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NOVEMBER 1952 T H E BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA 1953 CAPITAL EXPENDITURES IN THE PHILADELPHIA AREA The annual survey of plant and equipment outlays by Philadelphia area manufacturers reveals that the high spending level of recent years will be maintained. The most outstanding increase •'•UKEUjSv. f— - > "JF’-TT in capital expenditures is by the petroleum and coal products industries. It is expected that manufacturing employment will be even greater by next spring. FINANCING CAPITAL EXPENDITURES Corporations had less funds from retained profits to finance their capital expenditures in the first six months of 1952. Result: a record volume of new securities issued. CURRENT TRENDS Production, employment, and payrolls expanded in September. Durable goods industries accounted for most of the gains. Business loans continued to rise. Additional copies of this issue are available upon request to the Department of Research, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pa. THE BUSINESS REVIEW 1953 CAPITAL EXPENDITURES IN THE PHILADELPHIA AREA The Federal Reserve Bank of Philadelphia has just com pleted its annual survey of capital expenditures’ estimates by Philadelphia manufacturers. This year (September 1, 1951 through August 31, 1952) the study was extended to cover manufacturing in the Philadelphia metropolitan area—the eight-county area centering on Philadelphia— including Delaware, Chester, Bucks, and Montgomery counties in Pennsylvania and Gloucester, Camden, and Burlington counties in New Jersey. This, unfortunately, reduces to a minimum the comparability of the current estimates for 1952 and 1953 and those of earlier survey years. By covering the larger industrial area and includ ing a greater number of firms, the survey results prob ably are more representative and will have a wider use. Four hundred sixty-one firms participated in the survey, representing more than half of the total manufacturing employment in the eight-county area. These firms were used as a “sample” from which estimates of capital expen ditures and employment for the entire industrial comrnun- ESTIMATED CAPITAL EXPENDITURES AND EMPLOYMENT Manufacturing Industries in the Philadelphia Metropolitan area Expenditures (.$ thousands) Sept. 1951 through Aug. 1952 Sept. 1952 through Aug. 1953 Employment Sept. 1952 March 1953 All manufacturing ........ 274,659.8 286,901.5 602,800 613,800 Durable goods ................ 122,868.8 105,409.1 291,700 300,100 Nondurable goods .......... 151,791.0 181,492.4 311,100 313,700 Food and tobacco............ 15,271.2 18,667.5 59,100 58,300 Textiles ............................ 9,664.2 6,324.6 59,500 60,500 Apparel ............................ 5,602.3 1,428.5 61,500 62,100 Lumber and furniture... 2,071.8 3,650.5 9,300 10,500 Paper ................................ 15,795.2 7,499.6 21,100 21,400 Printing and publishing.. 8,737.0 8,543.4 34,300 34,200 Chemicals ........................ 44,092.3 38,523.3 36,600 37,800 Petroleum and coal products .............. 50,704.6 99,250.8 23,900 23,900 Rubber and leather.......... 1,924.2 1,254.7 15,100 15,500 Stone, clay, and glass.... 6,867.8 5,129.1 12,800 13,100 Primary metals .............. 19,111.0 17,744.0 32,500 32,700 Fabricated metals ...... 19,396.6 14,215.3 45,100 45,200 Machinery (excl. electrical) ........ 16,046.4 32,256.6 45,800 46,900 Electrical machinery .... 24,505.1 16,570.1 58,100 60,300 Transportation equipment 24,831.7 8,560.0 56,000 58,500 Miscellaneous .................. 10,038.4 7,283.5 32,100 32,900 ity were made. The published figures are estimates for all manufacturing firms in the Philadelphia area. The sur vey results are primarily indicative of regional rather than national trends. They do, however, supplement the national estimates made by the Department of Commerce and the McGraw-Hill Publishing Company. Discussions of the business outlook which have appeared in the press in recent weeks seem to lean toward the view that country-wide employment and income will remain high, at least until the latter part of 1953. Numerous ob servers doubt the ability of the economy to sustain the boom after that time. A few dare to predict a sizable recession for 1954. In most cases the doubts and fears about the future health of business are associated with an expected tapering off of defense outlays by Govern ment. A second factor very often mentioned is the possi bility of “over-production” as the result of recent additions to industrial capacity. One of the chief consequences of such over-production would be the sharp curtailment of expenditures for new construction and equipment by in dustry. While investment of this type probably does not occupy so important a place as it once did in