Cent Change in Mat 1936 From Mat Mat April 1936 Wheat: Receipts................................................................. Shipments.............................................................. Corn: Receipts................................................................. Shipments.............................................................. Oats: Receipts................................................................. Shipments.............................................................. Movement of 1935 1926-35 Av. +51.4 +75.1 +31.5 +56.6 —41.2 —30.5 —10.2 +35.3 +51.6 +52.4 +12.6 —18.7 +21.4 +71.3 +77.4 +235.6 —35.6 —21.0 Livestock Receipts of cattle, hogs, and calves at public stock yards in the United States decreased in May from April—contrary to the usual tendency—and those of lambs gained less than seasonally. Each declined from the 1926-35 average for the month. The number of hogs was in excess of a year ago but that of other livestock was smaller. Movement to inspected slaugh ter—inclusive of animals that did not pass through public stockyards—diverged in some instances from the trend of market receipts: the lamb supply fell off Page 3 from April, while that of hogs recorded a slight in crease; the volume of cattle was greater than either a year ago or the 1926-35 May average; and the num ber of calves was above normal for May. Reshipments of cattle and calves to feed lots de creased in May from a month and year earlier and those of cattle were under the 1926-35 average for the period. The movement of feed lambs rose sharply in all three comparisons, being above any month sub sequent to November 1935. Meat Packing The production of packing-house commodities at inspected slaughtering establishments in the United States declined non-seasonally by one per cent in May from April to a level 14 per cent below the 1926-35 average for the month, but was 12J4 per cent heavier than a year ago. The sales tonnage likewise was 14 per cent under this ten-year average, having expanded fractionally over a month earlier and totaling 3 per cent in excess of a year ago and 2 per cent greater than current production. Although quotations of lamb, veal, and a few other cuts strengthened, the general price level of packing-house commodities eased in May from April. Dollar sales billed to domestic and foreign customers aggregated almost as great as a month earlier but were one per cent under the cor responding period of 1935 and 5j4 per cent below the 1926-35 May average. Total inventories of packing house commodities in the United States were reduced somewhat more than normally on June 1 from the be ginning of May and were 29 per cent less than the 1931-35 average for that date. Payrolls at the close of May reflected little change from April in amount of wage payments but showed a gain of 3 per cent in employes and of one per cent in hours worked. Furthermore, comparisons with 1935 were more favor able than had obtained in any earlier month of 1936, the increases over last May being 1/5 per cent in employes, 7j4 per cent in hours worked, and 5 per cent in wage payments. With the contraction in lard forwardings largely offset by an expansion in those of meats, shipments for export in May continued near the April level. British demand recorded a further seasonal expansion in hams and remained moderate for United States lard. Cuban trade in fats improved and a moderate demand continued from Porto Rico, though some buyers were reported as awaiting a steadier market. Some inquiry developed from Ecuador. Imports of packing-house commodities into the United States decreased from April. In the United Kingdom, prices of United States lard remained below Chicago parity; quotations for livestock: slaughter Cattle Hogs Lambs and Sheep Calves .............. 194 451 188 89 .............. .............. .............. 786 812 735 2,579 2,559 2,172 1,213 1,267 1,584 503 525 508 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)---Fat Cows and Heifers................... Calves............................................... Hogs (bulk of sales)....................... Lambs.............................................. Week Ended Months of June 20, Mat April 1936 1936 1936 ............ $ 7.85 $ 8.45 t 7.95 ............ 6.65 7.00 6.90 ............ 8.75 8.75 8.35 ............ 9.80 9.55 10.55 10.50 10.90 Page Dairy Products Creamery butter production in the Seventh Federal Reserve district rose 57 per cent in May over a month earlier to a level within 8 per cent of the 1926-35 average for the period and 2j4 per cent under a year ago. The sales tonnage expanded 21 per cent over April, but aggregated 8 per cent under last May and was 8y per cent below this ten-year average. Manufacture of the commodity gained less sharply in the United States during May than in the Seventh district, and was lighter than a year ago, though only 2J-2 per cent below the 1926-35 May average. Coincident with an 11 per cent decline in prices in May from April, effecting some reduction in consumption of competi tive oleomargarine, inventories of creamery butter in the United States accumulated less than normally on June 1 over a month previous; however, the decline of 