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v Business Conditions Seventh FEDERAL Volume 19, No. 10 Reserve DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO September 26, 1936 DISTRICT SUMMARY tribution of dairy products in the district remained HE current level of industrial production and below normal and continued to show greater than of distribution in the Seventh Federal Reserve district continues well above the corresponding pe seasonal declines. The August movement of grain was below average, and price levels were above riod in 1935, despite some recent recession apparent those for July. Since the breaking of the drought, in certain phases and the continued effect of drought autumn crops have improved and pastures are in food-producing industries. noticeably better. From a survey made by this bank, The steel industry has shown no decline from the it is estimated that the 1936 pack of peas, corn, high level of activity which has been maintained beans, and most fruits in the district will be sharply throughout the summer months. The aggregate of less than in 1935 and the output of many other building construction gained further in August, items will be smaller. owing to a sharp expansion in the volume of resi dential building which was the heaviest since May Counter-seasonal declines took place during Au 1930, while there was a rising demand for building gust in most reporting wholesale trade groups, fol materials in the month. The production of auto lowing the improvement shown in July. Retail trade mobiles was considerably curtailed in August, as expanded, in accordance with seasonal trend. In manufacturers prepared for 1937 models. Shipments the majority of both wholesale and retail trade lines, of steel castings increased, but those of malleable gains over 1935 were smaller than in recent months. castings declined; output from furniture factories A continued rising trend is apparent in commer showed less than the usual gain over July. Indus cial loans of reporting member banks in the Sev trial employment decreased, continuing the trend of enth district, which gained 12 million dollars between a month earlier. August 19 and September 16 and were 182 millions Although the production of packing-house com heavier than on the corresponding date last year. modities totaled less in August than in July, it was Loans on securities also increased slightly in this much heavier than last year and slightly above period and holdings of U. S. Government securities average for the period; sales likewise were larger expanded 33 millions. than a year ago. However, the production and dis T Credit and Finance f Although in the period August 19 to September 16 there was a 22 million dollar net inflow of funds to this district from commercial and financial transactions with other districts and an increase of 7 millions in reserve credit (“float”) outstanding, they combined to augment member bank reserve balances by no more than 3 million dollars, for the demand for currency increased 4 millions and an excess of Treasury re ceipts over disbursements absorbed 22 millions. Dur ing the first three weeks of the period, with Treasury disbursements exceeding receipts and a net inflow of * funds to this district from other districts, reserve bal ances rose 68 million dollars, while currency in cir culation for month-end and holiday requirements in creased 9 millions. In the fourth week, Treasury deposits at this bank were enlarged by tax collections and payments for bonds issued September 15, and, FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) September Total Bills and Securities.................................. Bills Discounted.................................................. Bills Bought.......................................................... U. S. Government Securities............................ Total Reserves..................................................... Member Bank Reserve Deposits..................... All Other Deposits.............................................. Federal Reserve Notes in Circulation............ Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined................................................................... •Number of Points. 16, 1936 *291.3 0.0 0.4 289.1 1,891.7 970.0 60.9 916.5 86.5% Change From August September 19, 1936 $ —0.0 +0.0 +0.0 0 +16.2 +3.1 +21.6 —0.3 18, 1935 * —67.0 +0.0 —0.2 —66.6 +429.6 +234.4 +29.0 +107.9 —0.3* +0.8" 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) August 1930 August 1935 Total country and city check clearings: Pieces...................................................... 9,731,237 9,706,918 Amount................................................... $1,934,609,503 $1,620,688,786 Daily average clearings: Total items cleared— Pieces.................................................. 374,278 359,515 Amount............................................... $74,408,058 $60,025,511 Items drawn on Chicago— Pieces................................................... 64,575* 86,763 Amount............................................... $38,925,000 $31,081,000 Items drawn on Detroit— Pieces................................................... 17,469 16,626 Amount............................................... $8,577,032 $6,768,079 •Reduction in August 1936 is due to the packaging of Chicago early clearings. together with a net outflow of funds to other districts, reduced reserve balances of member banks by 65 mil lions despite a return from circulation of 5 millions in currency. The average rate earned on commercial loans by reporting down-town Chicago banks was 2.46 per cent for August, as against 2.64 per cent for July, 2.70 per cent for June, and 3.06 per cent for August 1935. However, there was no change in the range of com mercial loan rates which continued at low levels. The volume of bills accepted during August by banks in this district exceeded July by less than the normal amount, but was 20 per cent greater than in August 1935. In the first half of September a sub stantial amount of grain bills and more coffee accept ances brought the total well above the same period last year, although it was considerably less than for the first fifteen days of August. Banks in the Seventh district reported their acceptances outstanding on Au gust 31 as 11 per cent above a year ago, which increase compares with a decline of 4 per cent