the explana tion of business booms and depressions, there is no doubt that a drop in plant and equipment outlays, if it occurs, would contribute to a slackening in business activity. Results of the Survey On the basis of this year’s survey of the Philadelphia area, no drop in capital expenditures appears to be in prospect for the coming year. On the contrary, as the accompany ing table shows, a 4 per cent increase in total outlays is estimated. This figure is subject to an important qualifi cation, however. It does not include the Fairless Works project of the United States Steel Company at Morrisville, Pennsylvania. Published information concerning the cost of the huge new mill indicates that the amount spent on it during the past year might approximate the expenditures of all other manufacturing facilities in the area combined. The Fairless Works’ construction time table is such that the bulk of the work is now completed and much less will Page 3 THE BUSINESS REVIEW be spent on the project during 1953 than in 1952. Thus, if the Fairless plant had been included in the survey, that one project might have caused a decline in total expendi tures for 1953 in the neighborhood of 20 per cent. The inferences which might be drawn from such a result would be misleading for many purposes, but the omission, obviously, is an important one and should be borne in mind in interpreting the figures. Buildings vs. Equipment By far the greater part of the new capital outlays will be for equipment rather than for new construction. The line separating these two categories is often vague and the divi sion cannot be precise; but it appears that less than one third of all the money will go into buildings. This Bank’s past studies of manufacturers’ intentions were limited to the city of Philadelphia and are not strictly comparable, with the present survey. However, the direction of the trend in recent years away from construction and toward equipment is unmistakable. A shift from extensive to in tensive capital improvement—from mere enlargement of facilities to modernization and improvement—was, of course, to be expected as the post-war shortage of indus trial space was overcome and, more recently, as the expan sion of new defense facilities has been accomplished. This does not mean that manufacturers have stopped expanding their capacity. Of all the participating firms reporting capital development of some type for next year, nearly 55 per cent stated that their new facilities would enable them to produce more goods. Very few of these firms will increase their potential output by as much as 20 per cent, but most of them expect to be able to turn out better than 5 per cent more. Durable goods manufacturers show a much greater tendency to expand capacity than makers of nondurables. More Workers Many improvement programs now under way and antici pated for next year will not be completed for a long time, and demands for additional labor to man the new facilities will come gradually. Nevertheless, Philadelphia manufac turers can foresee a need for more workers within the next six months—about 11,000 more, or a little less than 2 per cent of their present force. Even with the addition of the many hundreds of manufacturing workers that the Fairless plant will take on during the period (as distinguished from construction workers who have been employed at Fairless Page 4 for many months), this apparently is a moderate expan sion in labor requirements in comparison with the plans of a year and two years ago. But coming at a time when the labor force is more fully employed, and being con centrated in durable goods industries, these new demands undoubtedly will be difficult to meet. Anticipated gains in employment within the next six months are not proportional to capital outlays, of course. In the short-run, many other factors are of great impor tance. Petroleum and coal products industries, for in stance, are the largest spenders for 1953, having doubled their 1952 outlays; yet they anticipate no increase in em ployment. Electrical machinery and transportation equip ment manufacturers will reduce their plant and equipment expenditures next year. They anticipate the largest in creases in employment. In fact, durable goods industries in general, which are increasing employment in the imme diate future—possibly, in part, as a result of past plant expansion—have reduced their planned capital spending from last year’s figure. The large expansion in the petrol eum and coal products industries’ outlays brings the non durables total up, but, with the exception of food and tobacco, all other industries in this group also are reducing their spending. Sources of Funds Most of the money for new plant and equipment—72 per cent of it—is coming from internal sources, the