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Business Conditions Seventh FEDERAL ^ I M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Awt. Federal Reserve Agent Reserve DISTRICT v~* Eugene John Manager Division of Research and Statistics Htcpis G. Pett, MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 18, No. 12 H. Martin, Asst. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst. Federal Reserve Agent November 30, 1935 GENERAL SUMMARY ACTIVITY trended upward during October in al exceptionally large though dropping sharply from a month previous, and reshipments were far below re most all major groups of Seventh district industry and trade. With the exception of certain food-produc ceipts. The 1935 production of corn, oats, wheat, ing industries, gains were recorded over October 1934, potatoes, and a few less important crops in the district as well, and in manufacturing phases they were notice was below the 1928-32 average, but that of most other crops was heavier. ably large. Automobile manufacturers accelerated output of new models sharply during the month. Business received by steel mills showed moderate improvement over a month previous, and output of steel and malleable castings was larger. Orders booked by furniture manu facturers expanded over those of September, contrary to trend for the period, and shipments increased more than seasonally. Building construction, as evidenced by data on contracts awarded, gained substantially in October, and the movement of building materials im proved. Industrial employment and payrolls gained, affected considerably by the sharp rise in activity at automobile plants. Greater than seasonal gains were recorded for Octo ber in the production and tonnage sales of packing house commodities, although owing to the lower prices prevailing in the period, dollar sales showed only a moderate increase. The production of butter and of Wisconsin cheese, on the other hand, fell off more than normally, while sales were above the average for the period, those of butter increasing over September con trary to trend. The movement of wheat and of corn was below average this October; oats receipts remained FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Change From November October November 20, 1935 Bills Discounted. Bills Bought........ U. S- Governmen' ♦Number of Points. ----- 355.7 .... Fed1.... 822.6 81.4 16, 1935 * 0 +0.0 -0.0 0 +86.4 +68.0 +9.7 +1.4* 21, 1934 $-73.1 -0.1 -0.2 -72.7 +311.1 + 178.4 +53.2 +8.3* In reporting groups of wholesale trade, above-aver age gains were shown in the drug and hardware trades, while the increase in electrical supply sales was smaller than usual and the decline in the grocery trade some what greater than seasonal, The gain over September in department store sales was about average for Octo ber and that over a year ago was the heaviest in three months. The retail shoe and furniture trades recorded declines from a month previous, which trends are customary in the period; sales in both groups ex ceeded those of a year ago. Chain store trade was larger in October than either a month or a year earlier. Holdings of Government securities by reporting member banks in the district increased 68 millions on November 20 over five weeks previous, while those of other securities declined and loans showed only a slight gain; demand deposits in these banks rose and time deposits declined a little during the period. Re serve balances of all member banks in the district gained almost 70 millions in these weeks. New financ ing by means of bankers’ acceptances expanded sharply in October, but dealer sales of commercial paper re corded a much greater than seasonal decline. Credit Conditions and Money Rates Reserve balances of member banks in the Seventh Federal Reserve district increased more than 69J/2 mil lion dollars during the five-week period ended November 20. The gain resulted from a further net inflow of funds to this district through commercial and financial trans actions, amounting to over 77 millions. The volume of reserve bank credit extended locally declined during the period, while demand for currency increased somewhat. Changes in all sources and uses of Seventh district bank- ing reserves are shown in detail in the accompanying tabulation. Changes between October 16 and November 20 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..................................................... —7,926 +77,387 —2,461 Total supply.................................................................................... +67,000 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.................................................................. +3,782 +69,584 —5,038 —1,397 +69 Total demand.................................................................................. +67,000 During the week ended November IS down-town Chi cago banks reported a range of 134 to S per cent as the prevailing rate on customers’ commercial loans; this range was also reported for the week ended October IS. The average rate earned by down-town Chicago banks on loans and discounts during the calendar month of October was reported as 2.85 per cent, compared with 2.93 per cent in September and with 3.03 per cent in October 1934. A range of 3J4 to S per cent was reported by the principal banks of Detroit as the prevailing rate on customers’ commercial loans during the week ended November IS, as compared with 334 to 6 per cent in the corresponding week of October. Commercial paper sales of reporting dealers in the Middle West aggregated slightly less than 10 million dol lars during October, showing a much greater than sea sonal decline from September, and were in the lowest volume since January 1934. Borrowing declined some what, although demand from city and country banks remained in about the same volume as the preceding month. Quotations for October ranged from J4 to J4 per cent for prime short-term obligations to 5/n and 134 per cent for those of longer maturity; the bulk of sales, however, took place at %. per cent, unchanged from the preceding month. Outstandings on October 31 showed a drop of 10 per cent from a month earlier and were the smallest since March 30 this year. Owing to a continued scarcity in supply, sales of commercial paper during the first IS days in November registered a further slight de cline from the first half of October. CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) Total loans on securities........................... To brokers and dealers: In New York.................................. Outside New York........................ To others (except banks)..................... Acceptances and commercial paper boi Loans on real estate................................... Loans to banks............................................ Other loans................................................... U. S. Government direct obligations... Obligations fully guaranteed by U. S. Government............................................. Other securities........................................... Demand deposits—adj usted........................ Time deposits................................................... Borrowings........................................................ Change From November October November 20, 1935 16, 1935 21, 1934 . $2,671 $+47 $ +364 . 246 +3 -66 . . . . . . . . . . . . . 1 27 218 31 65 10 335 1,476 161 347 2,092 739 0 0 -1 +4 -3 0 -1 +4 +68 -1 -23 +113 -1 0 -41 +i -26 -55 -10 -2 +17 +393 +49 +38 +405 +101 0 Note: The data as given above are not comparable with those previously given, as they cover an additional number of cities, and several of the items are shown on a revised basis. Future data will be on this new basis. Digitized for 2FRASER Page Dealer transactions in the Chicago bill market total considerably smaller from October 17 to November than in the preceding period or a year ago. Supplies f off 4234 per cent from those of September 12 to Octob 16 and were less than in either of the two precedi periods. A heavy decline in sales to out-of-town ban more than offset a slight gain in sales to local banks, ai with shipments to Eastern cities remaining nil, total d tribution equaled supply. Selling rates ranged from to per cent, unchanged from recent months. Activity in acceptance operations of banks in the Se enth Federal Reserve district increased in October ov the relatively low level prevailing in September. N< financing by means of bankers’ acceptances showed much greater than seasonal gain during the month ai was in the largest volume since last May. A similar trei was shown in purchases, the volume of the banks’ ov bills discounted registering a heavy increase which mo than offset a decline in the buying of other banks’ accef ances, and as a result total bills bought in the peril increased 33 per cent over the preceding month. A items, however, recorded declines in the year-ago coi parison. Sales continued to be nil during Octobe Maturities increased 11*4 per cent in the month but we considerably below October 1934 and the 1925-34 ave age. The liability for outstandings at the end of Octob was the largest for any date since May 31. New finan ing by means of bankers’ acceptances aggregated 97 P' cent larger in the first half of November than in tl corresponding weeks of October. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED B A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in October 1935 frc Sept. 1935 Oct. 19: Total value of bills accepted............................................ Purchases (including own bills discounted)................ Sales........................................................................................ Holdings*............................................................................... Liability for outstandings*............................................... +72.5 +33.1 0 +3.6 +7.8 —23.4 —54.6 0 -58.7 —21.3 *At end of month. Security Markets Demand for high-grade bonds continued strong durin October in the Chicago market. Prices moving within narrow range showed moderate reaction in the early pai of the month and recovery during the latter part. Utilitit and industrials were particularly strong in the corporal field with first-grade rails also being given preference while the second-grade railroad issues were somewh; weak. Municipal issues showed especial strength througl out the month—a reflection of some shortage in supp] and a continued demand for investments of that typ The issues of all securities in October, including refunc ings, though larger than in the corresponding period i the preceding four years, totaled under the volume < September. Prices on the Chicago Stock Exchange coi VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Oct. 1935 Chicago............................................................... $2,546 Detroit................................................................ 727 Milwaukee......................................................... 236 Indianapolis...................................................... 157 Per Cent of Increa: or Decrease From Sept. 1935 Oct. 19. +1.8 +17.9 +14.3 +11.6 +12. +49.: +10. < +12.: Total four larger cities................................. $3,666 36 smaller cities.............................................. 672 +5.8 +14.5 +17.< +25.< Total 40 centers..............................................