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Monfhlu Review Atlanta, Georgia April • 1959 A hook at Auto Sales N .e w A ls o in t h is is s u e : HIGHER PROFITS DESPITE INCREASED COSTS IMPACT OF CH A N GIN G ECONOMIC AND CREDIT CONDITIONS ON DISTRICT BANKS SIXTH DISTRICT BUSINESS HIGHLIGHTS SIXTH DISTRICT STATISTICS SIXTH DISTRICT INDEXES pern IBantof j^ /a n ta 1959-model automobiles have been increasingly numerous in traffic jams in the last five months, although, statistically speaking, the new model year is only about four months old. Figures reflecting substantial sales of new models are available for only November, De cember, January, and February. Few figures, however, have probably ever been searched so diligently by so many businessmen, economists, and Government officials for clues to the future course of the economy. The search is justified by the great importance of the automobile indus try in our national economy. From Coast to Coast So far, it is clear that 1959 models are selling better than the 1958 models did. Just how much better, however, is difficult to say, particu larly since several work stoppages at assembly and supplier plants have tended to disrupt normal delivery schedules in this period. There is no certainty as to what combination of figures is likely to show the sales trend most accurately. In November, the first month in which the new models were sold in large volume, sales of domestically-produced cars were 18 percent below a year earlier. Increases soon appeared, however, as stocks of new cars built up following strike-induced shortages: In December, sales were up 4 percent from a year earlier; in January, the year-to-year gain was 12 percent; and in February, sales were 26 percent above the same month of 1958 when sales were particularly low. Sales during the four months together totaled about 4 percent above the corresponding yearearlier total. If sales for the full model year prove to be only 4 percent better than for 1958, they will, indeed, be a disappointment to an industry that has been looking forward confidently to sales of about 5.5 million domestically-produced units, or an increase of about 30 percent over the unusually low level of 1958. Fortunately, the auto industry has grounds for believing the full year will prove to be more in line with its original forecast. After all, 5.5 million would be a low volume com pared with most recent years. Then too, general business activity is expanding; a year ago it was still on the downtrend toward the reces sion low reached last April. Improvement in both consumer income and outlook, stemming from economic recovery, has led the industry to expect a reappearance of the traditional spring upsurge in new car sales. In two of the last three years, this upsurge has been conspicu ous by its absence. We may, of course, be experiencing a change in the seasonal pattern of automobile sales, with the early months of the model year accounting for a greater proportion of total sales than for merly was the case. This possibility at least suggests the need for caution in assessing sales prospects for the remainder of the model year. With this in mind, we might consider what would happen if the sales pattern for the 1959 model year approximates the average for the 1956 New Passenger Car Sales United States (November of Each Model Year = 100) Percent model year, when the traditional spring upsurge in sales did not appear, and for the 1957 model year, when a small upsurge did appear. In both earlier periods, eco nomic activity was expanding much as it is currently. Sales during the first four months of the two model years averaged about 34 percent of the full year. If this per centage is representative of the current model year, sales of domestically-produced automobiles will be in the neighborhood of five million units, or about 15 percent above last year. A disappointing possibility? Undoubtedly, it would be to those who have expected a gain twice that size. Never theless, five million units sold would be a substantial im provement over last year. If sales are to reach five million units, however, the last eight months of the model year will have to show an average year-to-year gain of about 25 percent. In the automobile industry—characterized by wide, irregular fluctuations in sales—past experience is a noto riously poor guide to the future. There is no reason to ex pect this year to be an exception. The automobile indus try, therefore, may not be overly optimistic in expecting sales of 5.5 million domestically-produced units. Figures available so far this year simply indicate that a substan tial further improvement will be necessary if such expec tations are to be realized. Within District States Any improvement in national sales of new cars probably will be mirrored closely in Sixth District states. Although there is a greater lag in the availability of information on sales for the District, we do have information for Novem ber, December, and January on the number of new auto mobiles registered in Sixth District states. These figures show that registrations of new model cars in this region have been keeping pace with similar national data. Since the new models were placed on the market in large vol ume, District registrations have