companies’ own earnings and allowances. Almost all the participating firms expected to draw on their own funds. About 15 per cent of the firms will call on the banks for some money. Only 8 per cent of the funds for investment will come from this source, however. A small group—only about 5 per cent of the firms—expect to raise money in the securities mar ket or from insurance companies and other lenders. These are undoubtedly large firms and they will raise by these means 20 per cent of all the money to be spent. National Trends It is extremely difficult to draw any conclusions for na tional trends from a regional survey of this nature, particu larly when it has no history which can be analyzed. Hidden local influences may be strong and inapplicable to the na tional scene. A more obvious difficulty is the different product “mix” in the region as opposed to the nation. Tex tiles in the Philadelphia area, for instance, account for almost 10 per cent of all manufacturing employment—for THE BUSINESS REVIEW the nation the proportion is only about 7.6 per cent. Petroleum and coal products industries in Philadelphia employ over 4 per cent of all manufacturing workers— nationally, less than 2 per cent. It so happens that petro leum and coal products account for the greatest increase in capital expenditures in the Philadelphia area. Without them total outlays would show a sizable decline from 1952 to 1953. If they were reduced to their national importance, the total would probably decline moderately. Other sur veys, notably the recently published McGraw-Hill study, cover somewhat different time periods than this one, but their results for 1953 thus far—indicating a small decline for plant and equipment expenditures throughout the na tion—appear to be reasonably consistent with this survey. FINANCING CAPITAL EXPENDITURES The first six months of 1952 were busy and, in some re spects, “trying” months for many corporate managers. They were busy in that corporations spent at a record rate for plant and equipment. They were somewhat trying be cause corporate managers have had to finance this in creased spending at a time when funds available from internal sources were shrinking. Many concerns compen sated for this loss by raising funds from new security offer ings. They usually relied on bonds, principally because of the wider demand for debt instruments and because of tax advantages. Recently, some signs have pointed toward a revival of interest in stock issues but in the near future, at least, it appears that bonds will continue to represent about three-quarters of all new security issues. In the first half of this year, business spent $13 billion for enlargement and modernization of productive facilities. This was 10 per cent more than in the same period last year—the record year. Durable goods manufacturers, util ities, railroads, and other transportation companies did most of the increased spending. Corporations not only spent a larger dollar amount for plant and equipment but proportionally more of their total spending was for this purpose. This was principally because they spent only $500 million for inventory accumulation, as against $8 billion in the first six months of the preceding year. Sources of Funds The purposes for which corporations want funds influence the sources from which they get funds. When firms need money to purchase supplies and inventory or to pay wages and taxes, they generally borrow. Outlays for plant expan sion or modernization, for new equipment, and for long- range research programs are usually financed from retained profits, depreciation allowances, and new security issues. The ultimate source of most funds for capital investment in plant and equipment is saving. This saving generally comes from individuals or from the corporations them selves. Individuals save when they spend less on consump tion goods than they earn. Corporate saving is that part of net corporate profits that is retained rather than dis bursed as dividends. Corporations also might be consid ered to be saving when they set aside funds for replacement of capital equipment. Many firms prefer to finance their capital expenditures with retained earnings and deprecia tion allowances, thereby protecting themselves from the vicissitudes of the security market and the cost and com plicated arrangements frequently required in tapping sav ings of individuals. Internal financing has been the dominant means of meeting post-war requirements, and has constituted more than twice the amount of funds ob tained from external sources. Internal Sources The internal funds have been derived primarily from un distributed profits which supplied nearly $65 billion from the end of 1945 to December 31, 1951. Since late 1950, retained profits have declined. This reflects lower profits before taxes as a result of shrinking sales volume in many consumer lines and declining wholesale prices. Out of these lower profits have come larger taxes and con tinued large dividend payments. The effect has been to cut retained profits in the first six months of this year to 25 per cent below the same period last year. A second major internal source of long-term funds is Page 5 THE BUSINESS REVIEW SOURCES OF FUNDS FOR CAPITAL EXPENDITURES BILLIONS BILLIONS $ IS------------------ $ 15---- --------- 10- 10- I. Corporations spent record amounts on PLANT and EQUIPMENT BILLIONS 3 _ BILLION $ 3. But DEPRECIATION ALLOWANCES were larger..