$4,338 +7.1 +19. C tinued to move gradually upward during the latter half r of October and the first two weeks in November, the average price of twenty leading stocks* amounting to $46.47 on November 16 as against only $41.92 on the same date in the preceding month. ♦Chicago Journal of Commerce. Agricultural Products November 1 reports confirmed earlier indications that frosts in the first half of October did more than usual » damage to quality of Seventh district corn but only slightly affected quantity. Merchantable quality, how ever, was above a year ago, though much husking and cribbing was behind usual schedule because a prolonged period of cold weather was needed in many localities to reduce high moisture content of the crop. After having suffered some earlier delay, the harvesting of soybeans had made rapid progress by November 1. A slightly larger acreage was seeded to winter wheat this autumn than in 1934. . On the basis of November 1 condition, the United States Department of Agriculture increased Seventh dis trict forecasts for corn, soybeans, buckwheat, edible dry beans, apples, pears, and cranberries over October 1 but reduced those of potatoes, sugar beets, grapes, and to bacco. Seventh district production of com, oats, wheat, barley, flaxseed, potatoes, grapes, tobacco, onions, and celery totaled smaller in 1935 than the 1928-32 average but that of most other crops was larger in this com parison. continued above a year ago. Wheat for immediate de livery remained at a premium over the December option. Under the influence of the foregoing trends, visible sup plies of wheat in the United States accumulated counterseasonally on November 9 over a month earlier but were 44 per cent below the 1925-34 average for that date and 21 per cent smaller than a year ago. Receipts of corn at these points of accumulation in creased more than usually in October over September, but were 40 per cent under last year and 49 per cent below the 1925-34 average for the month. Reshipments remained exceptionally light, though gaining more than normally over a month earlier. Coincident with the be ginning of marketings from the 1935 crop, prices of cash corn had declined by early November to a level consid erably under a year ago and only slightly above the December option. Visible supplies of corn in the United States, however, remained unusually small. Primary market receipts of oats in the United States fell off sharply in October from September but were 11 per cent heavier than the 1925-34 average for the month and 161*4 per cent in excess of October 1934. Reship ments remained far below the volume of current receipts. Visible supplies of the grain in the United States, there fore, gained counter-seasonally on November 1 over a month earlier and were nearly 40 per cent greater than the 1925-34 average for the date. Prices for October and early November averaged slightly less than those of Sep tember and were decidedly lower than last year at the same time. Movement of Livestock Grain Marketing Receipts of wheat at interior primary markets in the United States fell off more than seasonally in October from September to a level 31 per cent under the 1925-34 average for the month and only 8 per cent in excess of a year ago. Reshipments remained relatively light and were considerably under current receipts. Imports ex ceeded those of September and a year ago, and exports remained almost nil. Prices for October averaged slightly , higher than those of September, though trending down ward from the peak attained early in the month; quota tions eased further in the first half of November but 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 > Corn..................... . . Buckwheat......... .. Flaxseed.............. ■ • Soybeans............. .. Cowpeas.............. . . Potatoes (white). .. Potatoes (sweet). Sugar Beets1......... • Apples (total)... • Pears...................... . Strawberries*........ . Cranberries3.......... ■ Grapes1.................. • Dry Beans4........... . Tobacco6................ . United States Preliminary Final Average 1935 1934 1928-32 2,211,268 1,377.126 2,562,147 7,787 9,042 8,277 14,213 5.213 15,961 36,527 18,627 11,658 5,983 5,296 4,773 353,805 385,421 363,367 68,186 67,400 63,841 8,163 7,481 8,118 168,465 120,670 161,333 21,255 23,490 23,146 11,896 13,152 12,091* 59(g) 487 443 581 75(a) 2,327 1,931 2,200 3.400(h) 13,806 10,369 11,858 12,764 1,300,036 1,045,660 1,432,845 1935 1934 819,634 482,658 1.086(a) 1.267(a) 237(b) 151(b) 31.099(a) 14.865(a) 742(c) 606(c) 50,852 66,027 1.187(d) 1.180(d) 774(e) 999(e) 22.887(a) 12.085(a) 1.564(f) 1.638(f) 1.427(a) 918(a) 85(g) 73(a) 4.835(h) 16,848 WreKh°?iSan.tS of t0?s’ thousands of 24-quart crates. «In thousands o! barrels. In thousands of 100-lb. bags. 6In thousands of pounds, (a) Fiv< States including Seventh Federal Reserve district, (b) Iowa and Wisconsin m Tium0‘S Mrdn-Indla?aj- (d) UHnols, Indiana, and Iowa, (e) Michigan WisconsTn.' ““92W3 average*' a“d I<>Wa' <6) Wisconsin' <h> Michigan anc Note: Estimates for oats, wheat, barley, rye, hay, peaches, and broom corn, not included m the above tabulation, are the same as a month earlier. Receipts of cattle, calves, and lambs at public stock yards in the United States rose in October to a level above any month since last October, although they de clined from a year ago and the gain in cattle and lamb marketings was somewhat less than seasonal. Cattle and calf receipts exceeded the 1925-34 October average but those of lambs decreased in this comparison. Hog mar ketings expanded considerably more than is customary over September but were 41 per cent below a year ago and 48J4 per cent under the ten-year average. Move ment to inspected slaughter (inclusive of animals that did not pass through public stockyards) generally followed the trend of market receipts, except that the supply of cattle and of lambs increased more than a seasonal amount over September and that of lambs gained over the 1925-34 October average. LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, October 1935............................... Federally Inspected Slaughter, United States October 1935............................... September 1935......................... October 1934............................... Cattle 230 1,083 886 1,417* Hogs Lambs and Sheep Calves 435 2,135 1,453 3,546 337 89 1,765 1,549 2,627* 531 458 660* ♦Inclusive of slaughter for relief agencies. AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Native Beef Steers (average) Fat Cows and Heifers............ Calves.......................................... Hogs (bulk of sales)................ Lambs......................................... Week Ended Months of November October September October 16, 1935 1935 1935 1934 ..$ 9.75 $10.45 $10.60 $7.60 .. 7.00 7.45 7.55 5.10 8.55 9.00 6.25 9.90 10.95 5.70 9.10 9.50 6.10 Page 3 Reshipments of cattle to feed lots in October were heavier than in any month since August 1934 and were not only per cent larger than a year ago but 19^4 per cent above the 1930-34 average for October. The movement of feeder lambs and calves rose to a level above any corresponding period since last October but was slightly below that month and under the 1930-34 seasonal average. Meat Packing The production of packing-house commodities at in spected slaughtering establishments in the United States rose more than seasonally in October to a level 29 per cent above September and within 11 per cent of the 1925-34 average for the month, but was 13^4 per cent below commercial production of last October and 25J4 per cent under total production at that time. The sales tonnage expanded more than normally over September and continued somewhat in excess of current production; however, it declined 13^4 per cent from a year earlier and 17 per cent from the 1925-34 average for October. Prices dropped sharply in October from the preceding month, though remaining considerably above the corre sponding period of 1934. The total value of sales billed to domestic and foreign customers, therefore, increased only 8J/4 per cent over September but was 18 per cent greater than a year ago and within 8 per cent of the tenyear average for October. Inventories of packing-house commodities in the United States decreased less than sea sonally on November 1 from the beginning of October, but were 228,702,000 pounds below the 1930-34 average for the date and 426,920,000 pounds under a year ago. Payrolls for the last week of October recorded a gain over the preceding month of 2 per cent in number of employes, 6J4 per cent in hours worked, and of 8 per cent in wage payments, and showed a much smaller de cline from 1934 than had been evidenced a month earlier. Shipments for export increased in October over the limited volume of September and continued to consist largely of hams and other hog meats to the United King dom, although forwardings of lard to that country in creased. Despite the resumption of limited shipments of lard to Germany following several months of inactivity, Continental demand for packing-house commodities from the United States remained almost nil. British trade was fair for United States lard but rather poor for hams. Cuban demand for lard remained light. Prices of Ameri can lard in the United Kingdom moved nearer to Chicago parity than in September, but English quotations for United States meats were considerably under the United States basis. Inventories of United States packing-house commodities in foreign markets—inclusive of stocks in transit—declined further on November 1. Dairy Products Creamery butter production in the Seventh Federal Reserve district declined more than seasonally in Octo ber to a level 14 per cent under September, 23 per cent below a year ago, and 4J4 per cent less than the 1925-34 average for the month. On the other hand, the sales ton nage expanded 14 per cent over September—contrary to the usual tendency—and was not only within 3J4 per cent of last October but 16 per cent above the average. Trends in United States production of the commodity were similar to those in the Seventh district. Inventories of creamery butter in the United States were reduced Page 4 more than a normal amount on November 1 from th beginning of October, but were 8,965,000 pounds greate than a year earlier and 19,190,000 pounds heavier thai the 1930-34 average for that date. Prices rose 6>4 pe cent in October over September and advanced furthe during the first half of November. The production of American cheese in Wisconsin fel off somewhat more than ordinarily is the case in th four weeks ended November 2 from the preceding period it was, however, 31J4 per cent larger than a year ago am 43 per cent in excess of the 1930-34 average for th period. Distribution of the commodity from primary mar kets of that State increased 26 per cent over the corre sponding weeks of 1934 and 36 per cent over the five year average, but showed little change from a montl earlier and a smaller than seasonal excess over curren manufacture. Total inventories of cheese in the Unite' States decreased less than is customary on November from the beginning of October, and were not only 12,835 000 pounds above the 1930-34 average for the date be within 6,279,000 pounds of a year ago. After averagin slightly lower in October than in September, prices firme early in November. Industrial Employment Conditions Seventh district industries increased employment almos 5 per cent and wage payments more than 7 per cer between the payroll periods of September 15 and Octc ber 15. These gains were the largest since the heav seasonal expansion of last February when employmer, advanced as sharply as in the current month and payroll by an even somewhat larger percentage. As in the earlie expansion, the present improvement affected the majorit of the reporting industries, all of the principal group with the exception of food products and constructio. work contributing to the gain in employment and all bu these and the textile and leather groups to the rise i payrolls. The automobile industry was almost entirel responsible for the substantial increases of 17 per cer in employment and 22 per cent in payrolls recorded fc the vehicles group as a whole. Rubber products followe the trend in vehicles with increases of 8 and 12 per cen respectively. The metal industries reported advances fc the third consecutive month, the October gains beir EMPLOYMENT AND EARNINGS — SEVENTH FEDERAL RESER1 DISTRICT Week Industrial Group Report ing Firms of October 15, 1935 Wage Earners Earnings (000 Omitted) $ Change Froj Sept. 15, 193 Wage Earn ers Eari ing: % No. No. 256,386 243,759 48,267 87,028 11,330 33,182 21,766 22,029 11,095 60,358 6,293 6,715 883 1,904 243 627 543 434 264 1,531 +3.7 +16.7 + 1.3 —6.1 +3.2 +3.6 +0.7 +0.1 +7.9 +1.3 +6. +22. -4. —5. +3. +5. +3. -1. Rubber Products................. Paper and Printing............. 