shown somewhat better month-to-month changes than have the national totals. As a result, registrations in this region accounted for a slightly larger proportion of the national total than they did in the last few months of the 1958 model year. Changes in automobile credit extended by commercial banks support the belief that both District and national auto sales are improving. In December, District bankers extended 15 percent more credit for consumer purchases of new and used automobiles than in the preceding month. A further rise of 9 percent occurred in January. All commercial banks in the country increased their ex tensions about 19 percent in December, but in contrast to District banks, they reduced their extensions slightly in January. For December and January combined, auto mobile credit extended by District banks averaged 21 percent higher than in November, whereas that extended by banks in the nation averaged 18 percent higher. It would be surprising, of course, if the Sixth District did not share in any substantial rise in national automo bile sales, judging from the sales patterns of recent years. Even though registrations have changed drastically, this region has accounted for a remarkably stable proportion of national registrations. In the record sales year of 1955, District states registered 10.1 percent of all new cars; in 1958, when dealers throughout the country sold about one-third fewer cars, registrations here accounted for 10.2 percent of the national total. Comparable percentages for 1956 and 1957 were 10.3 and 10.4, respectively. The Many Factors Involved The total of new car sales for the 1959 model year in the Sixth Federal Reserve District, whatever it proves to be, will be the net result of many factors at work to shape consumer response. Observers can only weigh those fac tors likely to promote sales against others likely to hin der sales. In the District, as in the nation, auto dealers can ex pect help from rising incomes. Economic recession caused a slight drop in personal income in late 1957 and early 1958, but for the full year, income in District states was nearly 4 percent above that for 1957. Since the low point of business activity, reached in this District about last ; April or May, incomes have increased as employment has picked up and work weeks have lengthened. Liberal terms are available for repaying money bor rowed to buy new cars: Half of all new-car loans made by District bankers last year provided for relatively long repayment periods, that is, over 30 months. The trend , toward more frequent use of long repayment periods, I however, has slackened over the past year, indicating that the potential for stimulating sales this year through the increased use of consumer credit probably has been re duced somewhat. While rising incomes and credit availability can be • 2 • expected to boost automobile sales, the opposite can be expected from price increases announced when the new models were introduced. List prices advanced an average of 4 percent, as reported by the Bureau of Labor Sta tistics for the new car component of the consumer price index. In recent model years, discounts from list prices have been common following introduction of new models. Nevertheless, an upward trend in annual price averages has continued strong. It must also be recognized that an increasing array of products now competes with the automobile for the con sumer’s dollar. The needs of growing families, the desire to build new homes or to improve existing ones and fur nish them anew, and the attractions of new or improved products may be leading to less emphasis on having the shiniest, biggest, and most elaborately equipped automo bile. That this possibility is very real seems evident in the fact that the major automobile producers are ex pected to bring out their own versions of the so-called “compact” car toward the end of the year. Observers seem to agree that important changes are taking place in the automobile industry. The relative success of new car sales this year will weigh heavily in determining the rapid ity with which these changes take place. P h il ip M. W e b st e r Higher Profits Despite Increased Costs The uptrend in operating costs of Sixth District member banks continued during 1958 despite recessionary forces that prevailed during much of the year. Furthermore, the rise in costs during the year was greater than that in total Average Operating Ratios of all Member Banks in the Sixth Federal Reserve District SUMMARY RATIOS: 1953 1954 1955 1956 1957 1958 Percentage of total capital accounts: Net current eamings before 14.2 16.2 16.9 15.7 15.5 income t a x e s ......................... , 16.3 14.1 12.6 13.2 12.8 Profits before income taxes . . . 14.2 15.1 8.4 9.6 8.4 8.5 9.9 Net p ro fits.................................. 2. 9 3. 0 3. 0 3. 0 Cash dividends declared . . . . 3. 1 . 3. 1 Percentage of total earnings: 4.01 3.88 3.43 3.66 3.25 3.26 Total earnings.............................. Net current eamings before 1.09 1.16 1.18 1.23 1.15 1.10 income t a x e s ......................... .74 .63 .62 .63 .71 Net p ro fits.................................. .64 SOURCE AND DISPOSITION OF EARNINGS: Percentage of total eamings: 20.9 22.5 21.8 22.2 22.4 Interest on U.S. Govt. Securities . . 