« 4 t -------------------;----- - 2. RETAINED PROFITS dropped below last year's level 1951 FIRST HALF 1952 FIRST HALF depreciation allowances. Corporate depreciation allow ances were larger in the first half of this year than in the same period last year. It has been estimated that the pro vision for rapid amortization of defense facilities which allows firms to write off their investment in defense facili ties over a period of five years has added between Si billion and $2 billion a year to depreciation charges. Cer tain industries, moreover, such as chemicals and petroleum, are adopting a more rapid depreciation policy as a matter of long-range planning and these industries are accounting for a greater share of business capital investment. So Page 6 --------- 1951 FIRST HALF 4. and NEW SECURITY ISSUES provided more funds 1952 FIRST HALF depreciation is a more important source of funds. The net effect of higher depreciation charges but lower retained profits has been a reduction of about 8 per cent in funds flowing from these two most important internal sources, as compared with the first six months of 1951. Outside Sources The ultimate external source of funds for capital invest ment is largely individual saving. Corporations tap these funds by issuing bonds or stocks. New security issues sold in the first six months of this year totaled $3.7 billion—a THE BUSINESS REVIEW record volume of security financing. From 1946 to 1951, corporations issued a near-record volume of new securities. In the 1930’s, corporations had smaller capital require ments and generally financed them from internal sources. During the 1920’s, business used external sources to a greater extent than in the thirties, but the amount of new money raised through the capital market was lower than it is today. Bonds vs. Stocks. Three-quarters of the new securities offered in the first half of this year were bonds, and this heavy dependence on bonds is typical of the post-war period. A number of factors are favorable to bond as compared with stock financing. It long has been a gen erally accepted principle of corporate finance that bonds or other fixed interest obligations should be issued only when prospective earnings appear both adequate in amount and stable in their flow. In the post-war period, this prin ciple has been obscured somewhat by two important con siderations: the major part of the excess cash of individuals seeks safety and liquidity, and tax advantages accrue to corporations using debt instruments. In general, the small investor is unable to weigh the risks of different investments or to obtain sufficient diversi fication to assume them; therefore, most people prefer to hold their savings in liquid assets of fixed money value. For example, it is estimated that only about 2.3 million NEW SECURITY ISSUES 1919 — First Half 1952 BILLIONS $ •annual people hold corporate stocks and only 640,000 directly invest in corporate bonds, as compared with 41 million families investing in life insurance and 26% million fam ilies holding savings accounts. Safety and liquidity seem to be more important considerations than the rate of return on investment. In part, this reflects the great empha sis on security manifested by Americans,, particularly since the depression of the thirties, and the redistribution of incomes to the benefit of lower-income groups who con sider life insurance, deposits in banks, and shares in sav ings and loan associations preferable to corporate stocks and bonds. Thus, much of consumers’ unspent funds flow to these savings institutions and through them into invest ment. These financial institutions traditionally adhere to a conservative investment policy, and legal restrictions also prevent them from putting a significant proportion of their funds into stocks. To date, holdings of stocks by life in surance companies amount to only about 3 per cent of total life funds. High corporate tax rates increase the advantages of debt financing because interest on bonds, unlike dividends, is a deductible expense. There are some factors, however, which favor the sale of stock. Inflation and