34 per cent in their volume from the 1931-35 aver age was smaller than shown on May 1. American cheese manufacture in Wisconsin in creased 29y2 per cent in May over April and was 5y2 per cent greater than a year ago, but failed to equal the 1926-35 average by 5y2 per cent. Distribu tion from primary centers of that State rose counterseasonally by 8 per cent over a month earlier to a level 34 per cent higher than last year and 16^4 per cent above the average. Prices declined 3 per cent in May from April. Total inventories of cheese in the United States increased on June 1 over the beginning of May and were 22j4 per cent above the 1931-35 average for the date. May 1935 $11.10 8.10 8.25 9.25 7.95 a, Industrial Employment Conditions Continued increases marked the employment and payroll figures reported by Seventh district industries for May, practically all of the main groups contributing EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week ReportIndustrial Groups of May 15, 1936 *- Change From Apr. 15, 1936 Wage Earn- Earn- ing ings Wage Earn- Earn- Firms ers (000 ers ings Omitted) No. No. i % % 1,463 315 251 442 2,471 365,710 359,580 20,370 41,510 787,170 9,436 11,221 446 761 21,864 +1.8 +1.3 +4.1 +2.4 +1.7 +3.5 +1.1 +5.8 +1.5 +2.2 Textiles and Products.......... Food and Products............... Chemical Products............... Leather Products.................. Rubber Products................... Paper and Printing................ Total........................................ 322 725 227 137 33 629 2,073 60,833 95,966 30,307 25,179 13,669 70,052 296,006 1,022 2,251 784 446 344 1,815 6,662 —1.0 +4.4 +2.3 —2.2 +1.7 +0.2 +1.3 -4.3 +7.6 +4.3 —2.6 +5.5 +1.4 +2.7 Total Mfg., 10 Groups.............. 4,544 1,083,176 28,526 +1.6 +2.3 Merchandising*.......................... Public Utilities.......................... Coal Mining................................ Construction............................... 2,423 160 26 301 109,999 87,747 5,021 12,217 2,265 2,741 107 279 —1.0 +1.3 +3.1 +20.6 —0.3 —0.3 —1.2 +27.3 Total Non-Mfg., 4 Groups....... 2,910 214,984 5,392 +1.1 +0.8 Total, 14 Groups........................ 7,454 1,298,160 33,918 +1.5 +2.1 Durable Goods: Metals and Products1........... Vehicles................................... Stone, Clay and Glass.......... Wood Products...................... Total......................................... Nondurable Goods: (In thousands) Yards in Seventh District, May 1936........................................ Federally Inspected Slaughter, United States: May 1936.................................... April 1936.................................. May 1935.................................... American hams improved in May but subsequently declined in June to a point under this parity. Cuban prices of United States lard and other fats ruled some- * what above the Chicago basis. 1Other than Vehicles. 2Illinois, Indiana, and Wisconsin. to the upward trend. In the durable goods industries— covering the manufacture of metal, automotive, stone * clay-glass, and wood products—-every group recorded higher employment and payroll volumes than a month earlier, the aggregate increase amounting to nearly 2 per cent in the former and slightly more than that in the latter item. Vehicles, which led the expansion in April, registered a smaller percentage gain in the cur rent month than shown in the aggregate for the durable goods group. The metal industries, exclusive of vehi cles, increased employment and payroll volumes at practically the same rate as in the preceding month a, and somewhat more sharply than in the durable goods industries as a whole. Two nondurable goods groups —textiles and leather products—recorded a decline during May, in both employment and payrolls, but all other groups in this classification showed expansion resulting in an aggregate rise of about \y2 per cent in number of workers employed and of 2y2 per cent in their wage payments. For the manufacturing groups as a whole, the increases totaled slightly over \y2 per cent in employment and slightly under 2y2 per cent in wage payments. Of the non-manufacturing industries, construction contributed the largest percentage, increase in both workers and wage payments, 21 per cent in the former and 27 per cent in the latter item. All of the other groups—merchandising, public utilities, and coal min ing—showed slight declines in wage payments, while only one, merchandising, showed a loss in employment volume. Manufacturing* * Automobile Production and Distribution Some curtailment took place during May in the manufacture of automobiles, but the volume produced continued to be exceptionally large and was well above that of the month last year. Passenger automobile production amounted to 385,507 cars, which number represents a decline of 7j4 per cent from April and an increase of 26 per cent over a year ago. Truck output numbered 75,058, or 12y2 per cent less than a month earlier and 35 per cent above last May. * Distribution of new automobiles in May was well maintained. Sales at wholesale exceeded those in April by about 4 per cent, while those to users were 3 per cent larger. The number sold by both distributors and dealers was considerably