23.0 7.2 6.2 6.0 Int. and div. on other sec. . . . 5.9 5.9 59.4 59.4 59.7 59.6 Earnings on loans......................... 58.8 7.3 6.6 . 6.4 6.7 6.6 6.5 Service charges on dep. accts. 2.6 2.6 2.6 2.6 Trust dep artm ent e a rn in g s1 2.2 2.6 5. 2 5. 7 5. 3 6. 2 6. 0 Other current earnings . . . . . 6. 3 100.0 100.0 100.0 100.0 100.0 30.2 30.3 31.2 31.6 32.3 Salaries and w a g e s .................... . 32.0 18.5 16.4 11.3 10.4 10.8 9.1 Interest on tim e deposits39.7 42.5 34.2 35.0 33.9 Other current expenses . . . . 72.8 66.2 69.9 65.8 66.2 Total expenses......................... , 64.5 Net current earnings before 27.2 30.1 34.2 33.8 income t a x e s .................... . 35.5 33.8 Net losses (or recoveries and 3.2 + 2.5 4.9 3.5 profits + ) 3 ............................. 3.8 + 1.0 Net increase (or net decrease + ) 2. 4 2.6 2. 9 1. 4 2. 3 in valuation reserves . . . . 7.9 8.6 9.9 8.7 11.4 Taxes on net income.................... 18.5 17.3 16.6 18.5 Net p ro fits.................................. . 19.9 22.0 RATES OF RETURN ON SECURITIES AND LOANS: Return on securities: 2.64 2.65 2.12 2.46 2.04 2.06 Interest on U.S. Govt. Securities . 2.82 2.66 2.52 2.52 2.67 2.60 Int. and div. on other sec. . . . Net losses (or recoveries and .11 + .44 .27 .17 profits + ) on total sec." . . .08 + .27 Return on loans: 6.71 6.67 6.35 6.35 Eamings on loans......................... 6.30 6.19 Net losses (or net recoveries - f ) .13 on loans3 .................................. .15 .15 .17 .10 .20 DISTRIBUTION OF ASSETS: Percentage of total assets: 31.4 30.3 31.4 33.4 33.0 U.S. Government securities . . . 33.9 10.4 9.4 8.6 9.0 Other s e c u r itie s ......................... 8.1 35.7 34.8 Loans ............................................ 34.8 32.8 31.5 21.9 22.8 Cash assets .................................. 23.4 24.3 25.8 1.4 1.5 1.2 Real estate assets .................... 1.1 1.0 1.0 .2 .2 .2 .2 .2 All other a s s e t s ......................... Total assets.............................. 100.0 100.0 100.0 100.0 100.0 OTHER RATIOS: Total capital accounts to: 8.2 Total assets .............................. . 7.7 7.9 7.8 7.7 7.5 Total assets less Government 17.7 18.0 18.1 securities and cash assets . . . 20 0 19.6 18.9 Total deposits.............................. . 8.4 8.5 8.6 8.8 9.1 8.2 31.7 Time deposits! to total deposits . . . 23.5 26.0 28.2 25.8 24.8 Interest on time deposits* to time deposits....................................... 2.46 1.42 1.62 2.36 1.36 Number of b a n k s.............................. 362 369 378 387 397 iBanks with none were excluded in computing this average. Ratio included in "Other current earnings." 2Banks with none were excluded in computing this average. Ratio included in "Other current expenses." ^Includes recoveries or losses applied to either earnings or valuation reserves. 4Banks with none were excluded in computing this average. earnings. Operating costs consumed 73 cents out of each dollar of earnings during 1958, compared with about 70 cents in 1957. Ten years earlier, in 1948, costs ac counted for 61 cents. Most of the rise in expenses during 1958 reflected a further increase in interest paid on time deposits result ing from rises in both the average rate paid and in the total amount of time deposits. These payments amounted to 18.5 percent of total earnings during 1958, compared with 16.4 percent in 1957. In 1956, before the general increase in rates paid on such deposits, interest payments accounted for only 11.3 percent of earnings. Although operating costs rose faster than operating earnings during 1958, member banks were still able to push their net profits substantially above the previous year’s total. These banks reported net profits equal to 9.6 percent of capital accounts, compared with 8.4 percent in 1957. Stated differently, 18.5 cents out of each earnings dollar went into net profits, whereas net profits amounted to 16.6 cents during the preceding year. The sizable rise in net profits was made possible by a sharp increase in profits and recoveries on securities, principally United States Government obligations. Curi ously enough, it was the same recessionary forces that adversely affected profits of other types of businesses that made much of these capital gains possible. Since Govern ment security prices strengthened because of declining interest rates, as they customarily do during a recession, bankers were able to sell at a profit. Profits and recov eries amounted to .44 percent of average security holdings of all types during the year. In contrast, net losses amounted to .11 percent during 1957, when prices of U. S. securities were falling. Despite the trend toward higher net profits, some bankers saw red ink appear on their annual statements. Six of the 397 member banks in operation during all of 1958 suffered a loss from net current operations. Profits and recoveries from security sales and from other sources were not sufficient to convert this to a net profit for three of these banks. Sixth District bankers earned about the same rate on their holdings of U. S. Government securities in 1958 as they did in 1957. Their rate of return on other securities and on loans, however, was significantly higher than during the previous year. w M D avis • 3 • Impact of Changing Economic and