The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District Federal R eserve A g en t Federal R eserve Bank, New Y ork Business C on dition s in the U n ite d States NDUSTRIAL production declined in July to a level below that of a year ago, while the Depart ment of Labor’s index of wholesale prices advanced for the first time since last autumn. Demand for bank credit showed a seasonal increase, but easy conditions prevailed in the money market. I P r o d u c t io n Output of manufactures declined in July and was in practically the same volume as a year ago, and the production of minerals, which was further reduced dur ing the month, was at the lowest level since early in 1926, wrhen the anthracite strike was in progress. Iron and steel production in July was in the smallest volume since 1925, and continued at practically the same level during the first three weeks of August. Automobile out put for July and the early weeks of August was con siderably below that of the corresponding month of last year; production of rubber tires, nonferrous metals, and food products, and activity of woolen mills were smaller in July than in the preceding month. Cotton consumption was smaller than in June, but continued unusually large for this season of the year. Produc tion of leather, shoes, and lumber increased in July as compared with June. Factory employment and pay rolls showed seasonal decreases in July and were smaller PERCENT Index Numbers o f Production of M anufactures and Minerals, Adjusted for Seasonal Variations. (1923-25 average = 1 0 0 per cent.) Septem ber 1, 1927 than in any month since 1924. Employment in coal min ing has been reduced in recent months, and reports indi cate some unemployment in certain of the building trades owing to the decline in the construction of houses. Building contract awards in July and in the first three weeks of August continued larger than a year ago, the increase reflecting chiefly a growth in awards for engineering projects. The August 1 cotton report of the Department of Agriculture indicated a production of 13,492,000 bales or 25 per cent less than the record yield of last year. The indicated production of corn, though considerably larger than the expectation in July, was 262,000,000 bushels lower than the harvested crop of 1926. The August estimate of 851,000,000 bushels of wheat indi cated an increase of 18,000,000 bushels over the 1926 crop yield. T rade Distribution of merchandise at wholesale and retail showed about the usual seasonal decline in July. Com pared with a year ago sales of wholesale firms and de partment stores wrere slightly smaller, owing largely to the fact that there was one less business day in July of this year than in July 1926. Sales of mail order houses and chain stores were somewhat larger than a year ago. Inventories of department stores continued to decline in July and at the end of the month were slightly smaller PER CETiT. Federal Reserve Board’s Indexes of Factory Employment and Payrolls. (1919 average = 100 per cent.) M ONTHLY REVIEW, SEPTEMBER 1, 1927 66 -RATE 1923 1924 192.5 1926 1927 Wholesale Price Index o f United States Bureau of Labor Statistics. (1913 average = 100 per cent.) than a year ago; and wholesale stocks also continued smaller than last year. Shipments of commodities by freight decreased, contrary to the usual seasonal trend, and were smaller in July and in the first two weeks of August than in the same period of last year. P r ic e s The Bureau of Labor Statistics index of wholesale prices advanced slightly in July, reflecting chiefly in creases in the prices of corn, livestock, cotton, and leather, while prices of wheat, silk, metals, and build ing materials declined. Since the latter part of July prices of corn, cotton, and cattle have continued upwrara and those of w7heat, nonferrous metals, and rubber have also advanced, while hogs, lumber, and hides have declined. B a n k C r e d it There wTas an increase in the volume of commercial loans at member banks in leading cities between July 20 and August 17, as is usual at the beginning of the crop-moving season. Loans on securities, as well as commercial loans, increased, while investment holdings declined, and total loans and investments w^ere about $60,000,000 larger than a month earlier. Total borrowings of member banks at the Reserve Banks increased slightly between July 20 and August 24; there was a growth of discounts at the Federal Re serve Bank of New York, partly offset by declines in other districts. There was little change in the System’s holdings of acceptances and a growth in the portfolio of United States securities. Money rates on all classes of paper in the open mar ket declined sharply in August, and were at a lower level than a year ago. Discount rates at eight Federal Reserve Banks were reduced from 4 to 3% per cent. M o n ey M arket Both prior to and following the redaction of the dis count rate of the Federal Reserve Bank of New York from 4 to 3y2 per cent on August 