greater than in May last year. Stocks declined moderately between April 30 and the close of May, but were about one-third heavier than a year ago. Used car sales continued to increase in May and were much larger than in the same month of 1935, while salable cars on hand numbered slightly less than a month earlier, though remaining substan tially heavier than last year. Sales made on the de ferred payment plan amounted to 51 per cent of total retail sales by dealers reporting the item, as compared with a ratio of 49 per cent for April and 48 per cent a year ago. Iron and Steel Products After declining to 65 per cent of capacity toward the latter part of May, production of steel ingots in the Chicago district again rose until in the early part of June it had reached 71 per cent, at which rate it was maintained through the middle of the month. A year ago at the same time, output had averaged only 42 per cent of capacity and in the middle of June 1934, 69 per cent. Both new business and shipments were well maintained through May, demand being particularly good from the railroads, carbuilders, and the construction industry, although there was still some buying from the automotive industry. Announce ment of higher prices for the third quarter of this year stimulated sales considerably in the early part of June. Production of pig iron in the Illinois and In diana district continued to expand in May, rising 6y2 per cent in the daily average over April and being almost 50 per cent greater than last May. Shipments of steel castings at Seventh district foundries continued to show a rising trend in May, the gain over the April tonnage amounting to 11 per cent. Orders, however, decreased 34 per cent from the preceding month’s volume and production was curtailed 3 per cent. At malleable casting foundries, decreases took place for the second consecutive month in both shipments and production—10 per cent in the former and 15 per cent in the latter item; a gain of 8 per cent in the volume of incoming orders partly offset the sharp drop experienced during April. In the yearly comparison, malleable castings showed in creases ranging from about 17 per cent in production to close to 30 per cent in shipments, while at steel cast ing foundries the tonnages of all items totaled more than twice those of last May and the dollar amounts were only slightly less than double. In the manufacture of stoves and furnaces, moldingroom operations declined 8 per cent in May as com pared with April but were practically on a level with those of a year ago. Shipments and orders, which normally show the effect of seasonal inactivity in May, increased this year by 12 and 11 per cent, respectively, and were also 39 and 64 per cent in excess of the corresponding volumes reported for May 1935. LUMBER AND BUILDING MATERIALS TRADE MIDWEST DISTRIBUTION OP AUTOMOBILES A Changes in May 1936 From Previous Months Class Per Cent Change From Companies Included April 1936 May 1935 +3.7 +3.3 +27.5 +11.9 16 16 +2.8 +1.9 +48.9 +62.2 33 33 —10.8 —9.5 +33.2 +32.0 33 33 sod Cars: Number Sold...................... Salable on Hand— Number................................ Value..................................... +11.6 +41.6 33 —1.8 —1.3 +29.6 +32.9 33 33 Trade Wholesale Lumber: Sales in Dollars...................... Sales in Board Feet............... Accounts Outstanding!......... few Cars: Wholesale— Number Sold...................... Value..................................... Retail— Number Sold...................... Value..................................... On Hand at Close of May— Number............................... Value.................................... of Retail Building Materials: Total Sales in Dollars.......... Lumber Sales in Dollars.... Lumber Sales in Board Feet Accounts Outstanding!......... May 1936: Per Cent Change From April 1936 Mat 1935 of Yards +0.5 —3.2 +12.0 +32.5 +23.2 +31.8 8 6 8 +6.7 +28.7 +16.5 +11.9 +13.3 —6.1 +6.7 +14.6 164 58 69 161 to Wholesale Trade........................ Retail Trade.............................. Number Ratio of Accounts Outstanding! Total Dollar Sales During Month Mat 1936 148.4 235.5 April 1936 133.1 223.6 May 1935 149.2 231.6 *End of Month. Page 5 Furniture The 9 per cent gain recorded for May over April in orders booked by reporting furniture manufacturers in the Seventh district was somewhat less than seasonal, comparing with an increase of 12 per cent in the 1927 35 average for May, but the volume of April orders had approximated that for March in contrast to a usual decline in April. Furthermore, orders continued to be higher than average for the month—by 2 per cent. Shipments declined 7 per cent in May, or about sea sonally. They totaled less than new orders received so that despite cancellations unfilled orders rose 16 per cent at the close of May over a month previous. As compared with last May, orders were 34y2 per cent, shipments 29 per cent, and unfilled orders 40 per cent larger in the month this year. Operations were cur tailed somewhat during May, averaging 63 per cent of capacity, as against 67 per cent for April; they were, however, 4 points higher than in the same month of 1935. Building Materials, Construction Work