Credit Conditions on District Banks Rapidly changing economic activity during the last 17 months has provided the Federal Reserve System with a unique opportunity to display its flexibility. System policy shifted in a counter-recession direction in late October and early November of 1957, when vigorous actions were taken to foster ease in credit markets and encourage eco nomic revival. The turnabout in economic activity com menced last spring. Since then, the economy has re bounded sharply, and most of the significant statistical indicators are now in an uptrend. Once it became evident that recovery was vigorous and widespread, the Federal Reserve began to reverse the policy of credit ease which it had pursued since the fall of 1957. After mid-1958, System open market operations supplied only a part of the reserves needed to meet rising credit demands and to offset the reserve drain of a con tinued gold outflow. As a result, member banks were obliged to draw down their excess reserves and to in crease their borrowings from the Federal Reserve Banks. Such borrowing was made more costly when Reserve Bank discount rates were raised last summer from 1% percent to 2 percent and in mid-fall when they were raised to 2l/2 percent. In March of this year, the dis count rate was again increased to 3 percent. Interest Rates Rise Borrowing costs associated with other types of debt in struments also rose rapidly with recovery. The Treasury bill rate, which had fallen to .83 percent in June 1958 rose sharply to 2.44 in September, and thereafter in creased more moderately, averaging 2.86 for the first two weeks in March 1959. Long-term interest rates also rose sharply as evidence of revival in economic activity cumu lated and fears of renewed inflationary pressures mounted. Yields on long-term United States Governments in creased from 3.19 to 3.75 percent from June to Sep tember 1958. Rates then declined through November, Interest Rates Variations in interest rates reflect changes in the economic and credit climate. but have since resumed their upward movement. In early March 1959, the rate on long-term Governments was 3.90, which was 71 basis points above the mid-1958 rate. Market rates for corporate bonds and for state and local government issues followed the same general pattern as yields on long-term United States Government securi ties from June to November 1958. Since late last fall, however, yields on corporate bonds have increased less rapidly than those of United States Governments, and rates on state and local government bonds have edged downward. The rise in interest rates from the recession low reflects in part the increased demand for credit associated with the upturn in economic activity and with System actions aimed at limiting the rate at which the supply of loanable funds expanded. The abrupt turnabout in rates apparently also reflects a sharp change in investor expectations. In short, the upward movement in interest rates signaled the change in the economic climate, and banks throughout the nation set out to adapt their activities to a new en vironment. But what of District banks? How have they adjusted to changing economic and credit conditions? Lending-lnvestment Patterns District member banks responded to the System’s policy of credit ease, inaugurated in the fall of 1957, by sharply expanding bank credit as their reserves increased. Bank credit rose $924 million from December 1957 through February 1959. Bank lending-investment patterns, how ever, shifted during this period, and for that reason, it is useful to consider bank credit developments in two sepa rate phases: from January through June 1958 and from July 1958 through February 1959. During the first half of 1958, bank credit rose by a record $417 million, with most of the increase accounted for by bank purchases of securities, particularly United States Governments. Banks in leading cities increased their security holdings during this period more than banks outside leading cities. The greater relative shift to investments by banks in leading cities reflected a weak er loan demand than that in smaller cities and towns. From July 1958 through February 1959, District banks —like banks throughout the nation— again adjusted their operations in the light of expanding business activity and a less-easy credit policy on the part of the System. Banks in leading cities, which in the first half of 1958, added to their security holdings but reduced their loans, now reversed the procedure. The demand for loans secured by real estate rose sharply at these banks after mid-1958 and, in the latter part of the year, the demand for busi ness and consumer loans picked up. Banks outside lead ing cities continued to lend at a pace slightly above the first half of 1958, but added to their security holdings at a somewhat slower rate. With loans expanding at a time when the System was making reserves less readily available, District mem •4 • ber banks made only limited additions to their security holdings. For the eight-month period beginning in July 1958, investments accounted for about 30 percent of the increase in bank credit, compared with 90 percent dur ing the first half of 1958. Looking back over both entire periods from December District Member Banks React to Changing