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MONTHLY REVIEW o f Financial and Business Conditions F ifth Federal Richmond * If yA. ^ nc. ^ _ Reserve D is tr ic t Federal Reserve Bank, Richmond, Va. July 31, 1941 Summary of June Business Conditions S O M E seasonal recession in business occurs in June cent. In the textile field, cotton consumption by Fifth district mills in June exceeded June 1940 consumption by 45 per cent, and shipments o f rayon yarn to domestic consumers rose 24 per cent in the same period. Bitu minous coal production in the United States last month was 33 per cent above June 1940 production. Business failures declined in both number and liabilities from June 1940 figures. A ll o f this increased activity raised employ ment levels to the highest point over a period o f years, and reduced relief rolls substantially. Agricultural prospects are fair to good in the Fifth district. The weather early in the season was very dry in most o f the district, and early crops such as hay, Irish potatoes and truck suffered severely, but general rains fell in June and the first half o f July, and if weather is favor able the balance o f the season most o f the backwardness in corn, tobacco and cotton, the three leading crops, can be made up. W ith higher Government payments to far mers in prospect, and advancing price tendencies evident for many farm products and live stock, cash returns from farming should be relatively good in the fall, and farmers should be in position to continue in the market for con sumer goods. Available estimates o f production in the Fifth district for 1941 appear on page 4. in most years, but on account o f forward orders in industry and higher consumer purchasing power result ing chiefly from the defense program the recessions were less than usual this year. In comparison with business a year ago, activity in June continued far higher in all lines of trade and industry. Department store sales in 79 Fifth district stores in June were 15 per cent above June 1940 sales, although the 1941 month contained one less business day, and re tail sales in 41 furniture stores last month were 31 per cent above sales in June last year. Registrations o f new passenger automobiles also ran far ahead o f last year’s June registrations. Wholesale trade in 195 firms in many lines and debits to individual accounts in 25 cities, both reflecting consumer purchasing power indirectly, rose 45 per cent and 32 per cent, respectively, in June 1941 in comparison with June 1940. Construction work provided for in permits issued and contracts awarded in June 1941 was in very large volume. Permits in 29 Fifth district cities last month rose 27 per cent in valuation over June 1940 permits, and construc tion contracts awarded in the district increased 217 per BUSINESS STATISTICS—FIFTH FEDERAL RESERVE DISTRICT % Change Y ear Month June 1941 May 1941 June 1940 Debits to individual accounts (25 cities).. Sales, 79 department stores, 5th district.... Sales, 41 furniture stores, 5th district......... Sales, 195 wholesale firms, 5th district....... Registrations, new autos, 5th district......... $1,807,218,000 $ 14,464,943 1,498,545 $ $ 14,423,000 35,804 $1,717,276,000 $ 16,590,561 $ 1,630,641 $ 14,364,000 38,966 $1,367,716,000 $ 12,590,200 1,143,807 $ 9,962,000 $ 24,135 + 5 — 13 — 8 + o — 8 + + + + + Number of business failures, 5th district.. Liabilities in failures, 5th district................ Value of building permits, 29 cities............. Value of contracts awarded, 5th district.... Cotton consumption, 5th district (Bales).. $ $ $ 27 152,000 13,533,100 92,503,000 391,979 37 $ 281,000 $ 14,579,982 $ 100,005,000 413,387 $ $ $ 47 801,000 10,664,464 29,161,000 271,127 — 27 — 46 — 7 — 8 — 5 — 43 — 81 + 27 +217 + 45 14.82 11.25 38,800,000 4,300,000 43,090,000 12.89 10.50 40,200,000 5,800,000 43,400,000 10.64 6.50 31,400,000 12,800,000 32,400,000 + 15 + 7 — 3 — 26 — 1 + + + — + Cotton price, cents per lb., end of month.... Print cloths, 39 in., 80x80s, end of month.. Rayon yarn shipments, U. S. (Pounds).... Rayon yarn stocks, U. S. (Pounds)............. Bituminous coal mined, U. S. (T on s)......... 