for the country as a whole. However, outstandings of this district were 55 per cent below the 1926-35 average for the end of August. Transactions by bill dealers in this district were light as compared with the preceding month and a year ago. Nominal rates were % to per cent. A more than seasonal decline in sales for August and the first half of Seotember, on a correspondingly reduced supply of paper, was reported by commercial paper dealers in the Middle West. Rates remain un changed, the bulk of sales being at % per cent. Bond dealers in this district report for August and early September a market seasonally dull in both new offerings and trading activity, with low yields and high price levels reflecting continued demand for the better CONDITION OF LICENSED REPORTING MEMBER BANES SEVENTH DISTRICT (Amounts in millions o( dollars) September Change From August September grade bonds. Reversing the relationship established in each prior month this year, August long-term offerings «. for new capital considerably exceeded refundings, owing principally to one large issue of corporate de bentures. Listed stocks moved generally higher in price, the Chicago Journal of Commerce average of twenty leading stocks traded on the Chicago Stock Ex change rising from $55.68 on August 17 to a high for the year of $57.55 on September 11, then receding to $56.53 by September 17 but recovering by September 21 to $57.22. Agricultural Products Precipitation in the closing week of the month brought average rainfall for the five States including the Seventh Federal Reserve district to 96 per cent of the August normal, and the consequent improvement in autumn crops was reflected in the upward revision of estimates for many items on September 1 over a month earlier. Corn, soybeans, and most other autumn crops of the Seventh district had improved further by Septem ber 21. Pastures are noticeably better than a month earlier and are sufficient to permit grazing over a rather wide territory, although some remain short or over grazed and many are weedy. Late alfalfa and soy beans are making good progress. The present condition of corn ranges from fair to poor, with an increased area that is fair and with some corn good. Despite the fact that improvement in late ears is expected to effect an increase over earlier estimates, prospects are for less than a normal portion of the crop reaching maturity before September 30; 55 to 70 per cent is * now safe from frost, but a considerable amount is still in the roasting-ear stage and some is so late that the most favorable weather will be needed for it to ripen. Many nubbins are reported. Furthermore, much of the corn which had been damaged beyond recovery has been cut for fodder and silage. The size of most stalks is so small that two to five times the normal acreage is being required for silo filling. Late potatoes are improving; the Wisconsin crop is in fair to good condition and that of Michigan is now fair. Prospects for Michigan peaches have been lowered somewhat because of the heavy storm on September 11. After having received a good start, plowing and seeding in many sections are now being delayed by wet weather. Canning Operations Returns received by this bank from 146 of the 400 canneries located in the five States including the Sev enth district indicate that the 1936 pack, as estimated by these companies on the basis of their operating rate to the present time and the prospective supply of raw % materials to the end of the canning season, decreased substantially from 1935 in the output of corn, peas, 16, 1936 $3,048 255 19. 1936 t +41 +6 18, 1935 t +395 +5 9 44 202 34 70 8 511 1,607 0 +5 0 —4 +1 —1 +12 +33 +8 +H —14 —3 +5 —3 +182 +181 147 416 —5 0 —13 +41 Chicago.................................................. Detroit.................................................... ................... Milwaukee.............................................. ................... Indianapolis........................................... ................... Demand deposits—adjusted............................... Time deposits........................................................ 2,240 821 +12 +5 +284 +84 Total four larger cities........................ ................... 37 smaller cities.................................... Borrowings.............................................................. 0 0 —2 Total 41 centers................................... ................... Total loans and investments............................... Total loans on securities.................................. To brokers and dealers: In New York.............................................. Outside New York.................................... To others (except banks)............................. Acceptances and commercial paper bought. Loans on real estate.......................................... Loans to banks................................................... Other loans.......................................................... U. S. Government direct obligations........... Obligations fully guaranteed by U. S. Government................ •,................................. Other securities.................................................. Page 2 a VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From August July August 1936 1936 —4.7 —6.4 —4.6 —13.0 1935 +9.4 +'21.5 +18.0 $4,110 —5.4 —6.6 +12.7 +17.4 $4,835 -5.6 +13.4 828 267 175 +22.8 beans, and most fruits. Moreover, somewhat smaller ^ losses are recorded in a majority of the other items on which data were collected. These trends in the main are confirmed by recent crop estimates, except that the decline in corn pack is much larger than had been anticipated and that in tomatoes probably reflects to a degree a strong consumption demand for the raw prod uct. Moreover, with a much greater than normal per centage of tomatoes still on the vines, there is a pos sibility that, if autumn frosts come much later than usual, the supply will exceed present estimates. Data from pickle companies are too meager to establish a ► definite trend, although prospects for cucumbers have been greatly improved by recent rains; some processors believe drought damage has been offset by the increased acreage this year, while others anticipate a reduction in total output as compared with 1935. Canning costs have advanced sharply in 1936 over a year ago, owing partly to the smaller volume of the pack and partly to the necessity in some cases of paying a higher than contract price to growers in order to prevent a diver sion of supply to the fresh market. Notwithstanding, a number of canneries in their sales to customers are adhering to the terms of the original contracts entered into early in the season and are not benefiting from the advances at retail and wholesale. % REPORTED PACE OF VEGETABLES AND FRUITS OF REPRESENTA TIVE CANNERIES IN FIVE STATES INCLUDING SEVENTH FEDERAL RESERVE DISTRICT (Converted to Cases—24 No. 2s to Case) Estimated Pack Beans, green, wax, and string............ Beans, lima, kidney, and all other*. Beets........................................................ Corn......................................................... Peas......................................................... Kraut....................................................... Tomatoes................................................ Tomato pulp and paste........................ Tomato juice.......................................... Tomato catsup...................................... All other canned vegetables**........... Raspberries............................................ Strawberries.......................................... Cherries.................................................. Peaches................................................... All other canned fruits and berries.. 1936 315,359 40,027 404,678 3,378,510 2,361,540 961,325 2,041,733 432,979 693,772 117,050 1,044,945 42,925 656 1,039,178 23,500 43,377 Actual Pack 1935 521,105 45,685 485,487 10,085,862 3,967,032 1,295,709 2,744,978 482,065 662,819 166,822 752,711 85,033 4,850 1,516,512 25,585 135,097 •Excluding beans, with pork, with sauce, and baked. ••Including beans, with pork, with sauce, and baked. Grain Marketing The combined July-August receipts of wheat at interior primary markets in the United States were only 14 per cent smaller than the 1926-35 average for the period, but reshipments declined 30 per cent in this comparison. Imports exceeded exports. Coinci dent with a decline in world crop prospects and an advance in European prices, quotations of No. 2 hard winter wheat at Chicago averaged 8 per cent higher in August than during July. However, a decline took ^ place at the close of the month because of weakness at Liverpool and hedging pressure at Winnipeg. An unfavorable outlook for the Argentine crop was ac companied by renewed strength in foreign markets, and quotations at Chicago had recovered by September 20 to a point only a few cents under the August 19 high. Visible supplies in the United States were 42 per cent lighter on September 12 than the ten-year average for the date. Corn at principal centers of accumulation in the United States moved in smaller than usual volume for 1 August, and prices advanced sharply over July. After weakness resulting from Argentine offerings in the Middle West and an improved outlook for autumn feed, quotations strengthened at Chicago to September 20. Visible supplies remained exceptionally light. Pri mary market receipts of oats in the 1936-37 season to August 31 were about average in volume, but reship ments fell considerably below normal. Prices followed those of corn, but visible supplies were 78per cent greater than the 1926-35 seasonal average. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In Thousands of Bushels) Wheat * Receipts......................................... Shipments..................................... Corn: Receipts......................................... Shipments..................................... Oats: Receipts......................................... Shipments..................................... August July August August 1936 1936 1935 1926-35 Av. 28,065 18,151 83,422 27,725 47,963 14,798 61,688 34,748 15,737 7,768 16,779 11,476 6,385 3,353 17,286 10,843 13,356 4,493 17,502* 4,665 30,297 5,184 22,891 8,537 •Corrected. Movement of Livestock Hog marketings in the United States aggregated less during August than in any previous month since November 1935 but cattle, calf, and lamb receipts at public stockyards in the United States exceeded those of any month since last October. In contrast to 1934, receipts in August this year were augmented only slightly by Government buying. Cattle and calf mar ketings remained above a year ago and the 1926-35 average; those of lambs continued smaller in these comparisons. Hog receipts were above last August but below this ten-year average. Movement to inspected slaughter followed the general trend of market receipts, except that the gain over July in cattle supply was greater than seasonal, and the number of lambs had been larger in January this year, though showing only CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of September 1 condition (In thousands of bushels unless otherwise specified) Seventh District Final Forecast Barley............................ Soybeans....................... Winter Wheat............... Spring Wheat................ Rye................................ Buckwheat................... Potatoes (white)......... Potatoes (sweet)......... Sugar Beets1................. Beans (dry edible)2— Cabbage for Market1 . Tomatoes for Market.. Canning Vegetables: Cabbage for Kraut1. Green Peas1............... Green Lima Beans1. Snap Beans1............... Sweet Corn1.............. Tomatoes1................. Apples (total crop). ... Grapes1.......................... Cranberries3.................. All Tame Hay1............ Wild Hay1..................... Broom Corn1................ Pecans4........................... Cotton6.......................... 1936 512,451 366,285 33.283(a) 23.444(b) 62,938 2,179 6.705(a) 568(a) 246(d) 43,976 995(b) 800 (f; 2.598(e) 3.425(a) 105(g) 1.345(h) Forecast United States Final Average 1935 1936 1935 1928-32 1,458,295 880,218 2,291,629 2,553,424 453,391 776,661 1,196,668 1,215,102 47.713(a) 144,847 282,226 281,237 34.533(b) 26.140(c) 37.691(c) 10.204(c) 519,097 464,203 622,252 57,807 111,144 159,241 241,312 2,134 38,212 12.911(a) 27,095 58,928 1,226(a) 5,793 8,220 8,277 336(d) 15,996 6,310 14,123 311,951 387,678 372,115 57,484 67,594 66,368 1.280(b) 83,198 686(f) 9,056 7,908 8,118 4.828(e) 11,858 10,771 13,799 2.559(a) 17,381 13,247 14,546 785 797 845 177(g) 16,891 19,637 1.301(h) 19,176 44(g) 31(g) 91 175 104(g) 68(g) 2(f) 20 2(f) 23(f) 73 13 (i) 581 438(a) 221(a) 381(h) 1,772 430(h) 9.821(a) 23.303(a) 105,856 1.348(h) 6.232(h) 43,873 23,914 967(h) 1.611(h) 1,875 51(a) 73(a) 531 81(i) 55(j) 1,142,887 15,835 16,375 17,450 02,997 13,722 542(a) 7,197 380(a) 39 17(k) 13(k) 265(k) 33,330 40(k) 11,121 135 268 16 82 860 1,689 167,283 52,808 22,035 2,455 520 1,296,810 76,146 11,338 63 95,340 10,638 166 182 13* 73 628 1,293 161,333 56,451 23,146 2,200 581 1,427,174 69,533 10,719 47 59,983 14,667 *1929-32 average. *In thousands of tons. 2In thousands of 100-lb. bags. 5In thousands of barrels. 