5, open market money rates tended to decline and reached the lowest levels in more than a year. In each of the past two years, as the 19ZG 1 925 19*27 W eekly M oney Rates at New York. accompanying diagram shows, the tendency of rates had been upward during August. Rates prevailing near the end of August are compared below with those of a month previous and a year ago. M oney Rates at New Y ork Aug. 30, 1926 July 30, 1927 Aug. 30, 1927 Tim e m oney— 90 d a y .............................. Prime commercial paper......................... Bills— 90 day unendorsed....................... Treasury certificates and notes Maturing December 15....................... Maturing March 15.............................. Federal Reserve Bank of New York rediscount ra te ...................................... Federal Reserve Bank of New York buying rate for 90 day bills................ *5 5 3% 3.29 3.40 *3 % 4% 4 -4 % 3VS 2.78 3.19 *3 H 4 4 3V& 2.61 2.95 4 4 3H 3H 3 V2 3X * = Prevailing rate for preceding week. The demand for currency continued small in August; the amount in circulation showed some increase from the low level reached near the end of July, but re mained more than 100 million dollars lower than a year ago. There were evidences, however, of the beginning of the Fall expansion in credit requirements. Commer cial loans of reporting member banks in this district showed a net increase of about 30 millions in the four weeks ended August 24, and an increase of similar FEDERAL RESERVE AGENT AT NfcW Y ORK amount occurred in other districts, so that the total in crease in commercial loans of all reporting member banks throughout the country was over 60 millions. In the New York district the increase in commercial loans was more than offset by reductions in loans on se curities and in investments, so that the total amount of bank credit outstanding on August 24 w^as smaller than a month previous. In other districts, however, there was a moderate increase in security loans, which, with the increase in commercial loans, was only partly offset by a reduction in investments; so that the total amount of credit outstanding increased somewhat. 67 M IL L IO N S o f D O L L A R S (Change in millions of dollars) July 27, 1927, to August 24, 1927 Banks in Second District Loans on stocks and b onds........... Commercial loans............................ Investm ents...................................... Demand deposits............................. Tim e deposits................................... — 38 + 31 — 54 — 123 + 15 Banks in Other Districts 4+ — + + 44 31 33 87 32 Aug. 25, 1926, to August 24, 1927 Banks in Second District + 71 + 25 4 + 37 + 20 6 + 16 7 Banks in Other Districts + 25 5 — 95 + 25 4 + 123 + 389 The greater part of the change in security loans of reporting banks was accounted for by changes in the volume of loans to brokers and dealers in securities, placed by New York City banks. The total of these loans increased nearly 50 million dollars in the two weeks ended August 10, and reached a new high level, but in the subsequent two weeks declined 22 millions. Loans placed by New York banks for their own account were reduced 47 millions during the four-week period, but loans placed for correspondent banks and others increased 74 millions. There was evidence of some flow of funds from New York to other districts and abroad in August, but the loss to the New York money market was made up by the sale of bills and securities to the Reserve Bank. Required reserves of banks in this district were reduced somewhat, accompanying the reduction in deposits shown above, but required reserves of reporting member banks in other districts appear to have increased slightly during the month. B il l M a r k et The lower level of rates established late in July brought a larger supply of bills into the market during August. Investment demand became less active at these rates, due partly to a decrease in foreign orders, and dealers' holdings of bills increased to the largest volume for any Summer since 1921. Later in the month, local bank demand for short bills developed and the offering rate on 30 day bills was reduced to 3 per cent. Ninety day bills were offered throughout the period at 3 % per cent. The volume of bankers acceptances outstanding dur ing recent months has been larger than in the corre sponding period of 1926 and 1925, as the accompanying diagram shows. Outstandings have fluctuated from about 550 to over 800 millions of dollars in recent years, chiefly as the result of the seasonal movement of exports B an k o f N ew Y o rk . and imports. The large amount of acceptances outstand ing during the first half of this year doubtless reflects largely exports of cotton, which reached unusually large proportions. C o m m e r c ia l P aper M a r k et Commercial paper rates continued to ease gradually, and following the reduction in the Reserve Bank's dis count rate, reached a prevailing level of 4 per cent for prime names. The market for paper among