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Business Conditions Reserve DISTRICT Seventh FEDERAL i R stum ta> lib «r Wksn hu&ihA V/ tk<M« uufreatt*!. Volume 19, No. 12 ) _______ ^ MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO --------- November 28, 1936 DISTRICT SUMMARY ;J YN DtfSTR Y and trade in the Seventh district have X shown a steadily rising trend in recent weeks and remain considerably above the 1935 level, al though at this time last year activity likewise was expanding. Increasing requirements of the automotive indus try and from miscellaneous sources sustained steel production at a high level through October and into November, and October pig iron production was the largest of the year so far. The manufacture of automobiles rose sharply, as output of new models was accelerated, but failed to equal the year-ago volume. Shipments from malleable casting foun dries increased over September, as did those from stove factories, and furniture manufacturers shipped an above-average volume in October. Output of steel castings declined. Building construction, as in dicated by contracts awarded, totaled somewhat heavier than a month earlier, and the movement of building materials continued active. A marked gain was shown in industrial employment and payrolls for October over the preceding month. Production of food products, such as packing house commodities, butter, and cheese, expanded in October, and not only was above a year ago but greater than average for the period. Sales volumes likewise increased over a month earlier, although distribution of butter and cheese was under October last year. The movement of grains continued be low normal in October. The Seventh district corn crop totaled million bushels higher on November FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Bills Discounted................................... Bills Bought..................... ..................... U. S. Government Securities............. Total Reserves........................... .......... Member Bank Reserve Deposits.. . All Other Deposits........................... .... bined. ♦Number of Points. November 18, 1936 . $ 285.9 . 0.0 . 0.4 . 283.9 . 1,745.8 . 1,051.7 . 12.3 . 931.8 d L . 87.4% Change From November October 20, 1935 21, 1936 $ -72.2 $ -0.1 +0.0 0.0 -0.2 0.0 -71.8 0.0 +348.8 -4.3 +170.2 -7.2 +0.4 -6.4 + 109.1 +11.2 -0.1* +6.0* 1 than had been forecast a month earlier and esti mates for several other crops also were raised,, be cause of the favorable weather conditions prevailing in October. _ _ The wholesale distribution of commodities in the district, as indicated by reporting trade groups, in creased in October over September. Gains in the hardware and drug trades were greater than usual for the month, and grocery sales rose counterseasonally, following two months of decline, while the gain in the electrical supply trade was somewhat less than seasonal. The department store, retail shoe, and re tail furniture trades again recorded exceptionally large increases over the corresponding month of 1935, although the retail shoe and furniture trades declined from the preceding month, in accordance with seasonal trend. Principally because of a decline in holdings of United States Government and of other securities, total loans and investments of reporting member banks in the district were 19 million dollars lower on November 18 than five weeks earlier. Com mercial loans of these banks expanded an additional 9 millions in the period. Both demand and time de posits were larger on November 18 than on October 14. In accordance with seasonal trend, new financ ing through bankers’ acceptances and commercial paper sales by dealers increased in October over the preceding month but remained much below average in volume. Credit and Finance Seventh district member bank reserve balances de clined 7 million dollars between October 21 and No vember 18. In this period, there was an 18 million dol lar rise in currency circulation and a 17 million dollar net outflow in interdistrict commercial and financial set tlements, the latter resulting mainly from large trans fers of capital funds for bond redemptions and pur chases. However, these factors effecting a decline in member bank reserve balances, were to a great extent offset by United States Treasury disbursements locally being 28 millions greater than current receipts. _ The level of bank loan rates in October was prac tically unchanged from September, as reported by down-town Chicago and Detroit banks, but a slight im provement is noted in the rate earned on loans and dis counts by certain of the reporting Chicago banks—an average of 2.49 per cent in October comparing with 2.46 per cent in September; in October 1935, the aver age was 2.85 per cent and somewhat lower than the preceding month of that year. Acceptances made by Seventh district banks in October increased seasonally over September, in dollar value, but continued below the 1926-35 average for October by 55 per cent. In the first half of November they exceeded those in the first half of October, but were less than for the same period a year ago. Total acceptances outstanding on October 31 were slightly higher than a month earlier or on the same date last year, though 58 per cent under the end-of-October av erage, 1926-35. Of outstandings on October 31, accept ances based on goods stored in or shipped between for eign countries comprised 59 per cent, domestic ware house credits 24 per cent, and imports 15 per cent. Bill dealers’ operations, while in smaller volume than a year ago, improved slightly in the four weeks ended Novem ber 11 over the preceding period. Rates remain nomi nally % bid, asked, for 90-day maturities. October sales of commercial paper dealers in the Middle West expanded more than seasonally over a month previous