4In thousands of pounds. 5In thousands of bales, (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) Wisconsin, Michi gan, Indiana, and Illinois, (h) Michigan, Illinois, Indiana, and Iowa, (i) Wis consin, Michigan, and Indiana, (j) Wisconsin, (k) Illinois. Page 3 a small decline from the average. Reshipments to feed lots were heavier than at any time since last autumn; the number of calves was above normal but that of cattle and lambs decreased in this comparison. Meat Packing Despite an earlier than customary liquidation of fat cattle coincident with rising prices of feed, a somewhat more than seasonal decrease in the supply of hogs and a less than normal gain in marketings of other live stock resulted in the production of packing-house com modities at inspected slaughtering establishments de clining slightly more than is usual in August to a level 3 per cent under July. It was, however, one per cent heavier than the 1926-35 average for the month and 26Yi per cent greater than a year ago. The tonnage sold exceeded that of last August by 17 per cent but aggregated \y2 per cent lighter than in July and 6 per cent under the ten-year average. An advance in the general price level of packing-house commodities was recorded over a month earlier, although quotations of lamb, most veal, medium to common beef, and of a few pork cuts declined. Therefore, dollar sales billed to domestic and foreign customers totaled 3 per cent greater than in July, 12 per cent larger than a year ago, and 4% per cent above the 1926-35 average for August. Inventories of these products in the United States rose counter-seasonally on September 1 over a month earlier and were 193,014,000 pounds larger than on the same date last year. Moreover, the decrease of 16j4 per cent in this item as compared with the 1931 35 average was smaller than had been recorded on any previous reporting date in 1936. Payrolls at the close of August registered a decline from July of \y2 per cent in employes, one per cent in hours worked, and of 3 per cent in total wage payments. Although the number of employes was only \y2 per cent greater than a year ago, hours worked increased 10 per cent and wage payments 8y per cent in the comparison. Shipments for export declined rather sharply in August from July, principally owing to a reduction in forwardings to the United Kingdom because prices of lard and hams in that country were 3 to 4 cents under Chicago parity and below replacement costs. Influenced by slow demand and limited offerings, sales of these commodities from the United States were relatively light in British markets during the entire month. Moreover, demand from the European con tinent remained negligible. Porto Rican and Cuban trade in United States packing-house products con tinued about the same as in July; sales of lard to Cuba were largely confined to deliveries subsequent to Sep tember 3. Despite some accumulation of hams in the United Kingdom, inventories of packing-house com modities in foreign markets—inclusive of stocks in v transit—showed little change on September 1 from the beginning of August. Imports into the United States increased further during the month. Dairy Products Seventh district production of dairy products con tinued to reflect the poor pasture conditions which obtained until recent rains. The manufacture of cream ery butter in the Seventh Federal Reserve district de clined more than seasonally in August to a level 13 per cent under July, 25 per cent below a year earlier, * and 24y per cent less than the 1926-35 average for the month. Coincident with an advance of 4y2 per cent in prices, the tonnage sold declined 12y2 per cent from July and was not only smaller than in any previous month this year since March but also 25y2 per cent under last August and 23 per cent below the ten-year average. Production of the commodity in the United States showed about a normal recession in August from a month earlier and a decline of only 9y2 per cent from the 1926-35 August average. Though recording somewhat more than a seasonal accumulation over Au gust 1, inventories of creamery butter in the United States aggregated 16 per cent smaller on September 1 than the 1931-35 average for the date. Quotations held rather steady through the first three weeks of Sep tember. The manufacture of American cheese in Wisconsin declined by 18y2 per cent in August from a month earlier, 19 per cent from a year ago, and 6 per cent from the 1926-35 average for the period, while dis tribution of the commodity from primary centers of / that State decreased 24y2 per cent, 13 per cent, and liy per cent, respectively, in these comparisons. Fur thermore, sales showed a greater than seasonal de ficiency from current production. Total inventories of cheese in the United States increased more than nor mally on September 1 over the beginning of August and were 6,050,000 pounds above the 1931-35 average for the date. Subsequent to a 6 per cent rise in August EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of August 15, 1936 Change From July 15, 1936 Wage Earn Earn ing ings Wage Earn Firms ers (000 ers Report Earn ings Omitted) No. No. $ % % 1,498 332 255 423 2,508 395,318 290,735 23,141 43,223 758,417 9,894 8,561 517 868 19,840 +1.1 —11.7 —0.3 +4.1 —4.2 +3.9 —14.7 +2.0 +13.9 —4.8 328 726 229 141 31 633 2,088 61,836 106,768 33,222 28,839 11,512 70,593 312,770 1,129 2,451 870 568 275 1,824 7,117 +4.8 +0.3 +2.5 +2.9 —2.2 +1.6 +1.8 +14.8 +0.1 +2.0 +8.3 +2.3 +6.0 +4.7 Durable Goods: Metals and Products1........... Vehicles................................... Stone, Clay, and Glass......... Total........................................ Non-Durable Goods: Yards in Seventh District, August 1936................................... ........... Federally Inspected Slaughter, United States: August 1936 ................................. ............ July 1930........................................ ............ August 1935................................... ........... Cattle Hogs Lambs and Sheep Calves 267 384 231 77 1,015 928 875 2,254 2,692 1,668 1,395 1,352 1,665 541 523 472 Total Mfg., 10 Groups.............. 4,596 1,071,187 26,957 —2.5 —2.4 2,431 164 28 519 105,468 90,103 6,786 16,908 2,180 2,789 157 397 -0.3 -0.7 —0.3 +21.4 Aug. Merchandising2.......................... Public Utilities.......................... Coal Mining................................ Construction............................... Total Non-Mfg., 4 Groups....... 3,142 219,265 5,523 +0.8 +0.5 Total, 14 Groups........................ 7,738 1,290,452 32,480 —2.0 —2.0 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Sept. 19 Aua. Native Beef Steers (average)....................... Fat Cows and Heifers......................... ......... Calves..................................................... .......... Hogs (bulk of sales)............................. .......... Lambs.................................................... ......... Page 4 Textiles and Products........... Food and Products................ Chemical Products............... Leather Products................... Rubber Products................... Paper and Printing................ Total........................................ 1936 $ 9.30 7.15 9.00 9.85 9.10 1936 $ 8.50 6.70 7.50 10.10 9.50 Month July 1936 $ 8.15 6.45 7.40 9.70 9.45 op 1935 $10.65 7.85 9.00 10.85 8.90 lOther than Vehicles. 2Illinois, Indiana, and Wisconsin. +1.2 +7.1 +3.9 +6.4 over July, prices of the product eased in the first three weeks of September. Industrial Employment Conditions Following a slightly less than seasonal curtailment in July, employment and payrolls in Seventh district industries failed to show the recovery usual in August, reports for the month indicating further declines of 2 per cent in each of these items. However, the de creases were effected almost entirely by reductions within the automobile industry, reflected in the heavy percentage declines for employment and payrolls in the vehicles group as a whole. Increases in the large metals and metal products group which recorded a re covery from the temporary set-back of the preceding month, as well as an unusually sharp expansion in the wood products industries, served to moderate somewhat the losses contributed by the vehicles group, but dura ble goods industries as a whole experienced decreases of more than 4 per cent each in employment and pay rolls. With the exception of rubber goods where there was a loss in employment though heavier payrolls, every reporting industrial group covering consumers’ or non-durable goods increased both employment and payrolls during August. In food products the gains were very slight but in all other groups they were of substantial proportions, the classification as a whole raising its employment volume close to 2 per cent and its wage payments almost 5 per cent. Even these in creases were insufficient to counteract entirely the de clines in the durable goods industries, so that manu facturing as a whole recorded losses of 2y2 per cent each in workers and wage payments. Further gains, however, were contributed by the non-manufacturing groups where aggregate employment increased nearly one per cent and payrolls one-half per cent. Substan tial increases in the coal mining and construction in dustries were partially offset by the large merchandising group which showed a slight reduction in both workers and wage payments, as well as by the public utilities which registered a minor loss in the latter item. Manufacturing Automobile Production and Distribution Most manufacturers of automobiles completed their production of 1936 models in August and many closed their plants preparatory to the production of 1937 models, with the result that aggregate output of auto mobiles in the month recorded a substantial reduction from that of July. Passenger cars produced in August numbered 209,754, or 44 per cent less than in the preceding month but 16 per cent in excess of output in August 1935, while the number of trucks produced totaled 61,537, representing a recession from July of 10 per cent and an increase over a year ago of 9 per cent. In line with the curtailed output from factories, wholesale distribution of automobiles in the Middle West dropped sharply in August from July and was moderately smaller than in the same month last year. Sales to users, though continuing to decline, numbered over 40 per cent greater than those made last August, and used-car sales remained well above a year ago. A noticeable decrease took place in stocks of new cars between July 31 and the end of August, and a much smaller one was shown in those of used cars; the margin of excess over a year ago in new-car stocks was slightly narrowed during the month, while that in used cars widened somewhat. The ratio of deferred payment sales to total retail sales averaged 50 per cent in August, as compared with 54 per cent in July and with 47 per cent in the month last year, according to data for identical dealers. Iron and Steel Products Operations of steel mills in the Chicago district con tinue to reflect a satisfactory demand for their products, as through August and into September the rate of output was maintained at 73 per cent of capacity. Prominent in the demand have been the railroads and the construction industry, it being significant that buy ing from both of these sources has expanded consider ably this year. Requirements from the automobile industry were lighter in August, but tonnage for 1937 models is now being placed. August pig iron produc tion in the Illinois and Indiana district showed some recession from the high level of the preceding three months, but it continued as in July to exceed the cor responding month of any previous year since 1929. A strong iron and steel scrap market prevailed through August and further advances took place in the first part of September. Seventh district foundries recorded a somewhat mixed trend in August operating activity, a number of them reporting increases over July, while others held to the earlier level and some showed curtailments. The aggregate result for steel casting foundries was an 8 per cent rise in production accompanied by a 7 per cent increase in tonnage shipped but a drop of 34 per cent in orders booked. Malleable castings followed an opposite trend to steel castings in production and ship ments, both of these items decreasing approximately 10 per cent, while the volume of new orders booked LUMBER AND BUILDING MATERIALS TRADE MIDWEST DISTRIBUTION OP AUTOMOBILES August 1936: Per Cent Change From Class Included July 1936 New Cars: Wholesale— Number Sold...................... Value..................................... Retail— Number Sold....................... Value.................................... On Hand August 31— Number............................... Value.................................... Used Cara: Number Sold..................... Salable on Hand— Number................................ Value.................................... op Trade Companies August 1935 —41.2 —44.6 —15.2 —18.5 19 19 —17.8 —14.3 +42.9 +59.2 34 34 —22.7 —28.6 +21.8 +21.8 34 34 —12.2 +21.0 34 —6.7 —6.2 +15.7 +25.3 34 34 Wholesale Lumber: Sales in Dollars...................... Sales in Board Feet............... Accounts Outstanding!......... Retail Building Materials: Total Sales in Dollars.......... Lumber Sales in Dollars — Lumber Sales in Board Feet Accounts Outstanding!......... August 1936: Per Cent Change From July 1936 August 1935 +3.3 —2.5 of Yards +23.6 +15.2 +19.7 8 +i.i +7.6 +1.8 +5.6 +3.1 +27.0 +27.6 +21.3 +15.5 140 35 69 137 to Wholesale Trade........................ Retail Trade.............................. Number 6 8 Ratio of Accounts Outstanding! Total Dollar Sales During Month August 1936 July 1936 152.0 212.1 155.3 222.5 August 1935 156.9 233.4 lEnd of Month. Page 5 increased by slightly less than one per cent. All items, both for steel and malleable castings, registered con siderable increases over a year ago, although the mar gins were narrower than previously this year. The manufacture and shipments of stoves and fur naces reflected the usual resumption of seasonal activ ity in this industry during August, gains recorded in the two items more than offsetting the losses of the two preceding months. The volume of orders accepted, however, was only slightly higher in August than in July. Comparisons with year-ago figures showed in creases ranging from 23 per cent in molding-room operations to 28 per cent in orders and 38 per cent in shipments. Inventories accumulated 3 per cent during the month and exceeded the volume of last August by 37 per cent. Furniture Orders booked during August by reporting Seventh district furniture manufacturers totaled half again as large as in the month last year, the gain in this com parison being the heaviest so far in 1936. They were, moreover, one-third above the 1927-35 average for August, and the 8 per cent decline recorded from the preceding month compared with one of 18 per cent in this average. The trend in shipments was contrary to that in new orders, as the 6 per cent expansion in the item over July was decidedly less than seasonal, the 22 per cent increase over a year ago was with one exception the smallest this year, and the volume totaled 3 per cent below the nine-year average for August. Inasmuch as shipments were considerably under the volume of new orders, unfilled orders on hand con tinued to rise, aggregating 24 per cent heavier than a month earlier and amounting to 112 per cent of orders booked; as compared with the close of August last year, they were larger by 70 per cent. Operations rose about 5 points during August from 67 to 72 per cent of capacity and were 11 points above last August. Building Materials, Construction Work A moderately rising trend in demand for practically all building materials was recorded for August. Sales of lumber, brick, and cement showed gains which in some instances were of rather small proportions but which were well distributed throughout the Seventh district. Lumber sales, measured in dollar value, in creased more sharply at wholesale than at retail, but the rise was somewhat less than is customary at this season. Retail trade, though stimulated by an increas ing demand for coal, also experienced less than the average expansion in August over July. Drought con ditions affected sales of brick and tile unfavorably in some sections; nevertheless, the trend in these mate rials also was slightly upward. Cement shipments with in the district gained moderately over the preceding month and remained at a level approximately 50 per cent higher than in the same month of 1935. Move- % ment of both brick and cement, however, continues greatly below what is considered normal for these in dustries. Prices of building materials as a whole reg istered little change during August, remaining at a level about one per cent above that of a year ago. Building Construction Not since May 1930 has the volume of residential construction started in the Seventh district been as heavy as in August this year. Contracts awarded for such work expanded sharply over a month previous + and were nearly three and one-half times those in August last year. The gain over July in residential contracts which comprised about one-third of all awards, was responsible for an increase in total con tracts, as other types of building construction declined in the period. In the first eight months of 1936, con tracts awarded exceeded by over 2 million dollars those for the entire year 1935. BUILDING contracts awarded* SEVENTH FEDERAL RESERVE DISTRICT August 1936...................................................................... Change from July 1936............................................... Change from August 1935.......................................... First eight months of 1936............................................ Change from same period 1935................................ Net Sales Groceries... Hardware.. Drugs......... Electrical Supplies.. Page 8 Stocks Accounts Outstanding Col LECTIONS Following the improvement noted in July, less favor able trends prevailed during August in reporting groups of wholesale trade in the Seventh district. Contraseasonal declines were shown of 3 per cent in drugs, 10 per cent in groceries, and 22 per cent in electrical supplies, while the decrease of 8 per cent in hardware sales compared with practically no change in 4 DEPARTMENT STORE TRADE IN AUGUST 1936 Per Cent Change August 1936 From August 1935 Ratio of August Collections to Accounts Outstanding End of July Stocks End of Month Net Sales Sales 1936 1935 Net Outstanding Per Cent Change First Eight Months 1936 From Same Period 1936 +0.6 +18.3 -4.0 +11.4 +33.6 —1.6 — 3.7 +18.0 —4.9 +8.5 +29.3 +5.1 82.6 170.0 167.0 Chicago..................... Detroit..................... Milwaukee................ Other Cities........... +13.7 +9.0 +11.4 +3.7 +3.2 +8.6 +16.4 +11.0 +12.7 +8.2 +12.4 +9.4 30.4 42.6 36.8 30.8 29.8 41.5 37.7 30.3 +17.7 +43.3 +7.0 +59.2 141.3 7th District.............. +9.9 +7.5 +10.7 35.1 34.5 / Merchandising Ratio of Accounts to Net Sales $17,179,900 +63.4% +236.9% $76,669,681 +123.9% For the second successive month, a decline took place in the total estimated cost of permits issued in this district, August data for 98 cities recording a 10}4 per cent decrease from July. Exceptions to the general trend were noted in Detroit and Des Moines, where gains of 26 and 6y2 per cent, respectively, were reported, and in the aggregates for smaller cities in Indiana and Wisconsin. The number of permits is sued increased 5 per cent over the preceding month. As compared with August last year, the estimated cost of permits in the 98 cities was 63 per cent larger in the current month and the number issued 31 per cent greater. Locality Commodity $ 52,847.200 +7.4% +81.8% $322,630,538 +86.7% Residential Contracts *Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN AUGUST 1936 Per Cent Change From Same Month Last Year Total Contracts Period the 1926-35 average for the period. Furthermore, the drug trade recorded a decline from the corresponding month last year—the first in this comparison since Feb ruary—and the gains over a year ago in hardware and electrical supplies were smaller than in several months. Data for the first eight months of 1936 show that electrical supply sales exceeded those of the same pe riod in 1935 by 34 per cent, the hardware trade was heavier by 23 per cent, drug sales by 4 per cent, and grocery sales by 2 per cent. Ratios of accounts out standing to net sales were generally higher for August than a month previous. Seventh district department store trade expanded 17y2 per cent in August over July, the gain being slightly greater than seasonal in extent. The increase of 10 per cent over August 1935 was noticeably smaller than in the yearly comparison for the three preceding months, but with one less trading day in the month this year, daily average sales showed a gain of 14 per cent. Aggregate sales of stores in smaller cities re corded the least improvement over a year ago—only 4 per cent—while Chicago stores had the largest increase M —14 per cent. A somewhat more than seasonal expan sion in stocks during August brought them to 7y2 per cent above the close of the same month in 1935, they having been but 3 per cent higher in a similar com parison for July. Although the rise of 19 per cent for August over July in sales of shoes by reporting dealers and de partment stores was considerably above average for the period, only a small increase—less than 3 per cent —was shown over the corresponding month a year ago, the majority of department stores reporting a decline in this latter comparison. In the eight months of 1936, the dollar volume sold exceeded that of the same pe riod in 1935 by 9 per cent. A 19 per cent expansion took place in stocks between July 31 and the close of August, and they totaled 12 per cent larger than on August 31 last year. A smaller than seasonal gain was recorded during August in the retail furniture trade. Aggregate sales of reporting dealers and department stores exceeded those of the preceding month by 20 per cent, whereas a 30 per cent gain is shown in the 1927-35 average for August, the current increase being smaller than in most of the years included in this average. As com pared with the corresponding month of 1935, the gain in sales volume continued to be substantial—20 per cent. Dealer sales made a less favorable showing in both the monthly and yearly comparisons than did those of department stores. Stocks on hand were 3 per cent larger on August 31 than a month previous and I2y2 per cent heavier than on the same date of 1935. 4 MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-1924-1925 as a base, unless other wise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars).......................................... ... 47 Casting Foundries— Shipments: Steel—In Dollars...................................... In Tons........................................... Malleable—In Dollars............................. In Tons.................................. Aug. 1936 July 1936 June 1936 May 1936 Apr. 1936 Mar. 1936 Aug. 1935 July 1935 June 1935 May 1935 Apr. 1935 Mar. 1935 94 91 91 85 85 81 84 82 83 86 82 77 .. . ... . .. ... 12 12 21 21 86 96 48 69 77 85 53 77 74 80 56 82 64 68 56 81 59 60 61 89 51 50 59 88 38 37 36 53 33 32 38 55 27 25 39 67 34 31 43 65 38 38 48 72 35 33 45 69 Stoves and Furnaces— Shipments (in dollars)................................ ... 8 183 154 170 176 156 150 133 100 117 127 115 106 FurnitureOrders (in dollars)....................................... ... Shipments (in dollars)................................ .. . 12 12 92 68 100 65 60 61 67 59 62 64 62 65 61 56 74 44 43 39 50 46 43 54 48 51 Output of Butter by Creameries— Production..................................................... ... Sales................................................................ .. . 59 61 99 97 114 111 145 133 140 120 89 99 87 88 131 130 153 134 173 141 144 130 99 94 83 87 Wholesale TradeNet Sales (in dollars): Groceries.................................................... ... Hardware................................................... ... Drugs.......................................................... ... 28 11 12 77 83 73 85 90 76 70 94 77 65 102 76 66 88 78 63 77 78 72 71 77 74 71 70 68 76 70 69 76 74 66 72 73 62 64 73 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago....................................................... Detroit........................................................ Indianapolis............................................... Milwaukee.................................................. Other Cities............................................... Seventh District—Unadjusted............. Adjusted.................. 