32 15 31 45 48 39 73 24 66 33 MONTHLY REVIEW 2 BANK ING STATISTICS E M PLO Y M E N T RESERVE BAN K STATEMENT ITEMS Fifth District 000 omitted July 15 June 15 ITEMS 1941 1941 $ 0 $ 108 Discounts held ........................................ 852 Industrial advances ............................. 818 121,486 119,663 Government securities ....................... Total earning assets ..................... $122,446 $120,481 Circulation of Fed. Res. notes ......... 321,434 309,206 Member’s reserve deposits .................. 394,524 414,644 Cash reserves ........................................ 713,046 678,548 Reserve ratio .......................................... 85.60 84.04 July 15 1940 158 871 122,624 $123,653 230,463 319,933 481,759 80.13 $ SELECTED ITEMS— 41 REPORTING MEMBER BANKS Fifth District 000 omitted ITEMS July 9 June 11 1941 1941 $148,400 Loans to business & agriculture........ $144,502 161,278 All other loans .......................................... 167,030 453,076 458,814 Investments in securities ..................... 269,162 288,614 Reserve bal. with F. R. b a n k ............... 27,929 Cash in vaults ........................................... 27,877 696,815 Demand deposits ..................................... 703,305 207,584 Time deposits ........................................... 208,558 Money borrowed .......................................... 0 0 July 10 1940 $121,200 149,917 407,515 218,375 23,103 574,902 202,182 0 M UTUAL SAVINGS BAN K DEPOSITS 10 Baltimore Banks June 30 1941 Total deposits ....................... CITIES $224,593,340 May 31 1941 Dist. of Col. Washington . . . . Maryland Baltimore ........... Cumberland ......... Hagerstown ......... North Carolina Asheville ............. Charlotte ............... Durham ............... Greensboro ........... Raleigh ................. Wilmington ........ Winston-Salem . .. South Carolina Charleston ........... Columbia ............. Greenville ............. Spartanburg ----Virginia Danville ............... Lynchburg ........... Newport News . . Norfolk ............... Portsmouth ......... Richmond ........... Roanoke ............... West Virtginia Charleston ........... H u ntin gton ........... Parkersburg District Totals .. $ 359,738 $ 358,663 $ 297,719 559,072 11,035 11,821 ■493,412 9,352 11,056 17,169 96,732 317,862 26,877 60,094 19,369 48,783 SALES OF NEW AU TOM O BILES of Change Month Year % + 21 389,042 9,253 9,802 + 13 + 18 + 7 + 44 + 19 + 21 16,774 96,343 33,975 27,309 51,214 17,425 47,254 12,901 64,637 31,607 21,113 47,932 11,419 42,824 + 2 + o + 11 — 2 + 17 + 11 + 3 b33 -50 -20 -27 -25 -70 -14 30,603 39,748 26,890 14,654 30,494 42,753 28,629 16,859 21,642 27,673 17,946 10,386 + 0 — 7 — 6 — 13 + + + + 41 44 50 41 10,093 17,493 15,364 73,862 6,848 193,695 34,966 9,838 16,959 16,466 75,720 6,833 181,474 36,044 8,289 14,598 12,338 53,127 4,815 149,636 28,608 + + — — + + — + + + + + + + 22 20 25 39 42 29 22 62,293 20,465 11,692 60,093 19,732 12,605 51,572 18,136 10,701 $1,807,218 $1,717,276 $1,367,716 + 3 3 7 2 o 7 3 + 4 + 4 — 7 + 21 + 13 + 9 + + 32 5 Business failures in the Fifth district in June 1941 were fewer in number and lower in aggregate liabilities involved than in either May 1941 or June 1940, accord ing to figures reported by Dun & Bradstreet. Statistics for several periods were as follows : 6 Months, 1941....................... 6 Months, 1940....................... 