and were well above October 1935, while in the comparison with the 1926-35 average for the month, the 44% per cent decline is the smallest since July of this year when sales were only 40% per cent below the 1926-35 average for the month. Reports for the first half of November indicate continued in crease in the number of borrowers and amounts re quired, with a consequent improvement in sales volume. Rates are unchanged from recent months. . Seventh district bond dealers report that renewed investment activity and firming prices have followed the dullness in October, which preceded the election. New offerings, principally refundings, have been read ily subscribed, institutional buyers predominating. Listed stocks also have advanced in price, as evidenced by the Chicago Journal of Commerce average of 20 leading stocks on the Chicago Stock Exchange, which rose from $59.73 on October 21 to a new high for the year of $62.64 on November 17, then receded to $61.63 on November 21. CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT ’ (Amounts in millions of dollars) Change From November October November 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... 1 ! Obligations fully guaranteed by U. S. Government................................... Other securities................................................. 18, 1936 14, 1936 20, 1935 $3,022 239 $ -19 -5 *+351 -7 3 38 198 31 71 9 532 1,596 0 -4 -1 0 +1 +1 +9 -15 +2 +11 -20 0 +6 -1 +197 +120 TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) October 1936 October 1935 I otal country and city check clearings: 10,725,721 rieces............................................. 10,718,594 Amount...................................... . $2,103,690,298 $1,772,023,991 Daily average clearings: Total items cleared—■ Pieces........................................ 410,459 410,184 Amount.............................. . $80,435,568 *67,730,006 Items drawn on Chicago— Pieces........................................ 66,323* 95,902 Amount..................................... $42,204,000 $34,566,000 Items drawn on Detroit— Pieces........................................ 19,155 18,443 Amount.................................... $9,455,915 $7,762,229 ♦Decline in October 1936 is due to packaging of Chicago early clearings. Agricultural Products Seventh Federal Reserve district production of corn was augmented to such an extent by the late crop reaching full maturity before killing frosts this autumn, that it totaled 3% million bushels greater than had been expected on October 1. Despite wet weather and some difficulty in obtaining harvest hands, husking operations made greater than usual progress, owing to the small size of the crop, and were more than half completed by November 1. The district estimates for soybeans, . buckwheat, potatoes, sweet corn, apples, pears, and to bacco likewise were increased because of the favorable weather conditions obtaining in October. High prices and some desire to supplement the corn deficiency by furnishing late fall and early spring pas turage resulted in a marked increase in Seventh district winter wheat acreage this autumn as compared with 1935. The grain which was seeded early has attained a good growth, but there is considerable apprehension as to whether the heavier than normal acreage planted late in October and early November will secure suf- ' ficient start to withstand rigorous winter weather. Indications are that a considerable portion of the cat tle which moved to feed lots earlier this season is being fattened on the abundant supply of autumn forage and will be marketed rather early and that winter feeding operations may be reduced sharply from a year ago. Grain Marketing _ The movement of grain at interior primary markets in the United States remained light during October. However, receipts and reshipments of wheat increased ’ counterseasonally over September, and exports of this commodity rose to a level above any month since August 1934. Imports decreased further. Except for temp orary weakness during late October and early Novem ber and under the influence of strong markets abroad, quotations of No. 2 hard winter wheat for immediate delivery at Chicago continued the recovery which be gan early in October. By November 18, prices of the grain had reached $1.22% and $1.26%, a level higher VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From October September October 1936 1935 Milwaukee............................. Indianapolis................................. Chicago................................ 1936 153 391 +5 -15 -8 +44 +16!8 +27.3 Demand deposits—adjusted............................. Time deposits............................................. 2,324 816 +31 +7 +232 +77 Total four larger cities.................... 37 smaller cities................................ +13.7 +13.9 +28.5 +17.1 Borrowings. f1...................................... 0 -1 0 Totals 1 centers............................... +13.7 +26.7 Page 2 than at any time since mid-August. Visible supplies of wheat in the United States were 6 per cent smaller on ' November 14 than a month earlier and 51*4 per cent under the 1926-35 average for the date. Receipts and reshipments of corn at these centers de creased nonseasonally in October from September and were smaller than at any time since last autumn. Im ports from the Argentine continued. After having de clined in October, prices of No. 2 yellow corn (old crop) for current delivery at Chicago advanced to $1.17J^ ar>d $1-1on November 9. Quotations later moved irregularly downward to $1.09)4 and $1.11)4 , by November 20. Visible supplies increased on Novem ber 14 over a month earlier. Interior primary market receipts of oats were smaller in October than for any month subsequent to July 1935. On the other hand, reshipments increased over September. Exports