interior institutions was good, and there was also a more active demand from some New York City banks, but available supplies remained limited. Occasional sales of very choice names of moderate m atoity were made in the Middle West at 3% per cent. Outstandings of commercial paper have shown a grad ual and practically continuous decline in recent years, except for seasonal changes. The decline in the volume of commercial paper may be attributed to a number of factors, including the policy of hand-to-mouth buying, which has reduced the needs of industrial and merchan dising concerns for funds, the funding of short-term borrowings into longer-term note and bond issues, and a reduction in the requirements of concerns in the tex tile trades which formerly had been heavy borrowers but which in recent years have been affected by slow business. G old M o v e m e n t The flow of gold in and out oi the country during August was of even smaller proportions than in the previous month, but again resulted in some excess of imports. Reports of the movements through the Port of New York during the first 29 days of August showed imports of $6,000,000. The principal imports were an additional $2,400,000 from the Netherlands, continuing a movement which began in May, and $3,100,000 from Chile to further augment the reserves of the Central Bank of Chile maintained in this country. Exports totaled $900,000, of which about half was shipped to Mexico. 68 MONTHLY REVIEW, SEPTEMBER 1, 1927 Complete July figures for the United States show a net import of $8,900,000, the result of imports of $10,700,000 and of exports of $1,800,000. The imports in cluded chiefly $4,800,000 from Canada and $4,500,000 from the Netherlands, while exports were principally to Mexico and the Far East. These figures raised the net gold import balance for the first seven months of the year to $140,000,000, and on the basis of preliminary reports for August, the net inflow since the first of the year has been further increased to approximately $145,000,000. T h e Foreign E xch anges The strength in the European exchanges, which was perceptible in July, became more pronounced in August. From a July low of $4.8506, sterling advanced above $4.8581, the highest quotation in twelve months. The German mark reached parity for the first time in the current year; the Swiss franc, just under parity, was at its highest since January; and the Swedish crown, at 26.83 cents was at a level not reached since July, 1926. The belga, at 13.92 cents was within a point of the highest figure since stabilization, and the Danish crown in the early part of the month reached parity for the first time since early 1919. Fluctuations in the French franc were nominal and in the Italian lira, small; the Netherlands florin was steady near 40.06 cents, the level reached in July. Among the unstable exchanges, the Norwegian crown shared the prevailing strength, cross ing 26 cents for the first time in several months, but Spanish pesetas wTere heavy. Among the American rates, Canadian dollars crossed parity, and the Argentine peso, at 42.70 cents was the highest since May 1920. On August 27, the opening of the Caja de Conversion announced the return of Argen tina to the gold standard. Brazilian milreis were the highest since March of the current year. The strength of European rates was not shared by the Far Eastern. Yen and rupees were steady, the former at about 4 7% cents and the latter at 36 cents; but silver and the silver exchanges were weak. Bar silver dropped to 54.13 cents, the lowest figure since January. Toward the end of the month, silver rallied from this low level. M o n e y R a te s A b ro a d Notwithstanding the strength of the exchanges, Euro pean money rates showed little change in August. The London bill rate remained at about 4 % per cent, and on August 23 the Treasury bill rate ran up to the highest figure since the first week of the year; but this was followed in the closing days of August by pronounced ease in the short money market. Rates in both Amster dam and Zurich were firm just under 3 % per cent, the official rates. In Berlin, the early part of August brought some evidence of an easier tendency; the bill rate was an eighth lower at 5 % per cent, and day-to-day funds and monthly money were more plentiful. Toward the end of the month, the bill rate advanced to 6 per cent, and monthly money became scarce; day-to-day funds, however, remained relatively easy. The rate in Paris remained in the vicinity of 2 per cent, but 1925 1926 1927 Prevailing Open Market M oney Rates in European Countries and in the United States in Each Month Since January 1925. (N inety-day Bill Rate in the United States and Corresponding1Rates for Other Countries.) it was reported that the market was somewhat firmer. The accompanying diagram compares tendencies of bill rates in several European countries and in the United States since the beginning of 1925. The Bank of Finland reduced its official rate from 7 per cent