234 294 6,702 7,119 Total Liabilities District U. S. $ 152,000 $ 9,449,000 281,000 10,065,000 801,000 13,734,000 2,533,000 3,416,000 Sales of new automobiles in the Fifth district dropped substantially in June from sales in May, but continued far ahead o f June 1940 sales. Last month’s decrease was partly seasonal and partly due to inability o f dealers to secure all models in sufficient quantity. Aggregate sales in the first six months o f 1941 were larger than in any other corresponding period on record. Higher purchas ing power as a result o f increased employment in defense work, anticipation of higher prices for 1942 models, and fear of inability to secure prompt deliveries in the fall or next spring, all stimulated new car buying in recent months. The demand for better cars overflowed into the used car market, and many people who do not buy new cars traded their old ones in on later model used cars. Dealers have been able to obtain enough cars to meet their needs until quite recently, but shortages are begin ning to develop in some models, and occasional dealers, chiefly in middle and higher priced cars, report advanced sales sufficient to take all the new cars they expect to obtain the balance o f this model years. The following registration figures for new passenger cars were furnished by R. L. Polk & Co., of Detroit: REGISTRATION OF N EW PASSENGER CARS— NUMBER STATES Maryland ........... Dist. of Col. . . . C O M M E R C IA L FAILURES Number of Failures District U. S. 27 970 37 1,119 47 1,114 ........... Dist. of Columbia .............................. ........... ........... West Virginia .................................... ........... North Carolina ...............^................ ........... South C arolina.................................... ........... District Average ......................... ........... Percentage change from May 1941 to June 1941 in number in amount on payroll of payroll + 3 .0 + 5.6 — 1.0 + 0.8 + 3.8 + 1 .5 + 1.2 + 1 .6 + 0.5 + 1 .1 + 0 .9 + 0.9 + 1 .5 + 2.4 $223,515,446 o PERIODS June 1941....................... May 1941....................... June 1940....................... STATES June 30 1940 $224,836,673 DEBITS TO IN D IVID UAL ACCOUNTS Fifth District 000 omitted June May June 1941 1941 1939 There were no outstanding developments in employ ment in June and the first half of July in the Fifth R e serve district. Skilled industrial workers and trained me chanics o f practically all types are fully employed, and there is relatively little unemployment among unskilled laborers. There continues to be a surplus o f clerical help, however, partly due to students desiring vacation work. Seasonal lay-offs have been few this summer, and shut downs to. overhaul machinery are being made as short as possible. The following figures, compiled for the most part by the Bureau o f Labor Statistics, reflect the trends of employment and payrolls in the Fifth district from May to Jun e: 72,156,000 83,481,000 West Virginia . . No. Carolina . .. So. Carolina .. . District ........... June 1941 6,767 3,612 8,954 5,615 7,121 3,735 35,804 June 1940 5,015 2,996 5,507 4,391 3,907 2,319 24,135 % Change + 35 + 21 + 63 + 28 + 82 + 61 + 48 6 Months 6 Months 1941 1940 37,148 26,844 20,262 15,104 43,377 28,605 21,767 17,310 41,863 26,656 22,954 15,195 187,371 129,714 % Change + 38 + 34 + 52 + 26 + 57 + 51 + 44 CO N STRU CTION PERMITS AN D CO N TRACTS Construction work provided for in permits issued and contracts awarded in June in the Fifth district continued at a very high level. Building permits issued in 29 cities last month totaled $13,533,100 in estimated valuation, an increase o f 27 per cent above $10,664,464 in permits in 3 MONTHLY REVIEW June 1940. Permits in the first half of 1941 totaling $73,789,147 exceeded those issued in the first half o f 1940, valued at $57,002,309, by 29 per cent. In June 1941 Washington led in permits with $4,982,670, Balti more was second with $2,388,186, Charleston, S. C., third with $1,076,090, Richmond fourth with $712,044, and N orfolk fifth with $588,585. Washington permits in clude no Government work, for which city permits are not required. Contracts awarded for construction work in the dis trict in June 1941 totaling $92,503,000 were the third highest in valuation on record for a single month, and exceeded contracts totaling $29,161,000 in June 1940 by 217 per cent. In the first half of 1941, contracts award ed in the district totaling $373,513,000 not only exceeded awards in any other half year, but also exceeded awards for the entire year in 13 of the past 20 years. Much o f the construction work for which contracts were awarded in the past year was a part o f the defense program, but non-defense work has also been at a relatively high level in recent months. Figures on contract awards by states for May 1941, which were not available when the June 30 R eview went to press, were reported by the F. W . Dodge Corporation as fo llo w s: CONSTRUCTION CONTRACTS AW ARDED STATES May 1941 May 1940 % Change $ 15,974,000 $ 9,746,000 + 64 Maryland ............................. Dist. of Col. •...................... 4,934,000 10,374,000 — 52 Virginia ............................... 13,151,000 7,262,000 + 81 West Virginia ................... 4,669,000 3,681,000 + 27 North Carolina ................. 42,686,000 5,785,000 + 63<8 South Carolina ................. ................. 18,591,000_________ 2,491,000_______ + 6 4 6 Fifth District ................. $100,005,000 $39,339,000 +154 C O A L PRO D U CTIO N T o meet expanding needs o f industries, and in an e f fort to rebuild reserves which were depleted during the April shut-down o f bituminous mines, soft coal mines increased daily production further in June, although total tonnage for the month was slightly less than in the longer month of May. Production o f 43,090,000 net tons in the United States in June exceeded June 1940 production of 32,400,000 tons by 33 per cent, and brought tonnage for the first half of this year to 226,226,000 tons against 219,583,000 tons mined in the first half of 1940, an in crease of 3 per cent this year in spite of the fact that production in April 1941 was merely nominal. Coal loaded at Hampton Roads ports from January 1 to July 12 totaled 11,455,794 tons this year against 12,645,284 tons in 1940 when there was no strike in coal fields. In the Fifth district, bituminous coal mined in June 1941, May 1941 and June 1940, was as follow s: SOFT COAL PRODUCTION IN TONS REGIONS West Virginia ....................... Virginia .................................. Maryland .................................. 5th District ................... United States ............... % in District ................. June 1941 May 1941 June 1940 12,965,000 13,429,000 9,961,000 1,635,000 1,660,000 1,110,000 151,000__________ 135,000___________ 91,000 14,751,000 15,224,000 11,162,000 43,090,000 43,400,000 32,400,000 34.2 35.1 34.5 CO TTO N TEXTILES In the first half of June print cloths and sheetings were very active and sales by manufacturers totaled about eight weeks’ production, and twills, drills, osnaburgs and ducks also sold freely. Arm y buying continued large and the Government invited bids for the first time in line with the provisions o f the Lend-lease Bill. However, the im position o f price ceilings by the O P A C S on print cloths, carded broadcloths, tobacco cloths, combed broadcloths, sheetings and osnaburgs caused a cessation o f selling or buying toward the end o f the month, and quoted prices were nominal on goods affected by the ceiling prices. W ith mills sold up from five to six months in many in stances, the Journal o f Commerce states that mills are faced with the necessity o f paying rebates on contracts probably amounting to about 700,000,000 yards. The ceil ing prices set were substantially lower than market quo tations, but some adjustments o f the differences were made shortly after the middle o f July, ceiling prices being raised to bring them more nearly in line with advanced costs o f production. Mill margins, the difference be tween the price o f a pound o f cotton and its approximate cloth equivalent, averaged 21.84 cents in June 1941 against 20.85 cents in May and 10.68 cents in June 1940. The 10-year (1930-39) average margin for June was 11.82 cents. COTTON CONSUMPTION— FIFTH DISTRICT In bales MONTHS No. Carolina So. Carolina Virginia June 1941................... 