Demand for building materials showed continued expansion in May, lumber, brick, and cement moving into consuming channels in a steadily increasing volume. Sales of lumber by wholesale and manufac turing firms of the district showed very little change from the preceding month but continued in excess of the corresponding dollar and tonnage volumes of a year ago by about the same percentages as in April. At retail yards, however, the distribution of lumber was sharply accelerated over the preceding month, board-foot sales rising 17 per cent though showing an increase of only 7 per cent as compared with the cor responding volume of a year ago. This latter com parison was affected by sharp decreases at a few yards, which partially offset the substantial increases recorded by a majority of the dealers. Outstanding accounts increased appreciably during the month for both whole sale and retail concerns and for the latter were heavier in ratio to dollar sales than either a month or a year earlier. Shipments of brick and cement also expanded seasonally during May and were substantially larger than at the same time a year ago. While seasonal and even greater than seasonal gains have thus been ex perienced by building materials groups in general, cur rent volumes continue considerably smaller than what is considered normal for the various lines. Building Construction The almost $42,000,000 of building contracts awarded during May in the Seventh district established a high for the year to date, and residential building, which comprised 28 per cent of the total, rose moder ately further to another record for more than five years, aggregating the heaviest of any month since March 1931. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Total Contracts Period May 1936................................................................................ Change from April 1936................................................ Change from May 1935................................................. First five months of 1936.................................................. Change from same period 1935................................... The estimated cost of building permits issued in 101 cities of the district declined 11 per cent in May from April, following two successive months of expansion; a however, the number of permits rose 13 per cent further in the period. As compared with last May, gains of 91and 31 per cent were recorded in esti mated cost and number, respectively. Exceptions to the general trend were to be found in Indianapolis and in smaller cities of Iowa, Michigan, and Wisconsin, where the dollar amount of permits exceeded that of a month earlier; also, a small decline was noted from a year ago in the aggregate number of permits issued in the smaller cities of Iowa, and from April in those issued in Des Moines. Merchandising Trends varied during May in wholesale trade groups. Sales by reporting grocery firms in the Seventh district declined 2 per cent from the preceding month, as against a 6 per cent expansion in the 1926-35 average for May; the 16 per cent increase over April in the hardware trade and that of 12 per cent in electrical supplies compared with seasonal gains of but 6 and 8 A per cent, respectively; while the recession of 2 per cent in drug sales was slightly greater than average for the period. In the yearly comparison, the gain shown in electrical supply sales was the largest since last Sep tember and in hardware since April 1934, but the grocery trade recorded a moderate decline following three months of increase, and the gain in drug sales was smaller than in the two preceding months. Data covering the first five months of this year show that sales in the drug, hardware, and electrical supply groups exceeded those of the corresponding months in 1935 by 3, 22j4, and 25J4 per cent, respectively, while there was a decline in the grocery trade of 2 per cent. In the grocery and drug groups, ratios of ac counts outstanding to net sales were higher in May than a month earlier or a year ago. Sales of reporting department stores in the Seventh district rose 4 per cent in May over April, the gain comparing with one of only one per cent in the 1926-35 DEPARTMENT STORE TRADE IN HAY 1936 Per Cent Change May 1936 From May 1935 Locality Groceries... Hardware Drugs......... Electrical Supplies. . Net Sales Stocks End of Month +12.1 —4.1 +6.5 Net Sales Stocks Accounts Outstanding lections Ratio op Accounts Outstanding TO Net Sales —2.0 +18.6 -0.5 —8.4 +27.7 —0.9 —5.1 +28.5 +2.9 92.9 154.6 159.9 Chicago..................... Detroit...................... Indianapolis............. Milwaukee................ Other Cities............. +15.6 —0.1 +33.4 +1.8 +17.2 +6.2 +4.0 +42.4 +27.1 +22.6 +22.7 121.9 7th District............. +15.3 +0.7 Commodity Page 0 Col $11,604,701 +14.1% +119.8% $36,329,994 +131.8% *Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN HAT 1936 Per Cent Change From Same Month Last Year $41,618,513 +11.3% +83.4% $181,199,375 +91.9% Residential Contracts +14.3 +18.9 Per Cent Change First Five Months 1936 From Same Period 1935 Ratio op May Collections to Accounts Outstanding End op April Net Sales 1936 1935 +13.6 +4.5 +8.0 +11.2 33.3 46.8 32.4 +11.0 40.8 35.7 +10.5 39.2 47.1 42.i 34.2 38.8 average for the period. Among the larger cities in A the district, Indianapolis recorded the heaviest increase over a month earlier—6 per cent—while sales in Chi cago expanded 2>y2 per cent and in Detroit 3 per cent, with Milwaukee trade showing a recession of a little under one per cent. Sales made by stores in smaller cities were 10 per cent larger in the aggregate than a month earlier. The gain over a year ago of 15 per cent for the district as a whole represented the heaviest in the year-to-year comparison since December 1934; daily average sales exceeded those of May 1935 by 18 per cent. A small decline of 1% per cent took *■ place in stocks during May, which totaled less than one per cent above those held at the close of May last year. For the fourth consecutive month, sales of shoes by reporting dealers and department stores in the Seventh district expanded in May. The gain of 14 per cent over April compared with a rise of but 5y2 per cent in the 1926-35 average for the period. Sales were 18 per cent larger in May this year than last, the increase being the heaviest in the yearly comparison since last * November and in contrast to one of only 4 per cent in April. This considerable gain brought sales for the year to date to 9 per cent above those for the first five months last year. Stocks on hand declined 4 per cent between April 30 and the close of May, and totaled 4 per cent larger than on the same date of 1935. The dollar volume of furniture and house furnish ings sold by reporting dealers and department stores expanded 22 per cent in May over the preceding month, as against an increase in the 1927-35 May average of only 7 per cent; in April, however, the gain over a month previous had been less than seasonal. Sales totaled 21 per cent heavier than last May, the increase as in the retail shoe trade being the largest since November last year. Dealer sales showed a noticeably greater gain in the yearly comparison than did those of department stores. Although stocks decreased 3 per cent during May, they were 8 per cent above those held at the close of May last year. While sales of drug, cigar, and men’s clothing chains increased in May over April, those by five-and-tencent store, grocery, and musical instrument chains de clined, so that aggregate sales of twelve chains operat ing 2,725 stores during the month showed a fractional recession from a month previous. The dollar volume sold, however, exceeded that of a year ago by 5y per cent, with all groups except groceries sharing in the increase. 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 a base, unless other wise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of t ■v May 1936 Apr. 1936 Mar. 1936 Feb. 1936 Jan. 1936 Dec. 1935 May 1935 Apr. 1935 Mar. 1935 Feb. 1935 Jan. 1935 Dec. 1934 47 85 85 81 83 85 83 80 82 77 80 81 73 12 12 21 21 64 68 56 81 59 60 61 89 51 50 59 88 46 46 49 73 42 42 52 78 41 41 49 73 34 31 43 65 38 38 48 72 35 33 45 69 31 29 37 57 31 30 37 59 20 19 28 42 Stoves and Furnaces— Shipments (in dollars)................................... 8 176 156 150 113 93 176 127 115 106 82 57 105 FurnitureOrders (in dollars).......................................... Shipments (in dollars)................................... 12 12 67 59 62 64 62 65 45 57 73 41 43 53 50 46 43 54 48 51 44 37 52 27 26 31 FlourProduction (in bbls.)...................................... 18 76 91 89 92 104 79 100 86 89 90 104 93 Output of Butter by Creameries— Production...................................................... Sales................................................................ 59 61 140 120 89 99 87 88 82 89 82 94 79 102 144 130 99 94 83 87 81 79 86 107 88 116 Wholesale TradeNet Sales (in dollars): Groceries..................................................... Hardware.................................................... Drugs........................................................... 28 11 12 65 102 76 66 88 78 63 77 78 60 49 67 64 48 73 60 65 74 69 76 74 66 72 73 62 64 73 60 43 69 69 41 74 65 52 67 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago........................................................ Detroit......................................................... Indianapolis................................................. Milwaukee................................................... Other Cities................................................ Seventh District—Unadjusted.................. Adjusted...................... 27 5 4 5 41 82 82 85 100 97 90 87 89 88 84 102 94 93 81 88 84 79 89 96 83 77 82 90 68 78 66 67 60 69 87 63 72 67 63 56 64 80 133 153 143 135 125 137 81 73 92 88 76 75 78 77 75 96 88 85 75 81 76 69 92 89 77 70 76 83 60 76 65 58 55 62 79 60 69 70 58 53 61 77 123 139 140 125 115 126 75 132 199 142 227 117 206 77 167 102 174 117 163 104 147 132 175 123 177 93 156 78 165 38 113 40 61 35 55 25 56 10 34 14 59 21 78 18 33 16 36 9 32 4 17 6 20 5 26 100 87 117 94 82 114 81 67 97 75 64 89 77 67 85 79 69 92 67 57 73 65 57 76 63 58 83 63 59 87 51 49 80 38 34 59 Meat Packing—(U. S.)— Sales (in dollars)............................................ Casting Foundries— Shipments: Steel—In Dollars........................................ In Tons............................................ Malleable—In Dollars................................ In Tons.................................... Automobile Production—(U. S.)— Passenger Cars.................................................... Trucks.................................................................. Building Construction- Contracts Awarded (in dollars): Residential....................................................... Total.................................................................. Iron and Steel- Pig Iron Production:* Illinois and Indiana........................................ United States.................................................. Steel Ingot Production—(U. S.)*................... •Average daily production. Page 7 CENT NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Board of Governors of the Federal Reserve System) of industrial production, which had increased sharply in April, VOLUME was maintained in May, and there was an increase in distribution of commodities to consumers. Production and Employment 1929 1930 1931 1932 1933 1934 1935 1936 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to May 1936. FACTORY EMPLOYMENT AND PAYROLLS Employment Factory employment increased slightly between the middle of April and the * middle of May, contrary to the usual seasonal tendency. Increases were reported at plants producing iron and steel products, machinery, and most other durable manufactures. Changes in employment in industries producing nondurable manufactures were largely of a seasonal nature. Factory payrolls were somewhat larger in the middle of May than a month earlier. Payrolls 1929 1930 1931 1932 The Board’s seasonally adjusted index of industrial production in May was 101 per cent of the 1923-1925 average, as compared with 100 per cent in April. Production of durable manufactures increased further, reflecting larger output *. of steel and lumber, partly offset in the total by a reduction in the output of automobiles from the high level of April. At steel mills the rate of activity in May was higher than at any other time since the spring of 1930. This level has been maintained in June, reflecting in part some accumulation of steel by fabricators in advance of the effective date of recently announced price in creases. Declines in production were reported for many nondurable manufac tures ; at woolen mills, however, activity increased. Output of bituminous coal declined from April to May, while output of crude petroleum continued in large volume. 1933 1934 1935 1936 Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 averages 100. By months, January 1929 to May 1936. PER CENT PER CENT Total value of construction contracts awarded, according to figures of the F. W. Dodge Corporation, declined slightly from April to May. Awards for residential building continued to increase and in May, as in other months this year, were substantially larger than a year ago when residential building was first beginning to increase from the extreme low level of the depression. A Distribution WHOLESALE PRICES Department store sales, which usually decline at this season, increased from April to May and there was also a rise in sales at variety stores and mail order houses. Freight-car loadings increased by slightly more than the usual seasonal amount. _L Other ^ _ Commodities Commodity Prices Foods Farm Products 1929 1930 1931 1932 1933 1934 1935 1936 Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending June 20, 1936. Wholesale prices of commodities, which had declined from the middle of * April to the middle of May, have advanced somewhat since that time and in the week ending June 20 were at 78.7 per cent of the 1926 average, according to the index of the Bureau of Labor Statistics. In recent weeks prices of livestock and livestock products, grains and flour, and textile raw materials and finished products have advanced. For many steel products price increases have been announced to take effect early in the third quarter. Bank Credit MEMBER BANK RESERVES AND RELATED ITEMS Gold Stock Treasury Cash "■sir' .Treasury & National I Currency Nonmember Deposits a Other Accounts Wednesday figures, January 31, 1934, to June 17, 1936. Page S Excess reserves of member banks, after a slow increase in May and the ^ early part of June, declined by $900,000,000 in the week ending June 17. The reduction in excess reserves was due principally to an increase in the deposits maintained at the Reserve banks by the Treasury, which received large pay ments for new securities issued, as well as quarterly tax installments. At that time the Treasury began to distribute checks and adjusted service bonds to veterans and there was an increase in the demand for currency in connection with the cashing of these bonds and checks. United States Government obligations held by reporting member banks in leading cities, which had increased somewhat in May and early June, showed a further sharp increase in the week ending June 17 in connection with the new issue of Government securities. Bank loans also increased. "f
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