and imports remained negligible. Visible supplies of oats in the United States decreased more than is usual on November 14 from mid-October, although the volume of these holdings continued above the 1926-35 average for the date. Prices tended to strengthen after the third week in October. ► MOVEMENT OP GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In Thousands of Bushels) October September October October Wheat: Receipts. . .. Shipments. . Corn: Receipts. . .. Shipments. . Oats: Receipts.. .. Shipments. . t 1936 1936 1935 1926-35 Av. 15,058 14,066 10,596 10,627 26,399 14,589 37,254 26,291 8,425 4,134 9,194 4,308 9,515 3,912 18,330 10,317 3,498 4,778 3,998 3,742 11,814 7,896 9,953 7,312 Movement of Livestock Hog and calf receipts at public stockyards in the United States were greater in October than in other months subsequent to the last quarter of 1934; and the marketing of cattle and lambs was the heaviest since last October, though gaining less than seasonally over September and totaling below the 1926-35 October average. Hog marketings, on the other hand, recorded more than a usual gain over the preceding period and CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of November 1 condition (In thousands of bushels unless otherwise specified) Seventh District Preliminary Final r I United States Preliminary Final Average 1936 1935 1936 1935 1928-32 Corn........................... 547,771 880,218 1,526,627 2,291,629 2,553,424 Buckwheat....... 642(a) 1,226(a) 6,456 8,220 8,277 Soybeans.................. 23.113(b) 34.533(b) 26.054(c) 37.691(c) 10.204(c) Flaxseed............ 236(d) 336(d) 6,081 14,123 15,996 Potatoes (white). .. 49,251 57,484 332,244 387,678 372,115 Potatoes (sweet). . . 1.045(b) 1.280(b) 68,537 83,198 66,368 Beans (dry edible)1. 2.299(e) 4.828(e) 10,755 13,799 11,858 Sugar beets2............... 850(f) 686(f) 9,505 7,908 8,118 Canning Vegetables: Sweet Corn2......... 224(a) 438(a) 578 860 628 Snap Beans2.......... 13(g) 23(g) 71 82 73 Apples (total crop).11.048(a) 23.303(a) 108,031 167,283 161,333 Pears.................. 1.037(h) 1.611(h) 23,750 22,035 23,146 Grapes2.............. * 46(a) 73(a) 1,836 2,455 2,200 Cranberries8..... 59(i) 81(i) 515 520 581 Tobacco4................... 18,402 15,835 1,162,637 1,296,810 1,427,174 Pecans4.............. 50(j) 265(j) 34,760 95,340 59,983 Cotton5........................................................ 12,400 10,638 14,667 Sorgo Syrup6........... 316(b) 448(b) 11,581 13,350 12,467 4In thousands of 100-lb. bags. 2In thousands of tons. 3In thousands of barrels. 4In thousands of pounds. 5In thousands of bales. 6In thousands of gal lons. (a) Five States including Seventh Federal Reserve district, (b) Illinois, Indiana, and Iowa, (c) Indiana, Illinois, Iowa, North Carolina, Ohio, and Missouri, (d) Iowa, Michigan, and Wisconsin, (e) Michigan and Wisconsin, (f) Michigan, (g) Michigan, Wisconsin, and Indiana, (h) Michigan, Illinois, Indiana, and Iowa, (i) Wisconsin, (j) Illinois. Note: Estimates of oats, barley, wheat, rye, peaches, tame hay, and broom corn not included in the above tabulation, are the same as a month earlier. were much larger than last October, but continued un der the ten-year average for the month. The volume of calves increased in all three comparisons. Movement to inspected slaughter deviated in several instances from the trend of market receipts: the supply of cattle expanded more than is usual over September, was above that of any month since November 1934, and exceeded the 1926-35 October average by a considerable margin. Furthermore, the volume of hogs and lambs for slaugh ter was above the ten-year average. Reshipments of cattle and lambs to feed lots ex panded more than seasonally over September but re mained less than a year ago and the 1931-35 average for the month, and those of calves increased in all three comparisons. Meat Packing Owing to the continued influence of a small corn crop in effecting earlier than normal marketings of livestock this autumn, the production of packing-house commodities at inspected slaughtering establishments in the United States rose more than seasonally in Octo ber to a level above any previous month since Decem ber 1934. It not only exceeded that of September by 17j4 per cent, but was 22 per cent heavier than a year ago and 9l/2 per cent above the 1926-35 October aver age. The tonnage sold was 11J4 per cent larger than in September, 18per cent above last October, and prac tically equal to the ten-year average for the period, though somewhat under the volume of current produc tion. Because of the large quantity offered, prices de clined rather sharply in October from September. Dol lar sales billed to domestic and foreign customers totaled only \l/2 per cent above a month earlier, 5 per cent greater than in the same month last year, and one per cent in excess of the 1926-35 average for October. In ventories of packing-house commodities in the United States accumulated counterseasonally on November 1 over the beginning of October and showed the first gain over the 1931-35 average thus far in 1936. Payrolls at the close of October registered an increase over Sep tember of 6 per cent in number of employes, 8 per cent in hours worked, and of 10per cent in wage pay ments. Moreover, gains of 13 per cent in workers, 19J4 per cent in hours, and 18 per cent in wage pay ments were recorded over last October. October shipments for export slightly exceeded those of a month earlier, owing principally to increased for wardings of lard to the United Kingdom. British de mand was fair for American lard and improved for hams. Except that some inquiry for United States LIVESTOCK SLAUGHTER (In thousands) Cattle Yards in Seventh District, October 1936........................................ .... Federally Inspected Slaughter, United States: October 1936....................................... ___ September 1936.................................. ___ October 1935........................................ ___ ^Including a small volume of Government Hogs Lambs and Sheep Calves 609 324 82 1,124 3,492 1,072* 2.403 2,135 1,083 purchases. 1,742 1.593 1,765 585 553 531 241 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Native Beef Steers (average)......... Fat Cows and Heifers...................... Calves.................................................... Hogs (bulk of sales).......................... Lambs.................................................... ........... ........... ........... ........... ........... Nov. 21, 1936 810.30 7.25 6.75 9.45 8.55 Oct. Months Sept 1936 $9.30 7.10 8.00 9.55 8.50 1936 $9.15 7.00 8.75 9.90 9.30 op Oct. 1935 $10.45 7.45 8.55 9.90 9.10 Page 3 fats developed in Finland, Italy, and Scandinavian countries, Continental European trade in animal prod ucts from the United States continued negligible. Cuban demand for lard improved in anticipation of an increase in freight rates. Quotations for United States lard and meats in the United Kingdom were slightly under Chi cago parity during the month. Coincident with the re duction in current arrivals, prices of American hams in British markets moved closer to the United States parity early in November. Imports of packing-house commodities into the United States decreased further during October. Dairy Products Unusually good pastures this autumn were mainly responsible for a counter-seasonal rise in the production of dairy products during October. Aggregating y2 per cent heavier than in September, the manufacture of creamery butter in the Seventh Federal Reserve dis trict exceeded that of last October by 9l/2 per cent and was 2 per cent greater than the 1926-35 average for the month. The tonnage sold was \ J/2 per cent under the ten-year average and 12 per cent below a year ago, though increasing 2 per cent over September. Produc tion of the commodity in the United States expanded one per cent over a month earlier and exceeded the 1926-35 October average by 12y2 per cent. Consumer demand for lower-priced competitive fats continued. Despite a price decline of 7y2 per cent in October from the preceding period, inventories of creamery butter in the United States decreased less than normally on November 1 from the beginning of October and were 2,358,000 pounds larger than the 1931-35 average for the date, in contrast to a decline shown in this com parison on other reporting dates of 1936. Quotations firmed in the third week of November. The manufacture of American cheese in Wisconsin increased 6y> per cent in October over September, and was not only 11 per cent greater than a year earlier but also 40y2 per cent heavier than the 1926-35 average for the month. Distribution of the commodity from primary markets of that State totaled less than current production and 6y2 per cent under a year ago, although it rose contraseasonally by 22y per cent over Septem ber and aggregated 12 per cent more than the 1926-35 October average. Total inventories of cheese in the United States increased 3,928,000 pounds on November 1 over the beginning of October to a level 17,907,000 pounds above the 1931-35 average for the date. Follow ing a decline of 4 per cent in October from September, prices steadied in the first three weeks of November. Industrial Employment Conditions Increases of 5y per cent in employment and 12y2 per cent in payrolls were reported by Seventh district industries for the payroll period of October 15 as com pared with the corresponding period a month earlier. The gains were the largest recorded since early 1934, surpassing even the marked expansion that was re flected in the reports for February and October in 1935. The improvement in the current month was effected largely by the durable goods industries which added a total of 9 per cent more workers to their volume of employment and raised aggregate wage payments close to 19 per cent. The vehicles group, covering mainly the Page 4 automobile and transportation equipment industries, rehired practically as large a volume of workers as had been laid off during the two preceding months and * paid out slightly more in wages than two months earlier. The large metals and products group, exclusive of ve hicles, increased employment 3 per cent, approximately the same as in the September to October period last year, but raised wage payments liy per cent, which gain was the largest recorded for this group since a year ago last February. The wood products and stoneclay-and-glass industries also contributed substantially to the aggregate rise in the durable goods group. Most of the non-durable goods industries also reported in- , creases, but these were less extensive and the largest of these groups, food products, registered a decline. Under the non-manufacturing groups only construction failed to follow the general upward trend reflected in increases aggregating \y2 per cent in employment and about 2 per cent in payrolls for this classification. Per centage gains in payrolls were almost uniformly above those in employment, although the extensive raise in wage rates announced by some of the larger industries had not gone into effect at the time of the October reports. * Durable Goods Employment, Payrolls, and Production The accompanying chart shows the trend by months of Seventh district building contracts awarded, castings output, automobile production, and manufacturing em ployment and payrolls in the durable goods industries as a whole. Except for temporary recovery in the spring of 1930, the series dropped steadily from a level 1 which through the greater part of 1929 was consider ably above the 1923-24-25 average, to an extreme low in 1932. At that time passenger car and truck produc tion, steel and malleable casting shipments, durable goods payrolls and employment, respectively, fell to only EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Reportin o Firms Industrial Group of Oct. 15, 1936 Wage Earn Earn- ers (000 » ings Change From Sept. 15, 1936 Wage Earn- INGS Omitted) No. No. $ % % 1,510 325 246 419 2,500 422,641 346,148 22,773 46,848 838,410 11,249 10,634 536 1,003 23,422 +3.2 + 18.7 +0.0 +4.5 +9.0 +11.5 +28.9 +6.6 +12.5 +18.7 322 747 240 135 31 637 2,112 62,532 117,142 35,856 25,718 14,907 75,016 331,171 1,136 2,636 947 508 393 2,037 7,657 +1.4 -4.1 +0.6 -2.9 +9.8 +1.4 -0.7 +5.5 CL5 +3.0 +6 1 +30.0 +7.7 +4.6 Total Mfg., 10 Groups. 