Economic and Credit Conditions 1957 to February 1959, we find that total bank credit expanded 12.5 percent, but total deposits rose only 8.5 percent. At banks in leading cities, moreover, growth in bank credit outpaced deposit growth to a much greater degree than at banks outside leading cities. Because bank credit has increased at a faster rate than deposits at both classes of banks, pressure on bank reserves has developed. District Member Bank Borrowing Total loans and investments have risen sharply since the fall of 1957. Investments in U.S. Governments accounted for most of the increase through mid-1958, but since then, loans have increased in relative importance. Since mid-1958, member banks have obtained an increas ing volume of reserves to support bank credit expansion by borrowing from the Federal Reserve Bank of Atlanta. In June 1958, for example, average daily borrowings totaled about $14 million, compared with average daily borrowings of $64 million for the first two weeks of March 1959. This rise in borrowing, however, reflects primarily an increase in average amount, rather than an increase in number of borrowing banks. Only about 35 of the 400 member banks in this Dis trict borrowed during March. Typically, the number of borrowing banks is small because commercial banks are reluctant to go into debt. Most banks maintain a degree of liquidity sufficient to satisfy unforeseen varia tions in deposits. In addition, however, banks generally have a margin of secondary reserves—United States Gov ernment Securities—that can be readily converted into lendable funds if there are urgent customer needs to be met or opportunities for new lending arise. U.S. Security Holdings and Loan Expansion Since mid-1958, member banks have obtained an increasing vol ume of reserves to support bank credit expansion by borrowing from the Federal Reserve Bank of Atlanta. 1 U.S. Govt. Securities by Maturity 1 1-5 Years / / V w a — ^Over 5 Years -1-L-1_1 1 1 I I . . 1 i i l 1 1 1 1 1 1 L L 1 1 1 1 11957 1958 1959 U.S. Government security holdings of member banks represent a source for some further expansion in loans. District member banks, through January 1959, had been accumulating rather than liquidating Government securi ties. With credit relatively easy throughout most of 1958, and with loan demand up only moderately, banks—on the average—did not find it necessary to dispose of secu rities. In recent weeks, however, there has appeared to be a trend toward moderate liquidation. It is reasonable to assume that if loan demands continue to increase and credit tightens further, liquidation of securities will be the principal means of financing loan expansion. In January of this year, member bank holdings of Government securities totaled over $3.1 billion. Of this amount, 29 percent represented securities with maturities of under one year; securities with maturities of one to five years and five years and over accounted for 48 per cent and 23 percent, respectively. The maturity distribu tion of security holdings is particularly important because the rise in interest rates since mid-1958, together with a corresponding decline in the market value of securities, may have an important bearing on the volume and type of securities that may be liquidated. During the early stages of recovery, banks generally obtain funds by selling short-term securities or accepting cash for bills as they come due. The income advantage from switching out of securities into loans depends, of course, on the differential between yields on securities and the bank loan rate. With interest rates on Govern ment securities currently high, banks may be somewhat reluctant to convert assets from securities to loans, unless loan rates are also adjusted upward. The decision to switch from investments to loans is only partly explained by differentials in rates. Banks • 5 • with relatively small holdings of short-term securities, of course, may find it necessary to liquidate longer-term se curities if they wish to take advantage of loan opportuni ties. In that instance, a factor deterring the security sale will be the size of the capital loss that would have to be absorbed. Both intermediate and long-term Government bonds have dropped substantially since mid-1958, with some issues off as much as $10 per $100. Before dispos ing of such securities, therefore, banks would have to weigh the amount of loss that would be sustained after tax write-offs against the income that might be obtained by reinvesting the proceeds of the sale. A l f r e d P. J ohnson On April 1, the Bank of Prattville, Prattville, Ala bama, a nonmember bank, began to remit at par. Officers are Carlie G. Smith, President and Chairman of the Board; J. W. Strange, Vice Chairman of the Board; D. L. Yarbrough and J. B. Striplin, Vice Presi dents; J. M. Donovan, Vice President and Cashier; Karl A. Clark, Florene Q. Boone, Ruby N. Durden, and Mary Y. Myers, Assistant Cashiers. Capital totals $200,000 and surplus and undivided profits total $216,598. Debits to Individual Demand Deposit Accounts (In Thousands of Dollars) Bank Announcements On March 9, the First State Bank of Altoona, Altoona, Alabama, a nonmember bank, began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Jack L. Ray is President; Rex