215,790 156,943 19,246 May 1941................... 223,743 169,452 20,192 144,430 116,248 10,440 June 1940................... 6 Months, 6 Months, 1941................... 1940................... 1,279,532 1,004,860 RAYON YARN 964,944 783,394 107,576 78,471 District 391,979 413,387 271,127 2,352,052 1,866,725 PRO D U CTIO N Shipments o f rayon filament yarn to domestic con sumers totaled 38,600,000 pounds in June 1941, a slightly lower figure than the record o f 40,200,000 pounds shipped in the longer month o f May but 23 per cent above 31,400.000 pounds shipped in June last year. For the third consecutive month shipments exceeded production, and reserve stocks o f yarn dropped from 5,800,000 pounds to 4.300.000 pounds during June. Rayon Organon states that shipments totaled 219,500,000 pounds in the first half o f 1941, an increase of 18 per cent above shipments o f 186,100,000 pounds in the corresponding period last year. On June 16, one large rayon producer changed selling terms from 2 % thirty days, net 31, to net 30 days, and the change was generally followed in the market. The elimination o f the cash discount increased rayon prices slightly, o f course, but the increase was nominal in comparison with recent upward trends o f cotton, wool and silk. In contrast with these rising prices, nylon yarns were reduced on June 16 by amounts rangii^g from 10 cents to 30 cents per pound, according to deniers. C O TTO N STATISTICS Spot cotton prices on 10 Southern markets, which had been advancing steadily since the middle o f May, dropped sharply in the first week o f July as a result o f the ceilings set for certain textiles by the O P A C S , but the decline was temporary and on July 18 the average for middling cotton on the 10 markets was 15.48 cents, the highest price reached since April 11, 1930. On July 19, 1940, the average price was 10.31 cents, the current price show ing an advance o f $25.85 per bale within the year. MONTHLY REVIEW 4 On July 8, the Department o f Agriculture reported the 1941 cotton acreage at 23,519,(XX) acres, 94.6 per cent of the area in cultivation on July 1 last year, and the small est acreage in almost half a century. In the Fifth dis trict, Virginia’s 35,000 acres are 105 per cent o f last year’s acreage, but South Carolina’s planting o f 1,243,000 acres is only 98 per cent and North Carolina’s planting of 807,000 acres is only 96 per cent o f 1940 acreage. No official data on the condition of this year’s crop will be available until August. COTTON CONSUMPTION AND ON H AND— BALES June 1941 fifth district states: Cotton consumed ....................... June 1940 Aug. 1 to June 30 This Year Last Year W HOLESALE TRADE, 195 FIRMS LINES Automotive supplies (9 ). Shoes (4) ......................... Drugs & sundries (12) . . Dry goods (8) ................. Electrical goods (10) . . . Groceries (63) ................. Hardware (13) ............... Industrial supplies (9) . Paper & products (9) Tobacco & products (8 ). Miscellaneous (50) ......... District Average (195) 391,979 United States: 875,137 Cotton consumed ....................... Cotton on hand June 30 in Consuming establishments . . 1,918,335 Storage & compresses ........... 10,570,235 271,127 4,002,796 3,433,200 ■489,191 7,488,516 6,111,530 903,285 9,516,166 565,416 8,789,277 1,160,912 9,576,683 133,530 Exports of cotton ......................... 