1,173 224 268 549 153 341 165 117 23 512 Total Mfg., 10 Groups---- 3,525 795,200 19,437 +5.6 +8. Coal Mining......................... Construction......................... 1,500 110 18 332 94,573 81,045 4,197 16,575 1,884 2,568 98 316 +2.1 +0.2 +14.5 —5.1 +1. +2. +41. —5. Textiles and Products.... Food and Products............. Wood Products.................... Total Non-Mfg., 4 Groups. % +n. +2. 1,960 196,390 4,866 +0.9 +i. 5,485 991,590 24,303 +4.7 +7. Total, 14 Groups................ iQther than Vehicles. Illinois and Wisconsin. approximately as heavy as those recorded for September. Stone-clay-and-glass and the chemical industries have also shown a steady rise in the number of workers em ployed and their wage payments since last July, and wood products have recorded increases in these items since last May. The main exception to the rising trend in manufacturing activity was furnished by the foodproducts group in which the losses were brought about mainly by the cessation of activity in the canning and preserving and certain other highly seasonal industries. Among the non-manufacturing groups, construction em ployment and payrolls experienced a moderate recession following the steady expansion that has been shown by this group since last January. The coal industry again recorded heavy gains in both men and wage payments, while merchandising and public utilities advanced more moderately. Manufacturing and non-manufacturing in dustries combined attained an employment level in Octo ber that was the highest since last May and a payroll volume that exceeded any month since April. Manufacturing Automobile Production and Distribution An exceptionally sharp upturn was shown during Octo ber in production of automobiles, following the low level reached in September, as manufacturers pushed output of new models. Passenger vehicles produced in the month numbered 214,609, representing a rise of 275 per cent over a month previous and a gain of 155 per cent over October 1934. Truck output numbered 60,412 in the period, or 86 per cent more than in the preceding month and 26 per cent above that of last October. Receipt of new models in certain makes of cars re sulted in a substantial aggregate gain over a month and a year previous in October sales of reporting distributors in this district. Sales by dealers to users likewise rose in the total over September and were moderately greater in number than a year ago. New cars on hand at the end of October were noticeably heavier than a month earlier, but numbered slightly smaller than on the same date of 1934. Sales of used cars increased 5 per cent in the monthly and 3 per cent in the yearly comparison; stocks were somewhat larger than a month previous and mod erately above those of a year ago. (See table for de tailed data.) The ratio of sales made on the deferred payment plan to total sales of dealers reporting the item stood at 42 per cent for October, as compared with 40 per cent in September and as against 53 per cent in the month last year. Iron and Steel Products Some further improvement took place during October in the business of steel mills in the Chicago district. Orders aggregated moderately in excess of those a month previous and were decidedly heavier than in October of last year. The automotive industry continued to lead in the demand for steel products. Output of steel ingots, which averaged around 55 per cent of capacity through the last half of October, had risen to 61J4 per cent by the third week in November, this rate comparing with only 33 per cent in the corresponding week of 1934. An other gain was recorded during October in production of pig iron in the Illinois and Indiana district, which as in September was more than double that of a year ago. The price of pig iron was raised $1 per ton at the end of October; finished steel prices remain firm; and the scrap market has advanced. Production and shipments of steel and malleable cast ings at Seventh district foundries were substantially heavier in October than September, the tonnage gains in these items amounting to 17 and 14 per cent, respectively, for steel and to 19 and 30 per cent for malleable castings. The volume of new orders booked by these foundries was less than either production or shipments, and orders for steel castings fell below the volume of a month earlier by 21 per cent and that of the corresponding month in 1934 by 13 per cent. New business in malleable castings was 5 per cent less than in the preceding month but was almost twice as heavy as in October 1934. In the yearago comparison, production and shipments of both types of castings registered heavier increases than in any previ ous month this year. Seasonal activity continued to manifest itself in the manufacture of stoves and furnaces, shipments totaling 31 per cent larger in October than September, orders rising 16 per cent, and production 4 per cent. In the yearly comparison, production showed a gain of 10 per cent, orders one of 12 per cent, and shipments one of 35 per cent. Stocks were 30 per cent lower at the close of October than a month earlier and 15 per cent below those reported for a year ago. Furniture A 3 per cent increase was recorded for October over September in orders booked by Seventh district furni ture manufacturers, the gain contrasting with a decline of 12 per cent in the 1927-34 average for the period. LUMBER AND BUILDING MATERIALS TRADE October 1935: Per Cent Change From Class of Trade MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in October 1935 From Previous Months Per Cent Change From New Cars Wholesale— Number Sold............................... Value............................................. Retail— Number Sold............................... Value.............................................. On Hand October 31— Number......................................... Value.............................................. Used Cars Number Sold............................... Salable on Hand— Number........................................ Value.............................................. Sept. 1935 Sept. 1935 Oct. 1934 Companies Included + 165.9 +202.5 + 136.9 + 158.9 18 18 +30.9 +36.8 +8.4 +0.6 37 37 +25.2 +39.2 -0.7 + 11.7 37 37 +5.3 +3.0 37 +3.0 +9.9 +14.5 +6.6 37 37 Wholesale Lumber: Sales in Dollars............................... Sales in Board Feet....................... Accounts Outstanding1................. Retail Building Materials: Total Sales in Dollars.................. Lumber Sales in Dollars.............. Lumber Sales in Board Feet.. . . Accounts Outstanding1................. +7.8 +9.1 -0.3 +21.9 +21.4 +33.6 +4.0 Number of Firms or Yards Oct. 1934 +50.3 +47.1 +22.8 11 9 11 +47.7 +43.8 +76.7 + 12.5 174 61 70 166 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month Oci. 1935 Wholesale Trade................................. Retail Trade........................................ 149.6 213.7 Sept. 1935 161.8 250.3 Oct. 1934 183.0 281.7 1End of Month. Page 5 Shipments rose 6)4 per cent in the month, whereas the normal gain is but 3 per cent. They exceeded incoming orders and together with cancellations effected a decline of 14 per cent from a month previous in unfilled orders held at the close of October, the ratio of this last item to current orders dropping from 92 per cent at the end of September to 77 per cent a month later. As compared with last October, data for the month this year show gains of 52 per cent in orders, 59 per cent in shipments, and 86 per cent in unfilled orders. An operating ratio of 73 per cent of capacity in October compared with one of 68 per cent in the preceding month and was 15 points above that of a year ago. Shoe Manufacturing, Tanning, and in excess of that in the corresponding months of 1933 and 1934, but is considerably lower than in years previ ous to these. Building Construction Construction activity in the Seventh Federal Reserve district registered the fifth consecutive monthly gain in October, according to data on contracts awarded in this territory. Total awards amounted to over 36 million dol lars for the month and were in the largest volume since August 1931. Residential contracts increased very slightly in the monthly comparison and comprised 17*4 per cent of the total. Hides Manufacturing activity in the shoe industry of the Seventh district showed some increase in October over the preceding month, the volume produced remaining at a level approximately 12 per cent higher than a year ago. Final reports on September production recorded a 6 per cent decline from August but a 12 per cent increase over the corresponding month of 1934 as well as over the 1925-34 September average. In the tanning industry, production and sales of leather were heavier in October than a month earlier, and prices showed a rising trend following the marked advance that has taken place in the cost of hides during the past two months. Trading in hides continued active, Chicago packers having moved all of their September and a large share of their October production. Prices advanced steadily and by early No vember ranged from to 1% cents higher than in the first week of October. Building Materials, Construction Work Demand for building materials in general showed some improvement in October over the preceding month and continued considerably more active than at the same time a year ago. Sales of lumber especially were sub stantially higher than a month earlier, both at wholesale and retail, the gains in board-foot volume somewhat ex ceeding those in dollar value. Furthermore, for materials other than lumber handled by retail yards the expansion in sales was slightly larger than for lumber alone. Col lections were good, and while outstanding accounts in creased at retail during the month, their ratio to total sales at both wholesale and retail was lower than either a month or a year earlier. Shipments of brick and tile were slightly heavier in October than in September with a somewhat more favorable margin shown in the yearly comparison. The demand for tile was particularly strong in certain farming sections of the district. Cement ship ments were reported as 5 per cent in excess of the Sep tember volume, although they were unfavorably affected by the cold and damp weather that prevailed during part of the month. The current demand for cement continues BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Change from same period 1934............ The usual seasonal trends were followed this October by reporting wholesale trade groups. Although the de cline of 5 per cent from September in the wholesale grocery trade was greater than average and the increase of 10 Y per cent in electrical supply sales smaller than usual, gains of 10 and 8 per cent in hardware and drugs, respectively, were above normal for the month. All groups showed smaller increases over a year ago than in the corresponding comparison for September. Gains for the first ten months of 1935 over the same period of 1934 amounted to 4 per cent in groceries, 10 per cent in drugs, 21 per cent in hardware, and 25 per cent in electrical supplies. With the exception of groceries, stocks on hand were heavier at the end of October this year than last. DEPARTMENT STORE TRADE IN OCTOBER 1935 standing Stocks +5.8 +30.6 +8.1 -6.8 +7.6 +4.4 +37.7 +17.6 Accounts Out Col Page 6 Per Cent Change October 1935 From October 1934 Per Cent Change First Ten Months 1935 From Same Period 1934 Ratio of October Collections to Accounts Outstanding End of September Net Sales Stocks End of Month Net Sales 1935 1934 lections TO Net Sales -10.5 +11.8 +0.8 +13.1 +23.7 +12.2 83.3 161.4 151.3 Chicago................. Detroit.................. Indianapolis........ Milwaukee........... Other Cities......... +2.1 +20.6 + 18.5 +7.5 + 15.7 +4.1 +1.4 -12.1 -0.7 +8.5 +3.3 + 10.1 + 10.8 +6.9 +8.9 35.3 48.7 42.3 42.4 35.9 36.9 45.3 41.4 39.3 32.3 +26.4 +51.6 127.3 7th District......... +9.2 +2.2 +6.4 40.6 38.8 standing Groceries.............. Hardware............. Drugs.................... Wlectrical Supplies........... $6,298,798 +0.6% + 187.6% $46,803,094 + 101.1% Merchandising Locality Net Sales $36,276,149 +24.4% +58.0% $238,241,628 +11.3% Permits issued in 103 cities of the district for all types of construction increased 3 6}4 per cent over September in their estimated cost and totaled more than twice the volume of October last year. The number of permits— 7,211—showed gains of 4^2 and 42 J4 per cent, respec tively, in the monthly and year-ago comparisons. The five large cities in the district—Chicago, Detroit, Milwau kee, Indianapolis, and Des Moines—determined the trend of the district in the estimated cost of proposed construc tion as compared with last October, the smaller cities showing an aggregate decline from that month. Ratio of Accounts Out- Commodity Residential Contracts ♦Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN OCTOBER 193S Per Cent Change From Same Month Last Year Total Contracts I * ► * Ratios of accounts receivable to net sales remained smaller than a year ago. Prices are reported as steady to upward. the aggregate from September as against an average de cline of but 12 per cent—it exceeded that of October last year by 17 per cent. Department stores effected the de cline shown in the monthly comparison, as dealers re ported increases over September. In the ten months of 1935, sales totaled V/2 per cent above those of the same period in 1934. Stocks on hand October 31 registered a gain of 3 per cent over both a month and a year previous. Seventh district department store trade expanded 6 per cent in October over the preceding month, which in crease is about average for the period. The largest gains were recorded in sales of Milwaukee firms and those of stores in smaller centers, which exceeded the September volumes by 18 per cent each; Chicago trade gained 11 per cent, and that of Indianapolis firms 7 per cent. De troit sales fell off 14 per cent, which trend, however, is customary for that city, following special sales each September. The gain of 9 per cent for the district over last October was the largest in the yearly comparison in three months and reflected particularly favorable margins in Detroit, Indianapolis, and smaller cities. Stocks again rose more than seasonally at the end of October over a month previous (by 8 per cent) and were 2 per cent heavier than a year ago, but the rate of turnover exceeded that in the month last year. Sales of furniture and house furnishings by dealers and department stores totaled 6 per cent smaller in October than in the preceding month. Dealers, however, reported an 18 per cent gain in this comparison. Total sales were 28 per cent above those of a year ago, and dealer sales 34)4 per cent heavier. Although stocks rose 4 per cent oyer the end of September, they were only fractionally higher than on October 31 last year. With practically all reporting groups recording gains, aggregate October sales of 12 chains operating 2,742 stores in the month exceeded those of September by 14 per cent. In the comparison with last October, five-andten-cent store, drug, and grocery chains showed increases, while cigar, men’s clothing, and musical instrument chains had smaller sales, the total being 4 per cent above a year ago. Although the retail shoe trade recorded a much larger than seasonal recession in October—sales of reporting dealers and department stores dropping 22 per cent in MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbeis express a comparison of unit or dollar volume for the months indicated using the monthly average for 1923-1924-192S as a hasp basis of r'tu™ " *^“si^oitt No. of Firms 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)............................. Oct. 1935 Sept. 1935 Aug. 1935 93 86 47 47 45 July 1935 June 1935 84 82 66 39 39 37 56 38 37 36 53 . 10 258 197 . 12 62 Meat Packing—(U. S.)— Sales (in dollars)....................................... . 12 . 21 . 21 Flour— Production (in bbls.)............................... . 19 Output of Butter by Creameries— Production.................................................. . 59 May 1935 Oct. 1934 Sept. 1934 Aug. 1934 July 1934 June 1934 83 86 79 77 75 68 69 68 33 32 38 55 27 25 39 57 34 31 43 65 27 26 26 38 29 31 24 34 42 46 27 40 40 44 25 36 41 44 32 48 44 47 41 62 132 100 117 120 192 140 85 64 84 102 68 61 64 61 56 74 44 43 39 50 46 41 43 41 40 39 38 43 28 20 25 30 34 122 98 94 85 87 100 117 106 102 82 94 96 96 122 112 107 132 153 173 143 125 127 133 120 152 140 150 132 152 136 143 138 81 86 82 86 75 76 77 71 77 71 70 76 70 76 74 77 65 77 76 59 68 78 57 69 67 54 59 83 62 63 76 71 68 81 92 101 95 85 86 78 73 110 95 80 72 81 79 63 74 77 69 70 68 85 55 58 64 59 53 56 78 76 78 79 75 72 76 77 73 92 88 76 77 78 77 79 85 89 75 79 72 75 98 96 76 68 79 77 66 69 70 63 62 66 82 51 50 51 52 45 50 70 71 76 71 68 64 71 72 74 93 81 74 76 78 77 Wholesale Trade— Net Sales (in dollars): . 28 Hardware................................................ . 11 Drugs....................................................... . 12 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................... . 27 Detroit..................................................... . 5 Indianapolis...................................... . 