L. Phillips is Vice President and Cashier; and Janelle Battles is Assistant Cashier. Capital totals $25,000 and surplus and undivided profits total $56,834. On March 17, the Bank of Ozark, Ozark, Alabama, a nonmember bank, began to remit at par. Sam J. Carroll, Jr. is President; H. H. Hodges is Vice Presi dent; R. C. Joiner is Executive Vice President; Wilmer Parker is Vice President and Cashier; Arnie Glover, Jr. is Assistant Cashier. Capital totals $200,000 and surplus and undivided profits total $365,297. On April 1, the Wauchula State Bank, Wauchula, Florida, a nonmember bank, began to remit at par. L. Grady Burton is President; Gene A. Brock is Vice President; Roger S. Greene is Cashier; and H. D. Wofford is Assistant Cashier. Capital totals $100,000 and surplus and undivided profits, $641,662. Department Store Sales and Inventories* Percent Change Place Sales Feb. 1959 from Jan. Feb. 1959 1958 —5 —4 —8 —9 —3 —10 —0 —2 —7 —5 ALABAMA ............................. B irm ing ham .................... M o b ile ............................. Montgomery.................... F L O R ID A ............................. Daytona Beach . . . . + 14 Jacksonville........................ Miami Area .................... Miami ........................ Orlando............................. St. Petersburg-Tampa Area . St. Petersburg . . . . T a m p a ........................ G E O R G IA ............................. Atlanta** Augusta.................................. +19 Columbus M a c o n ........................ Ro m e**........................ Savannah .................... LO U IS IA N A .................... — 14 Baton Rouge . . . . New Orleans . . . . — 15 M ISSIS SIP PI.................... Jackson ........................ — 13 Meridian** . . . . TENNESSEE .................... Bristol-KingsportJohnson City** . . Bristol (Tenn. & Va.)** Chattanooga . . . . K n o x v ille ................... —9 D IS T R IC T ........................ —7 —11 —1 —3 —6 —6 —12 —10 —6 •—6 +6 +2 +13 +14 +12 +6 +15 +19 +2l +9 +4 +27 +16 +1i +9 +33 +5 +13 +26 +5 +3 +3 +3 +17 +16 +13 +19 +21 +20 +20 +20 +12 2 Months 1959 from 1958 +12 +12 +12 +6 +11 +17 +16 +6 +1 +24 +12 +10 +9 +20 Inventories Feb. 28, 1959 from Jan. 31 Feb. 28 1959 1958 +9 +9 —8 —9 +4 +3 +11 —2 —9 +8 +ii —3 +9 +9 +2 +5 +14 +26 +7 +5 +5 +7 +15 +15 +4 +15 +2 + 15 +17 + 13 + 17 +4 — ^4 +14 +11 +3 +11 +10 + 14 + 20 —0 —1 +10 +11 +8 +0 —0 +12 +15 +14 +6 +7 —-5 —7 sample constructed that is not confined exclusively to department stores. Figures for non department stores, however, are not used in computing the District percent changes. Feb. 1959 ALABAMA Anniston . Birmingham Dothan . Gadsden . Mobile . Montgomery Selma* . Tuscaloosa* . . Total Reporting Cities Other Citiesf • . FLORIDA Daytona Beach* Fort Lauderdale* Gainesville* . Jacksonville . Key West* . Lakeland* . Miami . . Greater Miami* Orlando . . Pensacola . St. Petersburg Tampa . . West Palm Beach Total Reporting Citi es Other Citiesf . GEORGIA Albany . . Athens* . . Atlanta . . Augusta . . Brunswick . Columbus Elberton . . Gainesville* . Griffin* . . LaGrange* . Macon . . Marietta* . Newnan . . Rome* . . Savannah . . Valdosta . . . Total Reporting Cities Other Citiesf . LOUISIANA Alexandria* . Baton Rouge Lafayette* . Lake Charles New Orleans . . Total Reporting Cities Other Citiesf . MISSISSIPPI Biloxi-Gulfport Hattiesburg . Jackson . . Laurel* . . Meridian . . Natchez* Vicksburg . . Total Reporting Cities Other Citiesf . TENNESSEE Bristol* . . Chattanooga Johnson City* Kingsport* . Knoxville . . Nashville . _ Total Reporting Cities Other Citiesf . , SIXTH DISTRICT Reporting Cities Other Citiesf Total, 32 Cities UNITED STATES 344 Cities . . Jan. 1959 Feb. 1958 Percent Change Year-to-dat( Feb. 1959 from 1959 Jan. Feb. from 1959 1958 1958 34,395 767,373 30,180 31,961 237,793 150,4% 19,603 46,488 1,318,289 662,619 40,849 786,354 33,852 41,805 283,036 166,291 24,284 52,440 1,428,911 784,733r 30,346 633,735 26,857r 28,297r 242,204 124,394 17,525 40,304 1,143,662r 579,314r — 16 — 2 — 11 — 24 — 16 — 10 — 19 — 11 —8 — 16 +13 +21 +12 +13 —2 +21 +12 +15 +15 +14 56,354 208,337 35,569 742,670 15,614 73,340 850,153 1,291,238 234,538 76,917 221,348 390,228 140,310 3,486,463 1,548,243 60,864 235,036 41,421 801,852 17,641 84,508 904,811 1,406,458 259,916 90,530 247,582 437,546 151,426 3,834,780 l,710,641r 50,983 183,371 30,693 656,657r 13,785 60,375 733,910 1,119,614 179,686r 74,002 184,028r 336,299r 120,696 3,010,189r l,269,873r —7 — 11 — 14 —7 — 12 — 13 —6 —8 — 10 — 15 — 11 — 11 —7 —9 — 10 +11 +14 +16 +13 +13 +21 +16 +15 +31 +4 +20 +16 +16 +16 +22 57,335 32,040 1,735,765 92,095 24,197 91,297 7,641 40,841 16,402 28,531 114,045 27,394 16,359 37,251 181,431 28,512 2,531,136 800,206 63,887 37,337 1,900,324 101,304 25,241 100,493 9,155 49,105 18,478 21,805 119,642 33,068 19,622 41,812 193,021 32,317 2,766,611 883,219r 48,112 30,954 1,555,959r 86,383r 19,937 84,789 6,870 39,783 14,652 17,385 91,093 22,498 13,618 33,539 159,944 23,237r 2,248,753r 708,928r — 10 — 14 —9 —9 —4 —9 — 17 — 17 — 11 +31 —5 — 17 — 17 — 11 —6 — 12 —9 —9 +19 +4 +12 +7 +21 +8 +11 +3 +12 +64 +25 +22 +20 +11 +13 +23 +13 +13 65,132 267,002 60,431 82,842 1,239,297 1,714,704 563,500 78,191 272,635 70,895 99,168 1,352,173 1,873,062 642,987r 62,686 220,346r 46,872 78,371 1,152,792 