75,236 Spindles active, U. S....................... 22,991,546 21,954,616 7,161,051 ................................ ................................ June 1941 May 1941 June 1940 24,729,260 25,621,949 24,763,334 18,498,764,92017,858,111,310 17,565,041,013 478,802,003 475,067,340 435,029,473 2,930,255 3,609,796 2,896,537 R E T A IL A N D W H O LESALE TR A D E West V ir g in ia ......... North Carolina . . . South Carolina , . . District Av........... West V ir g in ia ......... North Carolina . . . South Carolina . . . . . . District Percentage increase or decrease in sales, stocks, outstanding orders and outstanding receivables in June 1941 in comparison with June 1940 figures: Sales + 8 + + + + + + + + + 14 15 17 15 14 16 16 14 23 ( + 15) ( + 19) ( + 20 ) ( + 15) ( + 19) (+ (+ (+ (+ (+ Stocks +22 + 16 + 15 + 12 + 16 Orders Receivables + 78 + 11 +12 + 136 + 13 + 119 + 131 + 10 +12 + 116 18) 21) 16) 17) 21) West Virginia . .. North Carolina . . . South Carolina . . . District ............. Note: Second figure, in parentheses, under Sales compares combined in 6 months of 1941 with sales in first 6 months of 1940. RETAIL FURNITURE Maryland (9) .......... Dist. of Col. (7) Virginia (13) ........... North Carolina (5) South Carolina (7) District (41) ........ Individual Cities: Baltimore (9) ........ Richmond (5) .......... Washington (7) ----- + 4 + 22 — 2 — 12 + 6 — 5 — 10 + 2 + o + + + + + + + + + + + + 15 13 26 41 48 15 11 23 11 9 30 24 May 31 outstanding 1941 June 1 — 4 + 17 + 3 + 8 — 5 + 0 + 6 — 2 + 4 — 3 1 3 + + 77 61 113 44 73 94 50 75 78 86 72 72 + 27 + 2 + ■45 + 22 + 10 + 38 2 3 6 8 8 + Yield 1940 Yield 1930-1939 7,220,000 7,155,000 1,768,000 6,830,000 2,900,000 25,873,000' 7,566,000 8,463,000 2,016,000 6,132,000 2,688,000 26,865,000 8,342,000 8,643,000 2,154,000 4,807,000 1,364,000 25,310,000 1,120,000 1,932,000 1,462,000 5,952,000 10,890,000 21,356,000 1,325,000 2,116,000 1,931,000 4,460,000 9,238,000 19,070,000 + 1 Oats (Bushels) 11 1,209,000 25 1,942,000 1,491,000 4 5 6,110,000 5 11,700,000 22,452,000 7 — — — — — - Com (Bushels) 8 16,13*5,000 4 32,389,000 7 12,182,000 2 46,215,000 2 23,814,000 3 130,735,000 17,535,000 36,490,000 12,852,000 44,733,000 24,304,000 135,914,000 16,173,000 32,418,000 12,610,000 43,507,000 22,831,000 127,539,000 + + + 1 0 2 Hay (Tons) 470,000 874,000 701,000 870,000 8 550,000 3,465,000 2 550,000 1,252,000 833,000 975,000 539,000 4,149,000 467,000 924,000 642,000 744,000 398,000 3,175,000 + + + + + + + West Virginia . . . . North Carolina . .. South Carolina . . . District ............... 2,898,000 10,412,000 3,630,000 8,720,000 3,192,000 28,852,000 2,997,000 10,661,000 2,844,000 8,182,000 2,475,000 27,159,000 North Carolina . . . South Carolina . .. District - ............. Sweet Potatoes (Bushels) + 11 1,700,000 1,485,000 + 3 3,875,000 3,680,000 + 8 8,400,000 7,104,000 + 3 5,525,000 5,040,000 + 6 19,305,000 17,504,000 1,071,000 4,061,000 8,354,000 5,401,000 18,887,000 SALES Changes in Sales, June and 6 Months of 1941 Compared with Compared with June 1940 6 Months + 27 + 22 + 45 + 38 + 26 + 28 + 27 + 23 + 36 + 20 + 31 + 29 — — — + + Yield 1941 (Bushels) Irish Potatoes (Bushels) — 3 2,586,000 + 1 6,237,000 0 3,300,000 6,642,000 + 7 2,670,000 + 1 21,435,000 * Includes stores reporting sales only. STATES + 2 — 17 — 4 % Change Acreage Wheat West V ir g in ia ......... North Carolina . . . South Carolina . . . District ............... DEPARTMENT STORE TRADE % b 67 -104 - 27 - 54 -109 - 13 - 40 - 57 - 3‘8 - 11 - 50 - 45 June 30 1940 The following figures, issued by the Department of Agriculture, show forecasts of production based on July 1 conditions, compared with yields in 1940 and in the 10-year period 1930-39, and percentage changes in acre age this year over or under 1940 acreage: 1,050,776 6,054,961 ................................ Production figures on tobacco products manufactured in the United States in June 1941, released by the Bureau o f Internal Revenue, compare as follows with figures for May 1941 and June 1940: Same stores by States: Maryland (13) ................. Virginia (16) ................. West Virginia (15) ----North Carolina (16) . . . . South Carolina (12) ------ May 1941 CROP FORECASTS TO BAC CO M A N U FA C TU R IN G Richmond (5) ......... Baltimore (10) ----Washington (7) . . . Other Cities (12) . Fifth District (79)* June 1940 Ratio June collections to accounts Source: Bureau of the Cenpus. Cotton growing states: Cotton consumed ....................... 742,792 Cotton on hand June 30 in Consuming establishments . . 1,522,775 Storage & compresses ........... 10,171,354 Smoking & chewing tobacco, pounds ............... Cigarettes, number ............... Cigars, number ....................... Snuff, pounds ........................... Stocks June 30., 1941 compared with Net Sales June 1941 compared with West Virginia North Carolina . . . South Carolina . .. District ............... Tobacco (Pounds) + 3 33,235,000 — 2 90,950,000 — 10 2,170,000 + 1 504,380,000 + 5 80,750,000 + 1 711,485,000 31,920,000 100,509,000 2,790,000 526,505,000 82,215,000 743,939,000 26,901,000 99,861,000 2,985,000 529,356,000 85,656,000 744,759,000 West Virginia North Carolina . . . South Carolina . . . District ............... Peaches (Bushels) 440,000 1,993,000 490,000 2,484.000 3,120,000 8,527,000 470,000 1,392,000 446,000 1,344,000 2,158,000 5,810,000 348,000 902,000 267,000 1,920,000 1,236,000 4,673,000 (Compiled July 21, 1941) MONTHLY REVIEW, July 31, 1941 FEDERAL RESERVE BANK OF RICHMOND SUMMARY OF NATIONAL BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION Federal Reserve index o f physical volume of pro duction, adjusted for seasonal variation, 1935-39 average=100. Subgroups shown are expressed in terms of points in the total index. By months, January 1935 to June 1941. WHOLESALE PRICES Bureau of Labor Statistics’ indexes, 1926 =10 0. “ Other” includes commodities other than farm products and foods. By weeks, January 5, 1935 to week ending July 12, 1941. MEMBER BANK RESERVES AND RELATED ITEMS W ednesday figures, January 4, 1939 to July 1941. MEMBER BANK RESERVES BILLIONSOPDOLLARS W ednesday figures, January 2, 1935 to July 9, 1941. Required and excess reserves, but not the total, are partly estimated. Industrial production increased fu rth er in June, continuing the rapid ad vance that began about a year ago. C om m odity prices, both in retail and in wholesale m arkets, rose considerably betw een the early part o f June and the third w eek o f July. P R O D U C TIO N R eflecting the continued advance in industrial activity at a tim e w hen ou t put ordinarily declines, the B oa rd’ s adjusted index advanced fr o m 150 p er cen t o f the 1935-1939 average in M ay to 156 in June and prelim inary estimates indicate a fu rth er rise in July. The curren t level com pares w ith 104 b e fo re the start o f the European w ar and 111 in the spring o f 1940, w hen the curren t advance in industrial activity began. Further increases in output w ere reported in June f o r a considerable num ber o f industries, particularly those associated closely w ith the defen se program , and there w ere no im portant declines. A s in oth er recen t months, activity in the aircra ft, shipbuilding, m achinery, and railroad equipm ent industries rose sharply. A u tom obile production was m aintained at the high level o f May, ow in g m ostly to unusually large retail sales. O utput o f iron and steel and n on ferrou s metals, already close to capacity, did n ot show an increase to c o r respond w ith the rise in output o f finished m etal products and official statem ents indicated g row in g con cern over shortages o f num erous m aterials. Steel in got produ ction rem ained close to 99 per cent o f capa city during June, bu t the rate