27 5 4 5 41 82 82 75 81 83 77 71 76 95 63 72 73 68 59 65 91 87 93 93 87 79 87 89 86 100 97 90 86 90 88 84 102 94 93 81 89 84 79 89 96 83 77 82 90 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 75 96 88 85 75 81 76 69 92 89 77 70 76 83 72 163 127 182 128 205 132 199 142 227 117 206 62 149 94 153 100 165 104 147 132 175 123 177 Building Construction— Contracts Awarded (in dollars): Residential...................................................... Total................................................................. 59 77 36 72 43 58 40 61 35 54 25 56 17 42 20 38 26 34 18 33 16 36 9 32 Iron and SteelPig Iron Production:* Illinois and Indiana........................................ United States................................................. Steel Ingot Production—(U. S.)*................... 97 89 121 101 85 113 101 88 115 100 87 117 94 82 114 81 67 97 65 58 81 53 50 66 59 53 68 67 57 73 65 57 76 63 58 83 ... ... ... ... .. . ... ... Automobile Production—(U. S.)— Passenger Cars............................................. Trucks............................................................ *Average daily production. Page 7 CENT PER CENT NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION TNDUSTRIAL activity increased seasonally in August and there was a substantial increase in factory employment and payrolls.. Commodity prices, which had advanced for three months, showed little change after the middle of August. ifek. Production and Employment 1929 1930 1931 1932 1933 1934 1935 1936 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to August 1936. FACTORY EMPLOYMENT AND PAYROLLS Employment Payrolls Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average = 100. By months, January 1929 to August 1936. Indexes compiled by the United States Bureau of Labor Statistics. PER CENT PER CENT ----- 120 WHOLESALE PRICES The Board’s index of industrial production, which makes allowance for usual seasonal movements, remained unchanged in August at 107 per cent of the 1923-1925 average. Output of steel increased by more than the seasonal amount and the higher level was maintained in the first three weeks of Sep tember. Production of automobiles was sharply reduced as plants were closed ^ for inventory taking and for mechanical changes in connection with the intro duction of new models. Output of non-durable manufactures increased further in August, reflecting chiefly continued expansion in activity at textile plants and shoe factories. At bituminous coal mines, output increased less than is usual at this season and at anthracite mines production declined. Output of petroleum showed an increase. Factory employment rose further between the middle of July and the middle of August by an amount larger than is usual at this season. There were substantial increases in working forces at establishments producing textiles and wearing apparel and smaller increases in most other lines, partly offset in the total by a decline in employment in the automobile industry. Factory pay rolls increased. ^ Value of construction contracts, which had increased sharply in July, de clined somewhat in August, according to the figures of the F. W. Dodge Corporation. The value of non-residential projects was smaller than in July but larger than in other recent months. Residential building increased con siderably, reflecting a marked increase in contracts for apartments, several of which were publicly-financed projects. Awards for single-family houses, which have accounted for most of the increase in residential building during the past year and a half, showed little change in August. Agriculture Department of Agriculture crop estimates based on September 1 conditions were about the same as the estimates made a month earlier, except for a sharp decline in prospects for cotton. Prospective output of leading crops, with the exception of cotton and winter wheat, is considerably smaller than last year, but, in comparison with the drought year 1934, it is larger, except for corn and potatoes. * Distribution Freight-car loadings of most classes of commodities showed about the usual seasonal increase from July to August. Shipments of grain, however, declined sharply and the increase in total loadings was less than seasonal. Department store sales increased by less than the usual amount and the Board’s seasonally adjusted index was 86 per cent of the 1923-1925 average, as compared with 91 per cent in July and 87 per cent in June. m Commodity Prices 1929 1930 1931 1932 1933 1934 1935 1936 Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending September 19, 1936. MEMBER BANK CREDIT — Demand Deposi*s- — US-Govt Obligations Wednesday figures for reporting member banks in 101 leading cities. September 5, 1934, to September 16, 1936. Loans on real estate, loans to banks, and acceptances and commercial paper bought included in total loans and investments but not shown separately. Page 8 Wholesale commodity prices showed little change between the middle of August and the third week of September, following three months of advance. Prices of steel scrap and chemicals and drugs continued to advance, and there were also increases in the prices of hides and nonferrous metals. There was a seasonal decline in hog prices. Cotton, which advanced in price early this month at the time of the official crop report, declined after the middle of the month. Bank Credit Demand deposits of reporting member banks in leading cities increased somewhat further in the four weeks ending September 16, reflecting gold im ports, Treasury expenditures, and an increase in bank loans. Growth in loans was principally in so-called “other” loans, which include loans to customers for agricultural, commercial, and industrial purposes. These loans are now at the highest level since early in 1933. Loans to security dealers showed an increase, as is usual, prior to flotation of the new issue of Treasury bonds on September 15. A part of the new Treasury issue was purchased by reporting banks, principally by drawing upon their balances with the Reserve banks. Largely as a consequence of payments to the Treasury, excess reserves of member banks showed a decrease of $280,000,000 in the week ending Septem ber 16. This decline followed an increase of nearly $200,000,000 in the pre ceding three weeks, when the Treasury was reducing its deposits with the Reserve banks. Since early in August there has been a renewed inflow of gold and the country’s monetary gold stock has increased by about $100,000,000 in the past month. 4 |
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