1,561,067 494,244r — 17 —2 — 15 — 16 —8 —8 — 12 +4 +21 +29 +6 +8 +10 +14 44,562 31,701 249,650 24,122 37,970 21,183 18,093 427,281 211,258 45,782 36,509 285,451 27,532 41,905 23,837 19,868 480,884 242,742 37,978 28,654 181,825 21,042 32,654 19,581 17,534 339,268 203,013 —3 — 13 — 13 — 12 —9 — 11 —9 — 11 — 13 +17 +11 +37 +15 +16 +8 +3 +26 +4 —9 — 20 — 15 — 15 — 17 +7 —6 — 13 —9 —8 — 11 —8 +19 +18 +9 +12 +8 +42 +27 +6 +16 +16 +15 +16 39,506 284,089 36,387 67,307 202,825 769,976 1,400,090 461,823 15,125,612 10,877,963 4,247,649 9,300,174 43,527 33,280 356,942 241,290 42,910 33,247 79,456 59,926 243,284 187,019 721,045 543,974 1,487,164 1,098,736 531,119 434,925 16,666,853r 13,091,972r 11,871,412 9,401,675r 4,795,441r 3,690,297r 10,088,410 8,024,816r + 16 ■+iS 1 +3 +7 +4 +6 +6 +1 +2 +8 +S +2 +’ s ++ i\ + +9i 195.770,000 221,927,000 181,6%,000 — 12 +8 •Not included in total for 32 cities that are part of the National Bank Debit Series. f Estimated. r Revised. • 6 • +5 , +J Sixth District Indexes Seasonally Adjusted (1947-49 = 100) 1958 SIXTH DISTRICT Apparel*** .................... C hem icals........................ Fabricated Metals . . . Food***............................. Lbr., Wood Prod., Fur. & Fix. Manufacturing Payrolls Cotton Consumption** . Electric Power Production* Petrol. Prod, in Coastal Louisiana & Mississippi* Construction Contracts* Residential . . . AllOther . . . . Farm Cash Receipts . . Crops ........................ Atlanta . . Baton Rouge Birmingham Chattanooga Jackson . . Jacksonville Knoxville Macon . . Miami , . New Orleans Furniture Store Sales*/** Member Bank Deposits* . . Member Bank Loans* . . . Bank D e b its*......................... Turnover of Demand Deposits* In Leading Cities . . . . Outside Leading Cities . . ALABAMA Nonfarm Employment . . Manufacturing Employment Bank D e b i t s ......................... FLORIDA Nonfarm Employment . . . Manufacturing Employment*** Manufacturing Payrolls . . . Farm Cash Receipts . . . Bank D e b i t s .................... GEORGIA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Bank D e b i t s .................... LOUISIANA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales* . . Member Bank Deposits* Member Bank Loans* . . Farm Cash Receipts . . . Bank D e b it s * .................... MISSISSIPPI Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales* . . Member Bank Deposits* TENNESSEE .................... Nonfami Employment . . Manufacturing Employment 1959 JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. 134 117 165r 132 181 112r 75 158 % 87 215 187 82 317 133 115 164r 131 177 112r 74 156 91 86 200 182 79 325 133 115 164r 128 174 110 72 157 91 86 194 183 79 311 132 114 163r 129 176 109r 72 158 90 85 187 182 74 306 132 113 165r 130 176 108r 72 157 93 84 172 183 75 297 133 115 167r 129 183 108 73 158 91 84 201 192 80 312 133 115 168r 129 186 llO r 73 157 90 85 198 196 81 312 133 115 167r 129 183 llO r 73 158 89 85 212 198 83 313 134 116 166 127 182 llO r 75 157 90 86 211 197 89 311 134 116 167r 128 180 llO r 76 159 95 86 192 195 87 314 134 116 168 129 177 llO r 76 158 91 86 202 200 87 316 134 116 170r 129r 175 109 75 158 93 86 206 201r 84 330 169 272 290 257 119 97 161 159 151 181 123 147 109 127 146 139 237 132 191 205 153 162 269 244 146 156 113 170 309 316 303 118 92 156 149r 147 171 111 128 99 116 128 137 225r 135 175r 200r 123r 163 269 233 143 154 111 168 317 297 333 121 87 160 158 157 175 132 141 97 122 139 148 233 125 186 193 132 166 270 230 138 149 109 162 324 315 332 150 134 174 156 153 164 117 136 99 108 141 151 242 135 181 190 138 168 273 237 140 159 105 164 375 338 406 157 143 178 166 154 172 130 145 107 122 147 159 244 137 203 191 143 170 276 226 140 154 111 167 394 381 405 165 146 184 176 169 199 129 144 106 126 137 165 259 145 202 191 139 174 279 233 144 168 104 170 427 377 468 134 90 184 173 168 185 127 159 111 127 139 164 268 141 207 192 139 170 278 240 148 165 110 176 397 413 384 136 118 182 183 183 187 147 161 124 138 156 183 285 147 219 192 153 176 281 229 147 165 113 187 393 421 371 104 82 185 167 158 179 133 150 107 129 151 147 250 140 209 198 145 175 282 256 146 161 116 190 364 433 308 112r 84r 217r 165 154 180 131 154 111 135 146 153 258 144 209 202 145 175 285 249 142 149 105 190 333 375 298 123 99 216 170 161 214 129 163 126 136 155 158 230 144 214 207 152 180 291 242 139 146 102 201 309 367 262 130 92 211 176 162 204 138 156 124 142 163 158 256 148 212 205 148 179 292 272 150 161 121 192 336 364 314 141 128 162 173 164 194 136 162 123 143 161 161 242r 145 207 200r 161 181 298 264 144 153 114 195 n.a. n.a n.a. n.a. n.a. n.a. 167p 161 177p 127 154 115p 141 154p 155 246p 139p 203p 199p 152p 178 303 269 153 162 121 122 105 170 133 140 224 120 205 120 103 163r 113 140 223 113 197 120 102 165 122 140 224 128 199 119 103 162 134 145 226 152 204 119 104 166 135 146 230 142 200 119 105 174 128 150 231 147 206 119 106 175 130 150 235 143 209 119 104 177 145 154 233 130 207 119 102 174 138 152 234 97 230 121 106 181 136 153 239 106r 220 121 107 184 136 158 246 101 214 121 103 178r 131 155 242 111 230 121 104 182r 147 155 248 126 230r 120 104 185 153p 154 254 n.a. 227 176 174r 278 156 212 425 162 344 176 172r 273 141r 211 426 178 326 175 169r 264 146 215 431 151 319 176 166r 271 153 216 444 239 337 177 171 280 157 