4,612 1,169,581 31,079 +6.1 +14.9 Merchandising2............. Public Utilities.............. Coal Mining................... Construction.................. 2,537 197 27 308 115,141 97,175 6,643 12,758 2,382 3,143 168 305 +3.2 +0.2 +6.5 -6.0 +4.2 +0.6 +13.5 -1.6 Durable Goods: Metals and Products1 Vehicles....................... Stone, Clay,and Glass Wood Products......... Total............................ Non-durable Goods: Textiles and Products Food and Products.. Chemical Products. . Leather Products. . . Rubber Products.. . . Paper and Printing.. Total............................ Total Non-mfg., 4 Groups..................... 3,069 231,717 5,998 +1.4 +2.2 Total, 14 Groups.......... 7,681 1,401,298 37,077 +5.3 +12.7 ’Other than Vehicles. Illinois, Indiana, and Wisconsin. 12, 32, 10, 12, 20, and 37 per cent of this average. Furthermore, residential and total building contracts had declined to 2 and 5^4 per cent of the average by February 1933. That employment showed less reduc tion than payrolls was due principally to shortened schedules for the purpose of spreading the work over a greater number of employes. A steady improvement has been shown in the past three and one-half years. By midsummer of 1936, durable goods employment and payrolls, castings production, and total building con tracts awarded had recovered to approximately 75 per cent of the 1923-24-25 average and the automobile in dustry was operating well above that level. Recent declines in the production of automobiles mark the annual change in models rather than any cessation of demand. SELECTED INDEXES OF ACTIVITY IN DURABLE GOODS INDUSTRIES SEVENTH FEDERAL RESERVE DISTRICT PER CENT UNADJUSTED Tt 1923-24-25 AVERAGE-100 — 1 1 MAIBJF ICTIJRIMG EKPlXlTNEMT AXO PAYROLLS N THE CUUBLE OCOS IRCUSTRIES IHIPNC IS Of 5TEEL MO HAL CABLE CASTIN S 2bU 200 150 100 0 150 h r'-A i'~”% 100 \ LCABLi OYHtM VP0LL* 4929 1935 1936 ’1937 1929 1930 1931 1932 1933 1934 1935 1935 1937 PER CENT £E3jC ENT BUILDING CONTRACTS MARCH) ,'9291 1930 1951 1952 >933 1934 1935 1936 1957 h*s°ckp«?SfN¥,™TrE5!1i'!HSvS^W °'ST"1CT 1929 1930 1931 1932 1333 1934 1935 1936 1937 r - OOOGC °«A Manufacturing Automobile Production and Distribution The manufacture of automobiles rose rather sharply in October, as output of new models was accelerated, but it failed to equal the volume in the month last year, owing to postponed change-over this year in certain > makes of cars. Passenger cars produced during the current period in the United States numbered 190,688 or 110J4 per cent above a month previous and 11 per cent under a year ago, while truck output numbering 33,940 declined 24 per cent in the monthly and 42 per cent in the yearly comparison. As deliveries of some new models were made to dis tributors, sales of automobiles at wholesale in this dis- trict totaled markedly higher in October than in the preceding month and substantially exceeded those in October last year. Sales to users, however, dropped off in the month and aggregated less than in October 1935. Data on stocks of new cars show that the number on hand increased to a much lesser extent over a month previous than did their value and the decline from last October was greater in number than in value, which would indicate that deliveries to the end of October had been light on the lower-priced cars. Used-car sales continued in October to exceed those of a year ago; stocks, though declining in the period, remained some what higher than last year. Iron and Steel Products Despite slowing-down in demand from the building and certain other of the heavy industries, incidental to the approach of winter, requirements of the automotive industry and from miscellaneous users have maintained operations of the steel industry in the Chicago district at a high level. At around 76 per cent of capacity in the middle of November, steel ingot output for the district approximated that of a month earlier and was close to 20 points higher than a year ago. A further increase was shown for October over September in the produc tion of pig iron in the Illinois and Indiana district, daily average output being the heaviest of the year to date and over half again as large as in the month last year. The scrap iron and steel market has continued firm. Operations at reporting steel casting foundries of the Seventh district decreased in October from the preced ing month and shipments followed a similar trend, while incoming orders were slightly heavier than in September. The decline in shipments amounted to 15y2 per cent in tonnage but only 8j4 per cent in dollar vol ume. Malleable casting foundries reported increases for the month of 12 per cent in production, 10 per cent in the tonnage shipped, and 7 per cent in the volume of orders booked. Comparisons with the corresponding month a year ago continued favorable for both steel and malleable castings, but the gains in shipments and production were considerably smaller than for several months previous. A continuance of seasonal activity was reflected in the reports for October covering the manufacture of stoves and furnaces, shipments rising 34 per cent, orders 13 per cent, and molding-room operations 18 per cent above the corresponding items in the preceding month. LUMBER AND BUILDING MATERIALS TRADE October 1936: Per Cent Change From Class of Trade MIDWEST DISTRIBUTION OP AUTOMOBILES October 1936; Per Cent Change From September 1936 Oct. 1935 +583.9 +675.8 +40.7 +40.4 14 14 -27.3 -21.0 -15.9 -8.4 34 34 +5.3 +38.9 -14.7 -5.8 34 34 -8.4 +10.5 34 -7.5 -6.7 +5.5 +9.0 34 34 Used Cars: Number Sold.................. Salable on Hand— Number............................ Value............................ ‘ ■ + 12.8 +2.5 + 1.8 +21.3 +16.2 + 15.7 8 6 8 + 19.5 +23.6 +21.9 +5.1 +19.3 +37.3 +18.7 +16.3 139 35 69 137 Sales in Dollars...................... Sales in Board Feet............... Accounts Outstanding1........ Retail Building Materials: New Cars: Wholesale— Number Sold.................. Value................................. Retail— Number Sold.................. Value................................. On Hand October 31— Number............................ Value................................. October 1935 Wholesale Lumber: Companies Included Total Sales in Dollars........... Lumber Sales in Dollars.... Lumber Sales in Board Feet Accounts Outstanding1........ to Wholesale Trade......................... Retail Trade................................ Number of Firms or Yards September 1936 Ratio of Accounts Outstanding1 Total Dollar Sales during Month October 1936 September 1936 October 1935 144.8 182.1 160.5 206.1 151.7 186.0 lEnd of Month. Page 5 Gains in the yearly comparison amounted to 25 per cent in orders, 28 per cent in production, and 39 per cent in shipments. Inventories totaled 7 per cent more than a month earlier and 140 per cent higher than at the close of October a year ago. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Furniture Activity in the furniture industry of the Seventh district continued at a high level in October, orders booked totaling ,29 per cent and shipments 13 per cent above the 1927-35 average for the period. New orders declined 6 per cent in the month, in accordance with seasonal trend, while shipments expanded 15 per cent, or considerably more than usual. Although a heavier volume of shipments than of current orders effected a decrease of 10 per cent in unfilled orders between Sep tember 30 and the close of October, they amounted to 103 per cent of new orders, as against a ratio of only 7834 per cent a year ago. Other comparisons with last October show an increase for the month this year of 38 per cent in orders booked and of 35 per cent in ship ments. Production in October averaged close to 90 per cent of capacity—better than 8 points higher than a month earlier and 18 points above October 1935. Building Materials, Construction Work A continued active demand for building materials was evident in October, distribution in most reporting lines showing an increase over September instead of the recession customary for the period. Lumber sales by manufacturing and wholesale dealers of the district, after recording a less than seasonal decline in Septem ber, followed with an expansion that was contrary to trend for October. Gains at retail lumber yards, both in sales of lumber alone and in those of all materials handled, including coal, were considerably above the average for the month. Shipments of cement were reported as either equal to or larger than in the pre ceding month, whereas the September to October movement of this material during the past ten years has been downward almost without exception. Brick de liveries also were well maintained and in some cases heavier than a month earlier. The movement of all building materials continued on a scale greatly in excess of that at the same time a year ago. Building Construction Both residential and other types of building in the Seventh district increased slightly in October over September, according to data on contracts awarded. As compared with a year ago, although residential build ing was 5}4 millions larger in October this year, other building was 3 34 millions smaller, so that total building was only 2 millions or 5 per cent heavier in the current period. Last year residential contracts comprised only 1734 per cent of total contracts, whereas this October they were 31 per cent thereof. WHOLESALE TRADE IN OCTOBER 1936 Per Cent Change From Same Month Last Year Commodity Net Sales Stocks Accounts Out standing Groceries. . . . Hardware.... Drugs.............. Electrical Supplies. . . -0.9 +26.6 +8.9 +18.9 +34.8 +1.4 -8.2 +20.9 -5.1 +50.2 +38.5 +30.0 Page 6 Col lections -3.0 +23.1 +8.5 +37.4 139.3 338,216,000 +2.6% +5.3% 3398,103,656 ' +67.1% $11,767,100 +4.1% +86.8% $99,737,360 + 113.1% Building permits issued in 99 cities of the district declined in both number and estimated cost in October from the preceding month, though continuing above t those of the corresponding month of 1935. Decreases from September amounted to 4 and 16 per cent in number and cost, respectively, while gains over a year ago aggregated 18 and 33 per cent. In the yearly com parison, declines in estimated cost were recorded by Chicago, Indianapolis, and Milwaukee, but increases for Detroit, Des Moines, and in the total for smaller cities considerably more than counteracted the effect of them. Merchandising < Trends in wholesale trade conditions of the Seventh Federal Reserve district were for the most part favor able during October. After having declined contraseasonally in the two preceding months, the wholesale grocery trade recorded a 3 per cent expansion in the current period, which was contrary to trend for Octo ber. Gains of 13 per cent in hardware sales and 7 per cent in the drug trade compared with seasonal in creases of only 8 and 3 per cent, respectively, in the 1926-35 October average. Electrical supply sales, how- 1 ever, exceeded those of