the threat of more inflation have aroused an increasing interest on the part of investors in assets of fluctuating value. Some indi viduals have switched a part of their investments from bonds to stocks hoping to provide themselves with an inflation hedge. Institutional demand for stocks has also increased. Insurance company holdings of preferred and common stocks rose from $1 billion in 1945 to $2.2 billion at the end of 1951, but still constitute a small percentage of total assets. Recently, laws governing insurance company invest ments have been altered in some states to permit the pur chase of more stocks. Also, mutual investment funds have continued to gain in popularity and these institutions invest a substantial portion of their funds in stocks. Pension funds, which are taking a larger amount of personal sav ing, find the higher yields on stocks attractive. The rise in interest rates, which has narrowed the spread between the cost of bond and stock financing, is a third factor diminishing the advantage of borrowing. Estab lished companies could expect to finance successfully with 2% to 2% per cent bonds in 1949, whereas today these same corporations pay 3 to 3% per cent on similar issues. At the same time, the fact that stock prices are high, his torically speaking, is favorable to the issuance of stock. Page 7 THE BUSINESS REVIEW RELATION OF STOCK ISSUES TO TOTAL AMOUNT OF NEW SECURITY ISSUES 1919 — First Half 1952 for about 27 per cent of all new security issues as com pared with less than 20 per cent in 1948 and 1949. The relationship between stock and bond financing since the war has been comparable with that of the 1921 through 1927 period. Conclusions - 1920 I The accompanying chart shows the percentage of stocks to total security issues. Since 1950, stocks have accounted Page 8 Between now and the middle of 1953, corporations are likely to continue spending at or near peak levels for plant and equipment. It seems probable, therefore, that the demand for long-term funds will continue at a high level. Internal funds for capital expenditures will probably be somewhat scarcer than in previous post-war years but may be more plentiful than in the first six months of this year. Depreciation accruals will be large and although corpora tions can expect little in the way of tax relief in the near future, the outlook for profits continues good. A more adequate flow of funds from internal sources would tend to reduce somewhat the need for outside financing. In spite of some evidences of increased interest in equities, it seems unlikely that the current ratio between stocks and bonds will be much altered in the near future. THE BUSINESS REVIEW CURRENT TRENDS Business expanded in September, picking up additional ground lost by the steel stoppage. Changes recorded by major commercial and financial indexes were varied, but the level of activity in general was somewhat above a year ago. In October, the economic picture, although temporarily clouded by the soft-coal strike, was substantially unchanged. The industrial recovery occasioned by the resumption of operations in the steel industry continued into September. Production, employment and payrolls in Pennsylvania factories showed, increases, extending the recovery from steel-strike lows. Although the durable goods group accounted for most of the gains, nondurables also contributed. Activity was stepped up in both textile and apparel plants where production was above a year earlier. , September sales of department stores, seasonally adjusted, dropped substantially from the level of the previous month and were 2 per cent below a year ago. Department store stocks showed no change during the month, but were 10 per cent under last year. The ratio of stocks to sales was considerably lower than in September 1951, reflecting the greater decline in inventories than in sales. Falling food prices more than offset increases in the cost of clothing and fuel during the month. While the Philadelphia consumer was paying more for cost-of-living items than in September last year, the index has shown a downward tendency in recent months. Business loans of District reporting banks increased $13 million to $865 million in the five weeks ended October 29. Retailers, commodity dealers and producers of metals and metal products accounted for most of the rise in borrowing. Holdings of Government securities declined $26 million, more than offsetting a rise of $10 million in other investments. During the same period last year, business loans declined $12 million and bank security portfolios shrank about $5 million. The nation’s private money supply increased somewhat in September, principally reflecting a substantial expansion in bank loans. Deposits and currency holdings of business and individuals increased $2.1 billion in the third quarter this year, as compared with $3.2 billion in the third quarter of 1951. Third Federal Reserve District United States Per cent change Per cent change SUMMARY Sept. 1952 from mo. ago 9 mos. 1952 from year year ago ago OUTPUT Manufacturing production. . + 4* + 1* Construction contracts J . . . . -11 +20 Cool mining................................ +42 + 8 Sept. 1952 from mo. ago year ago 9 mos. 1952 from year ago -6* +2 -6 + 5 - 5 +43 + 3 +40 + 6 - 2 0 - 8 —7* —4* + 2 + 1 Factory* 3 Department Store Check Payments Payrolls Per cent. change Sept. 1952 from LOCAL CONDITIONS Employment Per cent change Sept. 1952 from mo. ago year ago mo. ago year ago Sales Stocks Per cent change Sept. 1952 from mo. ago year ago Per cent change Sept. 1952 from mo. ago year ago Per cent change Sept. 1952 from mo. ago year ago +1 +13 EMPLOYMENT AND INCOME -1 + + + - +4 +8 +1 -1 +7 - 7 + 2 0 - 6 0 + + — - + 6 + 9 + 4 + 3 + 11 + + U.S. Govt, securities............ - 2 2 1 1 5 9 l 1 2 2 1 1 1 PRICES Ot + 3t +3f ++ Consumers................................... +2 +3 0 0 — 1 + 3 +12 +15 3 + 3 wii n +16 -1 0 0 + 2 +10 +4 +4 + 12 +48 -3 +5 + 4 +22 +1 BANKING + 7 +4 +1 + 6 + 8 + 5 + 4 +10 Lancaster............................ +6 +5 +2 + 13 +3 - 2 -10 0 +8 +3 TRADE** Department store sales.......... - 9 Department store stocks.. . . 0 +i +i + 3* 0* + 7* + 7* +3 +9 +12 +2 +7 +3 +17 -1 0 0 + 6 +12 i —9 n - 8 + 5 + 14 -11 +12 +12 +12 -12 + 9 +12 +11 +14 -3 +17 +14 + 9 0 +10 3 +14 + 8 -18 +11 +11 OTHER ec © p r ( H— + 10 + 5 ♦Pennsylvania **Adjusted for seasonal variation. fPhiladelphia. JChanges computed from 3-moiith moving averages York...................................... — 5 -3 +12 - 8 + 7 +30 *Not restricted to corporate limits of cities but covers areas of one or more counties. Page 9 THE BUSINESS REVIEW EMPLOYMENT AND INCOME MEASURES OF OUTPUT Per cent change 9 mos. Sept. 1952 1952 from from month year year ago ago ago MANUFACTURING (Pa.)...................... Durable goods industries.......................... Nondurable goods industries................... + 4 + 6 + 2 +1 0 + 2 - 6 - 7 - 5 Foods................................................................ Tobacco............................................................ Textiles............................................................ Apparel............................................................ Lumber............................................................. Furniture......................................................... Paper................................................................. Printing and publishing............................ Chemicals........................................................ Petroleum and coal products.................. Rubber............................................................. Leather............................................................. Stone, clay and glass.................................. Primary metal industries.......................... Fabricated metal products....................... Machinery (except electrical)................. Electrical machinery................................... Transportation equipment....................... Instruments and related products. . . . . Misc. manufacturing industries.............. + + + + + + + 3 4 2 3 4 2 3 4 0 - 3 - 1 0 0 +12 + 7 - 1 + 7 + 2 + 3 + 4 - 4 + 3 +11 + 4 - 5 +21 + 2 - 1 0 + 1 -17 +10 -12 + i + 3 - 7 + 9 4- 7 — 10 - 5 - 2 + 2 -10 - 8 - 8 + 4 - 8 - 1 0 - 9 - 5 - 5 -13 -16 - 9 - 3 + 4 4-16 - 6 -17 COAL MINING (3rd F. R. Dist.)*____ Anthracite....................................................... Bituminous..................................................... +42 +44 +31 + 8 + 11 - 6 - 6 - 4 -18 CRUDE OIL (3rd F. R. Dist.)**......... - 3 - 1 - 1 CONSTRUCTION—CONTRACT AWARDS (3rd F. R. Dist.)f.............. Residential...................................................... Nonresidential............................................... Public works and utilities......................... -11 + 6 -21 -20 4-20 4-34 4-30 -13 + 2 + 5 -17 4-47 *U.S. Bureau of Mines. ♦♦American Petroleum Inst. Bradford field. fSource: F. W. Dodge Corporation. Changes computed from 3-month moving averages, centered on 3rd month. Employment Pennsylvania Manufacturing Industries* (1939 avg. = 100) All manufacturing. .. . Durable goods industries.................. Nondurable goods industries................... Foods............................ Tobacco........................ Textiles........................ Apparel........................ Lumber........................ Furniture and lumber products..................... Paper............................. Printing and publishing................. Chemicals.................... Petroleum and coal products..................... Rubber......................... Leather......................... Stone, clay and glass............................. Primary metal industries................... Fabricated metal products..................... Machinery (except electrical)................... Electrical machinery................. Transportation equipment................. Instruments and related products. . . Misc. manufacturing industries................... Sept. 1952 (In dex) Per cent change from mo. ago Average Weekly Earnings Payrolls Sept. 1952 year (In ago dex) Per cent change from mo. ago year ago 1952 Average Hourly Earnings % chg. from year ago % chg. 1952 year ago 138 +3 0 425 + 7 + 7 $68.92 + 7 $1.70 +6 169 +4 + i 498 + 9 + 7 76.09 + 6 1.86 +7 109 131 90 69 131 146 +1 +4 +2 +1 +1 -4 + + + - 0 2 2 1 1 6 330 340 262 223 403 411 + + + + + — 2 4 7 3 3 4 + 7 + 1 + 7 +15 + 8 0 58.09 57.81 38.30 57.39 43.42 49.00 + 7 + 4 + 5 +14 + 7 + 7 1.46 1.40 .98 1.43 1.17 1.16 +4 +5 +3 +4 +2 +6 125 139 +2 0 +18 - 1 412 448 + 4 + 4 +31 + 9 60.66 69.74 +11 +10 1.36 1.61 +8 +7 119 147 +3 +1 - 2 - 3 341 431 + 4 + 1 + 6 + 2 80.95 69.81 + 8 + 5 2.05 1.67 +8 +5 157 227 85 -1 +2 0 0 - 7 4- 5 463 659 242 — 3 + 2 4- 1 + 6 -15 +16 88.56 72.15 48.62 + 7 - 9 4-11 2.17 1.89 1.24 +6 +1 +5 129 0 -10 372 + 2 - 9 65.88 +1 1.70 +4 145 +8 + 2 446 +18 +10 85.52 + 8 2.13 +9 180 +4 + 2 539 + 9 +11 71.23 + 8 1.73 +8 225 -1 - 7 664 0 - 3 74.77 + 3 1.76 +4 287 +4 + 8 734 + 8 +16 71.56 + 8 1.72 +5 186 +4 + 10 523 + 3 +10 79.81 + 1 2.00 +5 172 +3 8 505 - 6 67.06 1.66 +4 4 381 6 + 2 58.61 + + 2 +3 + + 5 133 - 7 1.38 +7 ♦Production workers only. TRADE Sales Per cent change Third F. R. District Indexes: 1947-49 Avg. = 100 Adjusted for seasonal variation Sept. 1952 Sept. 19J>2 from (Index) month year ago ago SALES Department stores........................ Women’s apparel stores............ 105 82 -9 -8 +2* - 2 - 5 4-17* STOCKS Department stores........................ Women’s apparel stores............ 113p 102 0 4-5 4-6* 9 mos. 1952 from year ago -10 -10 - 9* Recent Changes in Department Store Sales in Central Philadelphia - 1 - 2 4-15* Per cent change from year ago - 4 - 1 +11 - 1 -12 •Not adjusted for seasonal variation. Page 10 p—preliminary. Departmental Sales and Stocks of Independent Department Stores Third F. R. District Stocks (end of month) % chg. % chg. % chg. Sept. Sept. Ratio to sales 9 mos. 1952 1952 1952 (months’ supply) from from from September year year year 1952 1951 ago ago ago Total—All departments................................................. +2 -2 -11 2.9 3.4 Main store total................................................................. Piece goods and household textiles.......................... Small wares....................................................................... Women’s and misses’ accessories.............................. Women’s and misses’ apparel.................................... Men’s and boys’ wear................................................... Homefurnishings............................................................. Other main store............................................................. 4-2 -4 +7 +4 +3 +4 0 +5 -3 -8 +i -1 +3 -1 -8 -1 -12 -15 - 4 - 5 - 5 -12 -16 -25 3.1 3.5 3.6 2.9 2.1 4.5 3.2 4.0 3.6 3.9 4.0 3.2 2.2 5.3 3.8 5.5 Basement store total........................................................ Domestics and blankets............................................... Small wares....................................................................... Women’s and misses’ wear.......................................... Men's and boys’ wear................................................... Homefurnishings............................................................. Shoes.................................................................................... 0 -2 +5 0 +1 +1 -2 -2 -1 -5 -1 -1 -8 -3 - 7 -11 -12 0 - 8 -13 -16 2.1 2.2 1.9 1.6 2.6 2.4 2.6 2.2 2.4 2.3 1.6 2.9 2.8 3.0 +5 +2 THE BUSINESS REVIEW CONSUMER CREDIT BANKING Receiv ables (end of month) Sales % chg. % chg. % chg. Sept. Sept. 9 mos. 1952 1952 1952 from from from yearago yearago year ago Third F. R. District MONEY SUPPLY AND RELATED ITEMS United States (billions $) Sept. 24 1952 Changes in— four weeks year Money supply, privately owned............................................. 187.4 + 1.2 +9.5 Demand deposits, adjusted.................................................... Time deposits............................................................................... Currency outside banks................................................ 96.4 64.5 26.6 + .6 + .4 + .2 +4.4 +3.9 +i.i 21.3* -1.8* -1.4* i + +1 + 2 + 7 1 Department stores + 8 + 9 Turnover of demand deposits.................................................. i Loans made Loan Credit Third F. R. District Loan bal ances out standing (end of month) + .5 +8.5 U.S. Government securities.................................................... Other securities............................................................................ 