in the m iddle o f July w as slightly low er. F or the year to date output o f steel has averaged 98 per cent o f the rated capacity as o f D ecem ber 1940. O utput o f textiles and m ost other n ondurable m a nu factu res in June con tinued at recent advanced levels, w hich in some instances represent capacity production. O utput o f chem icals continued to increase rapidly. A lso, there was a sharp rise in rubber consum ption, reflectin g continued heavy dem and fo r ru bber products and the fa c t that June w as the last m onth b e fo r e curtailm ent o f ru b ber consum ption by industry was to go into effect and was the m onth to be used in apportion ing July consum ption am ong various m anufacturers. M ineral production increased in June, w ith a m arked rise in output o f anthracite, som e fu rther increase in output o f bitum inous coal, and a continued advance in crude petroleum production to a new high level. V alue o f construction con tra ct awards in June continued at the high level reached in M ay and was n early tw o-thirds above a year ago, a ccord in g to figures o f the F. W . D odge C orporation. A w ards fo r pu blic construction again increased sharply, reflectin g continued expansion in the volum e o f defen se construction projects. Private residential building contracts declined som ew hat m ore than seasonally, follow in g an increase in May. D IST R IB U T IO N Sales o f general m erchandise show ed little change fro m M ay to June. D epartm ent store sales decreased m ore than seasonally, w hile rural retail and v ariety store sales remained at the M ay level, although a decline is usual at this tim e o f the year. In the early part o f July sales at departm ent stores rose som ewhat and w ere 24 per cent higher than a year ago. Loadings o f revenue freig h t increased fu rth er in June, reflecting continued expansion in shipments o f coal and m iscellaneous m erchandise, and by the end o f the m onth w ere in larger volum e than at any tim e during the seasonal peak last autumn. C O M M O D ITY P R IC E S W holesale prices o f m ost grou ps o f com m odities continued to advance from the early part o f June to the m iddle o f July. Prices o f food stu ffs showed large increases and there w ere substantial advances in prices o f a num ber o f industrial raw materials and finished products. F ollow in g earlier marked ad vances, prices o f hides and cotton gray g oods w ere redu ced b y G overnm ental action. Retail prices fo r foods and m any other com m odities have been rising and in June the cost o f living was abou t 4 per cent higher than 4 m onths earlier. P relim inary figures indicate fu rth er advances in July. B A N K C R E D IT H oldings o f United States G overnm ent securities b y m em ber banks in 101 leadin g cities increased fu rth er during June and early July, reflectin g in part new offerings by the Treasury. Com m ercial loans continued to rise sharply. N otw ithstanding the grea ter volum e o f bank loans and investm ents, d e posits o f city banks declined som ewhat over the period, reflecting m ainly a grow in g dem and fo r cu rren cy and a bu ildin g up o f Treasu ry deposits at the R eserve Banks. These developm ents also resulted in a decrease in the volum e o f excess reserves, which am ounted to about $5,300,000,000 on Ju ly 16, com pared with $6,900,000,000 a year earlier. UNITED S T A T E S G O V E R N M E N T SE C U R IT Y PR IC E S United States G overnm ent securities advanced fu rth er du ring the latter part o f June. Partially tax-exem pt 1960-65 bonds on June 26 w ere at an alltim e peak, on a 2.02 yield basis. Since that tim e th ey have declined slightly. T axable bon ds generally continued to advance to successive new high levels. Y ields on T reasury notes show ed little change during the latter pa rt o f June and the first h a lf o f July.
@FedFRASER