to 6V2 per cent on August 11. The Finnish rate had not been below 7 per cent since it was advanced to that figure on November 18, 1919. The Austrian National Bank reduced its rate to 6 y2 per cent on August 24, from 7 per cent, to which it had been raised on July 21. Security M a rk e ts The stock market was subject to wide price movements and large fluctuations in the volume of trading during August. Industrial stocks advanced in the first part ol the month to slightly higher levels than in July, but several subsequent heavy selling movements resulted in sharp declines in the price averages in the second week. Following the middle of the month, however, the trend of the market again was upward and average prices of industrial stocks attained new high levels. Railroad shares were relatively inactive and after advancing early in the month to above the previous high points of 1906, showed average net losses of several points, which were not fully regained before the end of the month. Pronounced ease in money rates and a continued re striction of the volume of new security offerings were accompanied by further strength in the bond market during August. Corporation bond averages advanced about % of a point further and approximately equaled the high levels of early 1913, and a large number of for eign bonds, including nearly all of the French issues, sold at the highest prices of the year. United States Government long term bonds showed gains ranging from FEDERAL RESERVE A0ENT AT NEW YORK about to over y 2 point, the June issue of 3 % per cent Treasury bonds advancing as high as 100 31/32, com pared with the cash subscription price of 100%. The volume of new securities floated in this market in August continued very small until the final week, due in part to seasonal influences, and with the excep tion of July was the smallest for any month since Sep tember 1926. The reduction from previous months of this year was chiefly in offerings of industrial and public utility issues. For the first eight months of the year, however, total security offerings, including refunding as well as new capital issues, have been approximately $1,000,000,000 larger than in the corresponding period of 1926. Foreign issues, during the same period, have been over $150,000,000 larger than a year ago. 69 total net income of 180 companies for which reports are now available was about 6 per cent smaller than in 1926, but continued considerably larger than in 1925. Nearly all the oil companies reported sharp reductions in net income, reflecting the effects of overproduction, and about three-fourths of the automobile manufacturers had smaller earnings, though the large increase reported by General Motors and smaller increases in the profits of a few other companies resulted in some increase for the motor group as a whole. In other industry groups, earnMILLIONS OFDOLLAR5 F oreign T ra d e The value of our foreign trade declined in July. Ex ports of merchandise valued at $343,000,000 showed less than the usual decline from June, but were $25,000,000 smaller than in July 1926. Imports valued at $327,000,000 were $28,000,000 smaller than in June, and $12,000,000 less than a year ago. Cotton exports, in accordance with the usual tendency at the end of the crop year, continued to decline. For the entire crop year, however, cotton exports totaled 11,184,000 bales, or about 60 per cent of the largest crop ever produced in this country. This percentage of cot ton production exported was the highest since 1921, when the crop was the smallest in 26 years, and when prices about as low as during the past year stimulated foreign purchases. Shipments abroad of coal and petroleum products, and also grains and meats, declined in July as com pared either with the previous month or with July of last year. Available data indicate the import of larger quantities of raw silk and crude rubber than in the pre vious month or in July 1926. Receipts of coffee de clined, however, and were the smallest since May 1926. Business Profits Earnings of industrial and mercantile corporations in the second quarter of 1927 were irregular, and the (Net profits in millions of dollars) No. of Corpora tions Second Quarter First Six Months 1926 1927 1925 1926 1927 Food & Food P rodu cts.................... Machine and Machine M fg............ Mining and Sm elting........................ Chem icals............................................ Building Supplies.............................. Miscellaneous..................................... 28 22 16 20 15 21 7 9 42 114 44 45 29 8 13 9 6 26 121 14 41 30 7 14 12 6 30 148 64 70 44 15 21 14 11 46 198 72 88 53 16 26 19 12 62 204 41 82 54 13 28 23 11 64 T otal 9 groups................................ 180 294 275 433 546 520 T elephone............................................ Other Public U tilities....................... 79 14 52 21 59 23 90 43 103 45 117 52 M otors and A ccessories................... O il.......................................................... T otal Public Utilities................... 