4 Milwaukee.............................................. . 5 Other Cities........................................... . 40 Seventh District—Unadjusted........ . 81 Adjusted............. . 81 Automobile Production—(U. S.) — Passenger Cars.......................................... 76 May 1934 73 160 20 86 62 153 94 162 101 172 105 152 29 127 43 119 63 136 Building Construction— Contracts Awarded (in dollars): Residential............................................. Total........................................................ 111 120 94 150 22 53 21 43 17 42 20 38 26 34 18 33 8 34 8 29 7 23 28 Iron and Steel— Pig Iron Production:* Illinois and Indiana............................. United States........................................ Steel Ingot Production—(U. S.)* ... 30 13 32 71 65 87 68 60 85 65 58 81 53 50 66 59 53 67 67 57 73 33 31 41 34 31 38 42 35 38 45 40 45 66 66 88 68 67 95 76 •Average daily production. Page 7 PER CENT PER CENT 140 INDUSTRIAL PRODUCTION NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) production increased more than seasonally in October and there INDUSTRIAL was also a considerable advance in factory employment and payrolls. There was a continuous inflow of gold from abroad and an increase in bank deposits. Industrial Production and Employment Index number of industrial production, adjusted for sea sonal variation. (1923-1925 average = 100.) FACTORY EMPLOYMENT 1929 1930 1931 1932 1933 1934 1935 Index of factory employment, adjusted for seasonal vari ation. (1923-1925 average = 100.) Volume of output at factories and mines, as measured by the Board’s seasonally adjusted index of industrial production, increased from 89 per cent of the 1923-1925 average in September to 94 per cent in October, reflecting larger output in a wide range of industries. Automobile production, which had been at a low level in September when preparations were being made for the manufacture of new models, increased rapidly during October and the early part of November. At steel mills, activity increased slightly in this period, contrary to the usual seasonal tendency, and in the third week of November was at about 54 per cent of capacity. Lumber production showed little change. Among the industries producing nondurable manu factures, the principal changes in output were increases of considerably more than the usual seasonal amount at cotton mills, woolen mills, and meat-packing establish ments. At mines, output of bituminous coal was in larger volume than in other recent months and output of crude petroleum continued to increase. Factory employment, which ordinarily shows little change at this season, in creased considerably between the middle of September and the middle of October, reflecting substantial increases in the industries producing durable manufactures. The most marked expansion was in the automobile industry and there were smaller increases at railroad repair shops and in the iron and steel, machinery, and nonferrous metals industries. Employment at canning factories showed a considerable decline, largely of a seasonal character. Total value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed a considerable increase in October followed by a slight decline in the first half of November. In this six-week period total contracts were substan tially larger than a year ago, reflecting marked increases both in residential building and in other types of construction, but the volume is still at a relatively low level. MILLIONS OF DOLLARS MILLIONS OF DOLLARS ------------------- 600 CONSTRUCTION CONTRACTS AWARDED Total ■'•VN All Othci Residential Distribution Railroad freight-car loadings increased by a considerable amount from Sep tember to October, reflecting principally larger shipments of coal and miscellaneous freight. In the early part of November carloadings were at a lower level than in October, chiefly as a consequence of seasonal developments. Department store sales which usually increase at this season, showed little change from September to October on a daily average basis, and the Board’s seasonally adjusted index declined from 81 per cent of the 1923-1925 average to 77 per cent. Commodity Prices Ttr- f •" Three-month moving averages of F. W. Dodge data for 37 Eastern States, adjusted for seasonal variation. Latest figure based on data for September and October and esti mate for November 1935. WHOLESALE PRICES The general level of wholesale commodity prices, as measured by the index of the Bureau of Labor Statistics, was slightly lower in October and the early part of November than in the latter part of September, reflecting reductions in the prices of farm products and foods, offset in part in the index by an advance in prices of other commodities, particularly hides and leather products and textiles. Prices of hogs and pork showed a decrease, as is usual at this season, while cotton advanced. Bank Credit Excess reserves of member banks increased further by $190,000,000 during the five-week period ended November 20, reflecting a continued inflow of gold from abroad. At the end of the period excess reserves were at a new high level of over Indexes of the United States Bureau of Labor Statistics. (1926 = 100). By months 1929 to 1931; by weeks 1932 to date. Page $3,000,000,000. Total loans and investments of reporting banks in 101 leading cities increased by $190,000,000 during the five weeks ended November 20, reflecting principally an increase in holdings of United States Government securities. Adjusted demand de posits of these banks showed an increase of $550,000,000 for the period. The call money rate on New York Stock Exchange loans was increased from y. 0f i per cent to Ya of 1 per cent in the last week of October. At the same time the rate on time loans was increased from ^ of 1 per cent to 1 per cent, but few loans have been made. Other money rates have remained at former low levels.
@FedFRASER