61 2 61.6 14.3 - .4 - .1 +L9 +i+ 20.6 + .8 +1.2 Required reserves (estimated).......................................... Excess reserves (estimated)................................................... +11 137.1 Member bank reserves held...................................................... + 2 +19 + 9 + + Commercial bank earning assets............................................ Furniture stores Cash......................................................................................... 19.8 .8 + .2 + .6 +1.0 + .2 Changes in reserves during 4 weeks ended September 24, reflected the following: Effect on reserves Consumer instalment loans Commercial banks............................................................... Industrial banks and loan companies.......................... Small loan companies......................................................... +29 +37 + 7 +29 +39 +32 +12 +23 0 +25 +18 +16 PRICES Increase in Reserve Bank holdings of Governments... Decrease in Reserve Bank loans........................................ Other Reserve Bank credit................................................... Net Payments by the Treasury.......................................... Miscellaneous.............................................................................. + .6 —.5 + .1 +.5 +.1 Change in reserves.................................................................... chg. % Chg. % chg. Sept. Sept. 9 mos. 1952 1952 1952 from from from yearago yearago year ago % +.8 * Annual rate for the month and per cent changes from month and year ago at leading cities outside N. Y. City. Oct. 29 1952 OTHER BANKING DATA Per cent change from Sept. 1952 (Index) Monthly Wholesale and Consumer Prices United States (billions $): Loans— Commercial, industrial and agricultural.................... 22.3 Real estate.............................................................................. To banks.................................................................................. All other................................................................................... 6.0 .6 6.8 year Total loans—gross............................................................. Investments.............................................................................. + .6 -1 .1 + .2 + 1.7 4 + -3 0 + .8 37.9 39.7 86.2 + .9 + .5 + -3 + 3.2 + 1.2 4-3 7 Real estate.............................................................................. 865 76 147 + 13 + 6 + 1 + 72 + 33 + 15 All other................................................................................... 444 18 + 9 + 51 Total loans—gross............................................................. 1,550 Investments............................................................................ 1,463 3,311 + 43 - 16 - 10 +181 - 39 + 94 - .1 + .8 - .1 0 + -3 + .3 + -9 + 1.0 + .i + i.i + i.i + .i + 18 + 10 - 2 + 24 + .2% + + + + + year ago 112 106 111 113 0 -3 0 0 -1 -3 0 -1 191 192 233 198 0 0 -2 +1 +3 +3 +5 -3 Third Federal Reserve District (millions $): Loans— Commercial, industrial and agricultural.................... 153 213 176 +1 0 0 0 -4 +4 Consumer prices (1935-39 = 100) five weeks Weekly reporting banks—leading cities month ago Wholesale prices—United States (1947-49 = 100). . . Changes in— 4- + - Member bank reserves and related items Weekly Wholesale Prices—IJ.S. (Index: 1947-49 average =100) All com modi ties Farm prod ucts Proc essed foods Other 111.1 106.6 104.6 105.1 104.5 104.3 108.5 108.1 107.4 106.2 105.6 112.6 112.6 112.5 112.4 112.4 110.7 110.6 110.3 110.1 Source: U.S. Bureau of Labor Statistics. United States (billions $):held............................................ Member bank reserves Reserve Bank discounts and advances....................... Reserve Bank holdings of Governments.................... Gold stock.............................................................................. Money in circulation.......................................................... Treasury deposits at Reserve Banks........................... $): 20.4 1.2 23.6 23.3 29.5 .6 Federal Reserve Bank of Phila. (millions Loans and securities......................................................... 1,523 Federal Reserve notes....................................................... 1,773 Member hank reserve deposits...................................... 930 Gold certificate reserves................................................... 1,259 45.0% Reserve ratio ................................................................ (%) 31 78 21 77 -9% Page 11
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