93 73 82 133 148 169 Class I R a ilro a d s .............................. 183 272 247 439 496 473 Quarterly Profits of 1D5 Industrial Corporations and Net Operat ing Income of Class I Railroads. ings were irregular, and of the total of 180 corporations, the number reporting increases and decreases was almost evenly divided. Profits of telephone companies and other public utilities continued to increase gradually, but the net operating income of the principal railroads showed less than the usual seasonal increase and was 9 per cent smaller than in the second quarter of 1926. P rodu ction The output of a majority of industries declined from June to July after allowance is made for the usual seasonal variations, and in most cases was also smaller than a year ago. Substantial curtailment occurred in the production of pig iron and steel ingots ; the July rate of output in each case was the smallest for any month since 1925, and no increase in activity was indi cated by trade reports in August. Production of pas senger automobiles and motor trucks was reduced con siderably in July, and preliminary employment reports indicate only a slight increase in the activity " of the industry in August. Bituminous coal output did not show the usual sea sonal expansion in July and was smaller than in the corresponding period of any year since 1924. The re sults of a survey made by the TJ. S. Bureau of Mines indicated that domestic consumption and export demand for bituminous coal exceeded production by an average of 1,000,000 tons a week between April 1 and July 1, but that consumers’ stocks at the beginning of July remained larger than at the corresponding time in any 70 MONTHLY REVIEW, SEPTEMBER 1. 1927 PERCENT. previous year, being equal to requirements for nearly seven weeks. The export demand is now considerably below that of a year ago when the British coal strike was in progress, but evidence of a stronger domestic market in August has appeared in a moderate advance in prices, and some increase in output has occurred. Anthracite production in July was the smallest for that month since the strike of 1922, but a more active market has been reported in August. Mill consumption of cotton was reduced considerably, but was, nevertheless, the largest for that month in several years. The market for cotton goods has been unsettled by the rapid advance in raw cotton prices, and although continued large shipments prevented the accumulation of heavy stocks of most lines of cotton goods at the mills during the first half of August, some further curtailment of production occurred. Silk and woolen mill activity also was curtailed moderately in July. The indexes of production in the following table are adjusted for seasonal variations and year-to-year growth. (Computed trend of past years =100 per cent) 1927 1926 July M ay June July Producers’ Goods Pig iron ........................................................... Steel ingots..................................................... Bituminous coal?*.......................................... Copper, U. S. m ines.................................... Tin deliveries................................................. Z in c.................................................................. Petroleum ....................................................... Gas and fuel o il............................................. C otton consum ption.................................... W oolen mill a ctiv ity *.................................. C em ent............................................................ Lum ber........................................................... Leather, sole?*................................................. Silk consumption*/*...................................... 113 104 95?* 109 121 100 107 99 86 77 139 109 91r 115r 114 110 85r 99 102 92 119 101 108 88 125 76 107r 129r 108 98 81r 99 88 98 118 96 116 89 133r 80p 9 3r 116r 102 89 74 98 92 95 io s 83 p 136 98p 93 112 Consumers' Goods Cattle slaughtered?*...................................... Calves slaughtered/*..................................... Sheep slaughtered?*...................................... Hogs slaughtered?*........................................ Sugar meltings, U. S. p orts....................... Wheat flour.................................................... C igars.............................................................. Cigarettes....................................................... Tobacco, m anufactured.............................. Gasoline.......................................................... T ires................................................................ N ewsprintr..................................................... Paper, total?*.................................................. B oots and shoes............................................ Anthracite co a l............................................. Automobile, a ll............................................. Automobile, passenger................................ Automobile, truck........................................ llGr 96r lO lr 95 r 96 114 106 70 107 139 124 113r 108r 105 103 128 134 105 85 r 108r 99r 92 101 105 76 106 141 127 98r 102r 89r 94 116 121 93 lllr 107r 87r 108 r 105r 9Gr 104 98 76 98 101 91 94 *=Seasonal variation not allowed for p = Preliminary i42 138 97r 103 103 86 100 102 91 i24p 94 H ip 61 92 95 78 r=R evised W a g e s and E m p lo y m e n t This bank's composite index of wages has continued to rise gradually during the past year, and as the ac companying diagram shows, 1927 wages in general are above the highest level reached in 1920. Meanwhile the cost of living has declined slightly, so that the purchas ing power of wages has increased further. At the end of the first half of 1927 the cost of living index of the United States Bureau of Labor Statistics was 71 per cent above the pre-war level, whereas the wage index was 121 per cent higher. This indicates a gain of 29 per cent in the average purchasing power of the wages Comioosite bidex c/ 7AGE5 , A i *f / \v r / } / J ^ \ V -.. cosT o/livjng - r 19J3---lOO 1914 J____ J...... 1 1 _J -J....... .... 1 ____!........ ....... !... .. 1 . . 1915 1915 1917 1918 1919 1920 1921 1922 1923 1924 19Z5 1926 1927 1928 ' Composite W age Index of the Federal Reserve Bank of New York and Cost o f Living Index of the U. S. Bureau of Labor Statistics. (Fluctuations in Cost of Living between Report Dates Interpolated by Federal Reserve Bank.) paid to all classes of workers since 1914, largely in the past six years. The composite wage index includes per capita earn ings of factory operatives and railroad employees, wage rates paid to agricultural labor, building labor, and gen eral unskilled labor, salaries paid to teachers, and earn ings of clerical help. Accompanying some evidence of decreased opportunities for securing employment, the average hiring rate paid to unskilled labor has remained virtually unchanged during the past year. All other groups have shown at least slight gains, though factory operatives' earnings, after reaching in March the high est level ever reported, have subsequently declined some what, accompanying the moderate recession in factory activity since that month. The number of workers employed in factories was reduced about 2 per cent in New York State and in the country as a whole, from June to July. A part of this decline in factory employment was attributed to mid summer closings for vacations and plant repairs, but there was evidence of more than seasonal curtailment in some industries, notably iron and steel and auto mobiles. Farm work, road building, and fruit and vegetable canning provided employment for a consider able number of workers, but the voluntary labor turn over rate continued to be very low and State employ ment offices reported some surplus of applicants over opportunities for employment. In dexes of Business A c tiv ity There appears to have been no curtailment of general business activity comparable to the reduction in indus trial production in July. This bank's indexes showed no consistent change from the previous month, nor from July 1926. Bank debits in localities outside of New York City continued in about the same volume as in June and the corresponding month a year ago, but New FEDERAL RESERVE AGENT AT NEW YORK York City debits showed an increase after seasonal ad justment and were larger than last year. The distribu tion of goods at retail continued fairly large and foreign trade remained active. Railway distribution of commodities, especially of the heavy freight, such as coal and ore, declined slightly further after seasonal adjustment and was considerably smaller than in July of last year. The number of com panies incorporated in New York State was smaller than in the previous month and a year ago, but business mortalities were less numerous than in June, although they continued appreciably higher than last year. In the following table this bank’s indexes of busi ness activity are given in percentages of the computed trend, with allowance for seasonal variations, and, where necessary, for price changes. JAN-JULY 19Z6=100% VUBUC WORKS & UTILITIES (Computed trend of past years=100 per cent) July M ay June 109 106 97 99 131 90 91 105 93 105p 122p 63 101 100 106 112 101 Primary Distribution Car loadings, merchandise and m isc., Car loadings, other................................ E xports..................................................... Im ports..................................................... Grain exports.......................................... Panama Canal traffic............................ 109 107 104 103 95 148 87 Distribution to Consumer Department store sales, 2nd Dist. Chain store sales.............................. Mail order sales................................ Life insurance paid fo r ................... Real estate transfers....................... Magazine advertising..................... Newspaper advertising................... 