September by only 6 per cent, whereas the seasonal gain for October is 13 per cent. As compared with a year ago, the decline of slightly less than one per cent in the grocery trade contrasted with one of almost 8 per cent in September, the gains in hardware and drug sales about equaled those of a month previous, while the increase in electrical sup plies was larger in the comparison. For the first ten months of 1936, sales in the drug trade were heavier by 5 per cent, those of hardware by 24 per cent, and those of electrical supplies by 34 per cent than in the corresponding period of 1935; the dollar volume of groceries sold approximated that of the same ten months last year. In all groups except electrical supplies, ra tios of accounts outstanding to net sales continued to decline in October and were lower than a year ago. Stocks were generally higher than either a month or a year previous. _ DEPARTMENT STORE TRADE IN OCTOBER 1936 Locality 77.8 154.6 140.4 Residential Contracts *Data furnished by F. W. Dodge Corporation. Ratio of Accounts Out standing to Net Sales Total Contracts Per Cent Ratio of October Per Cent Change Change Collections to First Ten October 1936 Accounts From Months 1936 Outstanding From Same End of September October 1935 Period 1935 Net Sales Stocks End of Month +1.0 Chicago..................... Detroit...................... Milwaukee............... Other Cities............. +20.1 +22.8 +10.1 +23.6 +15.6 +11.3 +3.4 7th District.............. +20.4 +4.8 Net Sales 1936 1935 +14.6 +11.4 +14.5 +11.0 36.8 51.1 43.5 37.7 35.3 48.8 42.4 35.9 +13.1 42.8 40.9 Although Seventh district department store trade rose only 8 per cent in October over September, the gain was larger than in any of the preceding ten years and compared with one of only 2 per cent in the average for those years. In this district, September-October expansion is modified each year by the trend in Detroit where special sales in September are followed by a rather noticeable drop in October trade. Sales by Mil waukee stores increased 24 per cent in October over the preceding month, Chicago trade gained 14 per cent, and sales by stores in smaller cities totaled 18 per cent larger, while Detroit sales declined 14j4 per cent. As compared with a year ago, sales in the current period showed an even greater gain than in September, ex ceeding those of last October by 20 per cent; the larger cities recorded heavier increases in the comparison than did the smaller centers. Stocks continued to rise during October, in accordance with seasonal trend, and totaled 5 per cent above the corresponding 1935 level. Sales of shoes by reporting dealers and department stores in the district declined somewhat more than sea sonally in October from the preceding month, following considerably better than usual expansion in August and September. However, the recession of 19 per cent in the current period, though comparing with one of but 16 per cent in the 1926-35 average, was smaller than in any of the four immediately preceding years. Furthermore, the gain of 21 per cent over a year ago equaled that of September, which had been the largest in the yearly comparison so far in 1936. Sales in the first ten months of this year exceeded those in the same period last year by 12 per cent. A rising trend con tinued in stocks. Although a recession of 5 per cent was shown for October from September in sales of furniture and housefurnishings by reporting dealers and department stores, the decrease was less than usual for the period and most dealers as well as the majority of department stores recorded increases for the period. The dollar volume sold totaled 27 per cent in excess of that for October last year, with dealer sales showing a much smaller gain in the comparison than did department stores. A further rise of 8 per cent in stocks between September 30 and the close of October brought them to 16 per cent above those on the corresponding date 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 a base, unless otherwise 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 Firms Meat Packing—(U. S.)— Sales (in dollars)......................................... Casting Foundries— Shipments: Steel—In Dollars.................................... In Tons........................................ Malleable—In Dollars........................... In Tons............................... Stoves and Furnaces— Shipments (in dollars)................................ Furniture— Orders (in dollars)...................................... Shipments (in dollars)............................... Output of Butter by Creameries— Production................................................... Sales.............................................................. Wholesale Trade— Net Sales (in dollars): Groceries.................................................. Hardware................................................. Drugs........................................................ Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago.................................................... Detroit...................................................... Indianapolis............................................. Milwaukee................................................ Other Cities............................................. Seventh District—Unadjusted............. Adjusted.................. 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.)*............. Oct. Sept. 1936 1936 Aug. 1936 July 1936 June 1936 May 1936 Oct. 1935 Sept. 1935 Aug. 1935 July 1935 June 1935 May 1935 .. 47 99 97 94 91 91 85 94 86 84 82 83 86 . . . . . . . . 12 12 21 21 74 76 56 80 85 94 50 73 86 96 48 69 77 85 53 77 74 80 56 82 64 68 56 81 47 47 45 66 39 39 37 56 38 37 36 53 33 32 38 55 27 25 39 57 34 31 43 65 .. 8 356 274 183 154 170 176 257 196 133 100 117 127 .. . . 