99 104 115 118 109 110 122 101 100 General Business Activity Bank debits, outside of N. Y . C it y ......... Bank debits, New York C it y .................... Bank debits, 2nd Dist. excl. N. Y . C ity. Velocity of bank deposits, outside N .Y.C. Velocity of bank deposits, N. Y . C it y ... Shares sold on N. Y. Stock E xch an ge*.. Postal receipts............................................... Electric p ow err............. ............................... Employment in the United States........... Business failuresr......................................... Building perm its........................................... New corporations formed in N .Y . S ta te. General price level....................................... * —Seasonal variation not allowed for Building Contracts Awarded in 37 States during First Seven Months o f 1927 Compared by Type of P roject with Corresponding Period in 1926. 1927 1926 121 94 100 100 106 91r 103 96 97 July 106 117 109 ' ’ 97 97 103 101 100 116 123 106r 103 96r 128 126 117 135 104 108 131 214 92 108r 99 105r 116 113 116 134 104 106 128 219 95 107 100 'ioo 185 184 184 183 110 108 123 173 101 p=Prelim inary 115r 129 123 116 135 106 110 135 176 92 104 104 116 r=R evised Building Building and engineering contracts awarded in July were nearly 16 per cent smaller than the record amount reported in June, but were 3 per cent larger than in July 1926, according to the F. W . Dodge report for 37 states east of the Rockies. The principal element in the reduction from June was a sharp decline in residential contracts. Compared with a year ago, public works and utility projects continued to show a substantial increase, and commercial and residential building was slightly heavier, while industrial and educational construction work was smaller. The dollar value of building contracts let in the re porting states during the first seven months of this year was 2 per cent larger than in the corresponding period of 1926. The exceptionally heavy volume of civil engi neering and public works and utilities projects— more than 21 per cent larger than a year ago, as the accorn- panying diagram indicates,— was the principal factor in the maintenance of a large amount of construction work. Commercial building was also ahead of last year and educational construction about the same, but residen tial contracts were 4 per cent smaller, and industrial building was considerably lower, due partly to the in clusion in the 1926 figures of a very large power house project. In the New York and Northern New Jersey district, the accumulated amount of contract awards since the first of the year slightly exceeded the figure for the corresponding period of last year at the end of July, for the first time this year. The July increase was due primarily to the large amount of public works and com mercial contracts. C h ain Store Sales The increases over last year in total sales reported by leading chain store organizations continued large in July, especially in view of the fact that there was one less business day than in the corresponding month of 1926. Variety stores continued to show the most rapid rate of growth in total volume of business, and sales of grocery chains again showed a large increase over last year. Sales of drug and ten cent store chains also were larger than in July 1926, while tobacco and shoe systems reported slight declines, and sales of candy chains showed little change. Percentage Change July 1927 from July 1926 T ype of Store D rug...................................................................... T o b a cco .................................................................... S hoe........................................................................... C an d y................................................................... T o t a l.................................................................... Number of Stores Total Sales Sales per Store + 8 .8 + 8 .9 + 1 7 .4 + 3 .0 + 7 .4 + 2 2 .2 + 3 .3 + 1 8 .8 + 7 .0 + 8 .8 — 1 .4 — 3 .2 + 2 4 .7 — 0 .2 + — — — — + — + 8 .6 + 1 4 .4 + 5 .3 9 .2 1 .7 7 .4 4 .3 9 .9 2 .0 3 .3 72 MONTHLY REVIEW, SEPTEMBER 1, 1927 W h o le s a le T r a d e July sales of reporting wholesale dealers in this district averaged 5 % per cent larger than a year ago, due chiefly to a large increase in sales of women’s coats and suits, which in July 1926 were affected by a strike. Sales of cotton goods and of paper continued larger than last year and small increases were reported also in sales of men’s clothing and drugs. Decreases in July following increases in June occurred in sales of groceries, silk, and shoes, however, and sales of hardware, machine tools, sta tionery, diamonds and jewelry were considerably smaller than in July 1926. Stocks of groceries at the end of July were substan tially larger than a year previous, and shoe stocks con tinued much above the low level of last summer; jobbers stocks of cotton goods and mill stocks of silk goods also remained somewhat larger than in 1926. Comm odity Percentage Change July 1927 from June 1927 Net Sales Groceries..................... M en’s clothing.......... W om en’s dresses. . . . W om en’s coats and suits Cotton goods— Jobbers C otton goods-Com m ission........................ Silk good s....................... Shoes............................... D rugs.............................. H ardware....................... Machine tools**........... Stationery...................... P aper............................... D iam onds....................... Jew elry............................ — 9 .9 + 7 0 .4 — 2 7.7 + 2 1 3 .9 + 2 4 .5 W eighted A verage.. . + 2 2 .8 — 17.2 — 13.7 — 22.5 +12.6 — 6.6 —12.8 — 20.3 Stock end o l month Percentage Change July 1927 from July 1926 N et Sales Stock end of month + 8.8 — 8.1 + 1.6 + 1 6 .0 — 5 .0 + 1.2* + 1 .7 + 9 .6 + 3.1 — 0 .5 + 9 9 .6 + 1 0 .4 + 4 .2 — 9 .6 — 2 .4 + 2.0 + 5.S 37.5 41.7 + 6 .7 * + 3 9 .9 — 17.6 *48! 9 36.8 39.2 48.3 53.8 36.9 38.2 49.6 74! 7 6 5.0 28.3 66! 3 66.4 24.4 ........... + 5 .5 + 0.6 5 0.7 *= Q uantity not value. Reported b y the Silk Association of America. * * = R eported b y the National Machine Tool Builders’ Association. D e p a r tm e n t Store T ra d e Sales of leading department stores in this district averaged 3 per cent smaller in July than a year pre vious, but there were five Sundays during the month this year, and daily average sales were slightly larger than a year ago. All sections of the district reported smaller total sales than in July 1926, except West chester County, where reporting stores have been ex panding their business rapidly, and the lower Hudson River Yalley. Leading apparel stores also had a slightly smaller volume of business. The accompanying diagram, showing outstanding orders for merchandise reported by department stores at the end of each month, indicates that forward buying during the Spring season was even smaller this year than in other recent years, but the July reports indicate that advance buying of Fall merchandise has been of about the usual proportions. Average stocks of mer chandise at the end of July remained somewhat smaller than a year ago, but the decline in total sales caused a slight reduction in the rate of stock turnover compared with last year. The proportion of outstanding charge accounts col lected during July was slightly smaller than a year previous; this also may have been due to the fact that there was one less business day this year. Percentage Change July 1927 from July 1926 1926 79.2 45.7 — 11.9 — 25.3 + 4 .9 — 24.9 — 12.9 1927 73.9 36.1 —22.8 — 9 .6 + 5 .9 — 42.2 Per cent of Accounts Outstanding June 30 Collected in July Department Store Orders for Merchandise Outstanding at the End of Each Month in Percentage of 1924 Average, Compared with Volume o f Sales. (1927 Sales Estimated on Basis of First Six M onths.) Per cent of Charge Accounts Outstanding June 30 Collected in July Locality Net Sales Stock on hand end of month 1927 1926 — 2 .6 — 3 .3 — 9 .1 — 9 .0 — 2 .8 — 9 .4 — 2 .7 — 1 .8 — 14.4 — 2 .8 0 — 2 .4 + 5 .3 — 0 .8 — 7 .0 — 1 .6 — 22.9 + 7 .2 — 9 .4 — 2 .7 4 5.8 4 8.7 3 6.4 2 6.0 4 4 .0 4 7.3 4 8.3 39.6 2 3.8 4 5.3 3 i !2 32.0 All department stores..................... — 3 .4 — 1 .5 4 3 .3 44.3 Apparel stores.................................. Mail order houses............................ — 1 .8 + 0 .7 + 3 .1 44 .6 45.0 Northern New Y ork State........ Central New York S tate........... Southern New Y ork State........ Hudson River Valley D istrict.. Capital D istrict............................ Westchester D istrict................... Comparisons of July sales and stocks in leading de partments with those of a year ago are shown in the following table. W oolen g o o d s ............................................. Books and stationery................................ W om en’ s and Misses’ ready-to-wear. . . Hom e furnishings....................................... W om en’s ready-to-wear accessories. . . . Linens and handkerchiefs......................... Toys and sporting go o d s .......................... Luggage and other leather g ood s........... Silverware and jew elry.............................. T oilet articles and drugs.......................... M en’s furnishings....................................... C otton goods ............................................. Musical instruments and ra d io............... Silks and velv ets........................ ................ M en’s and B oys’ w ear.............................. Miscellaneous............................................... N et Sales Percentage Change July 1927 from July 1926 Stock on H and Percentage Change July 31, 1927 from July 31,1926 + 2 5 .3 + 1 1 .5 + 7 .7 + 5.1 + 4 .4 + 4‘. 1 + 4 .1 + 3 .7 + 1-4 — 0 .6 — 1 .2 — 1 .4 — 2 .1 — 3 .7 — 8 .4 — 8 .6 — 8 .7 — 10.7 — 6 .8 — 16.8 — 1.1 + 1 2 .4 — 2 .7 — 2 .3 + 1 2 .2 + 0 .2 — 3 .0 + 7 .6 — 4 .9 — 4 .0 — 0 .7 + 1 1 .9 — 13.1 — 24.2 + 2 .3 — 9 .1 — 1 .3 — 12.1
@FedFRASER