12 12 84 91 89 79 89 72 100 65 60 61 67 59 62 68 61 64 61 56 74 44 43 39 50 46 .. .. 59 61 103 106 103 104 101 98 114 111 145 133 140 120 94 121 112 107 131 130 153 134 173 141 144 130 . . . 27 11 12 73 108 89 72 96 83 75 84 74 83 90 76 68 94 77 63 102 76 75 86 81 80 75 76 70 71 77 71 71 70 66 76 70 67 76 74 . . . 27 5 4 . . . 41 82 82 98 112 128 118 97 104 95 86 134 116 94 83 97 94 72 81 83 77 71 75 94 63 72 73 68 59 65 91 87 93 93 87. 79 88 89 86 100 97 90 86 90 88 81 92 101 95 83 86 78 73 110 95 80 71 81 79 63 74 77 69 69 68 85 55 58 64 59 52 56 78 76 78 79 75 71 76 77 73 92 88 76 75 78 77 65 90 31 118 72 163 127 182 128 205 132 199 73 156 19 83 62 149 94 153 100 165 104 147 40 56 39 54 59 77 36 72 43 58 40 61 22 53 21 43 17 42 20 38 26 34 18 33 108 98 126 103 93 120 97 89 121 101 85 113 101 88 115 100 87 117 71 65 87 68 60 85 65 58 81 53 50 66 59 53 68 67 57 73 .. . . . . ... ♦ ' ♦Average daily production. Page 7 PER CENT PER CENT 140 140 INDUSTRIAL PRODUCTION 130 NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) 120 110 100 90 Production and Employment 70 In October the Board’s seasonally adjusted index of industrial pro duction was at 109 per cent of the 1923-1925 average, about the level of the three preceding months. Steel production was in larger volume than in any other month since 1929, and the rate of activity was sus tained in the first three weeks of November. Output of automobiles rose sharply from September to October. The increase in this period was less than a year ago, reflecting the fact that this year the date of the shift of production of new models was less uniform among the leading producers, but in the first three weeks of November produc tion increased further and was larger than last year. Activity at textile mills, which usually increases in October, declined slightly from the high level of September. In the meat-packing industry out put showed a further increase. Coal production increased seasonally, and production of crude petroleum continued at recent high levels. Factory employment increased by more than the usual seasonal amount between the middle of September and the middle of October. Increases in employment were general among the durable goods industries, with the largest expansion reported at factories producing automobiles and machinery, while changes in employment in the nondurable goods industries were largely of a seasonal character. Factory payrolls rose by considerably more than the usual seasonal amount. Value of construction contracts awarded, as reported by the F. W. Dodge corporation, was slightly smaller in October than in September, with a decline in publicly-owned projects partly offset in the total by an increase in awards for private non-residential construction. 50 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 October 1936. CENT PER CENT 250 DEPARTMENT STORE SALES — Adjusted for seasonal variation Without seasonal adjustment 1929 1930 1931 1932 1933 1934 1935 1936 Indexes of value of sales, 1923-1925 averages 100. months, January 1929 to October 1936. PER CENT By PER CENT 120 — 120 WHOLESALE PRICES Commodity Prices Farm Products 1930 1931 1932 Distribution Sales by department stores and by mail order houses serving rural areas increased from September to October by a larger amount than is usual at this season. Variety store sales showed a less than seasonal rise. Freight-car loadings increased further in October, reflecting chiefly a larger volume of shipments of miscellaneous freight and of coal. Foods 1929 have advanced. 80 60 1929 OLUME of industrial production increased seasonally in October and there was a substantial rise in employment and payrolls. V Prices of a number of industrial raw materials and finished products 1933 1934 1935 1936 Indexes compiled by the United States Bureau of Labor Sta tistics, 1926=100. By months. 1929 to 1931; by weeks, 1932 to date. Latest figure is. for week ending November 21, 1936. The general level of wholesale commodity prices advanced some what during the first three weeks of November, following two and a half months of little change. Since the middle of October prices of a number of industrial raw materials, particularly nonferrous metals, hides, rubber, silk, and wood, have shown a considerable rise and there have also been substantial increases in the prices of some finished products, including automobile tires, glass, woolen goods, and cotton goods. Bank Credit MEMBER BANK RESERVE BALANCES TOTAL .excess; reserves [required reserves) mm Wednesday figures of total member bank reserve balances at Federal Reserve banks, with estimates of required and excess reserves, January 6, 1932, to November 18, 1936. Page 8 Member bank reserves increased in the four weeks ended November 18, chiefly as the result of transfers of gold to the United States. On that date member bank reserves were $2,270,000,000 larger than legal requirements, the highest level since the increase in reserve requirements which became effective in the middle of August. Adjusted demand deposits at weekly reporting member banks in leading cities have continued to increase, and on November 18 amounted to about $15,400,000,000. Since the end of last May these deposits have increased by over $800,000,000, reflecting a rise in deposits outside New York City. Time deposits at reporting banks have re mained at about the $5,000,000,000 level. Holdings of United States Government obligations at reporting banks have recently declined somewhat further. Since the end of June the decline has amounted to about $300,000,000 and has been at New York City, with little change elsewhere. Holdings of other securities have declined in recent weeks, reflecting chiefly a reduc tion in the amount held by New York City banks. Loans to customers have shown some further increase.
@FedFRASER