221 441 249 322 180 174 292 155 227 447 308 354 182 178r 301 156 225 449 214 361 182 181r 307 172 233 456 206 343 183 182r 311 171 234 457 212 386 183 181r 315 153 235 463 162r 391 182 180r 311 170 241 477 147 360 180 179r 304 167 241 477 162 409 182 181r 306 176r 242 485 281 376 183 183 313 184 238 492 n.a. 384 128 115 183 137 142 213 140 222 126 114 177 113 144 212 141 210 126 113 177 127 147 211 150 202 125 111 171 121 147 212 150 212 124 108 167 139 148 213 157 207 125 112 182 136 152 216 167 212 126 112 189 133 146 213 129 219 126 113 192 154 154 212 157 212 127 114 189 147 155 219 158 235 127 113 184 151 154 223 104r 223 128 114 198 141 158 226 124 217 127 114 1% 153 158 227 153 242 128 114 191r 149 159 230 143 235 128 115 1% 143 157 237 n.a. 237 131 98 174 195 153 269 116 205 131 97 169 168r 155 270 113 193 130 % 168 193 156 269 111 209 129 96 171 171 154 269 96 206 129 95 169 181 157 271 115 203 127 93 166 178 159 272 147 211 127 93 163 177 153 264 143 208 127 93 168 189 157 273 109 200 127 93 167 181 155 265 72 234 127 94 163 166r 152 268 99r 213 127 95 171 197 156 277 114 197 127 94 166r 1% 159 274 209 227 128 93 170 171r 163 284 103 208 127 92 171 166p 160 287 n.a. 214 126 121 210r 104 164 303 100 177 125 121 207 86 166 303 92 175 125 122 226 95 172 304 115 172 125 123 221 % 185 308 124 182 125 123 221 107 186 334 148 190 124 123 226 113 186 337 145 191 124 125 230 101 184 367 138 207 125 127 238 123 192 352 100 200 127 128 240 101 194 359 59 219 127 129 239 80 197 359 99r 208 128 131 240 107 198 363 129 210 127 129 239r 133 195 369 122 235 129 128 236r 114 197 361 93 212 129 128 235 106 190 367 n.a. 206 119 116 179 107 148 239 92 205 117 114 179 90r 149 238 85 1% 118 114 181 101 155 239 107 197 117 112 178 106 156 242 116 197 117 112 179 109 158 245 103 197 117 113 181 104 161 248 113 199 117 113 186 105 156 243 114 201 117 113 192 105 159 250 112 200 118 114 190 103 158 247 77 214 118 115 186 103 159 251 114r 216 118 115 186 112 161 251 114 209 118 115 195r 113 162 256 100 228 118 116 200r 111 165 262 98 225 119 117 202 114 160 267 n.a. 238 NOV. DEC. | JAN. 1 134 117 172r 131 178 llO r 75 159 92 86 203 200 91 351r FEB. 135 117 173 131 176 111 76 157 94 87 195 202 92 n.a. Distr'ct area only. Other totals for entire six states. n.a. Not Available. p Preliminary. r Revised. Daily average basis. ***Revisions reflect new seasonal factors. So^es: Nonfarm and mfg. emp. and payrolls, state depts. of labor; cotton consmption, U. S. Bureau Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; elec. power prod., Fed. Power Comm. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 7 • S I X T H D I S T R I C T B U S I N E S S H I G H L I G H T S T h e eco n om ic situation continued to improve slowly in February. Employment edged upward, fewer workers were unemployed, and spending by businesses and consumers rose. Farm work has been hampered by bad weather recently, but farmers plan slight increases in their output and employment. Lending by member banks gained strength in February. Nonfarm Employment Nonfarm employment rose slightly in February, after allowance for seasonal changes. In four of the preceding five months, employment had edged upward, but it was not until February that the cumulative effect of persistent small increases was enough to raise the charted index. The February gain reflected slight improvement in Florida and Tennessee, partly offset by declines in Alabama and Louisiana; Georgia and Mississippi showed virtually no change after seasonal adjustment. Manufacturing payrolls increased to a new record in February as gains occurred in both manufacturing employ ment and average w eekly earnings. Cotton textile activity improved slightly further in February, as shown by seasonally adjusted cotton consumption. Crude oil production in Coastal Louisiana and Mississippi also rose, but remained below December’s advanced level. Steel mill operations continued sharply upward in February and March. The three month average of seasonally adjusted construction contract awards showed a substantial rise in January, following five consecutive declines. Electric power production advanced to a new record in January. Seasonally adjusted bank debits rose almost to December’s all-time record during February, indicating a rise in total spending. Furniture and depart ment store sales did not share in the gain, however, and fell below the month-ago level after adjustment for seasonal variation. Department store sales were unchanged from February to March. Household appliance store sales rose in February after seasonal adjustment and continued well above a year ago. More comprehensive figures on total retail sales, available only through January, show consumer spending has recovered sharply in recent months to approximate the pre-recession record. Consistent with this, loans made by commercial banks to trade concerns in February rose more than they did during the same month of recent years. M fg Employment Consumer instalment credit outstanding at Sixth District commercial banks continued to rise at a better-than-seasonal rate during February, with a sharp upturn in automobile loans responsible for most of the gain. Savings in the form of time deposits at member banks did not rise as much as usual in February, but ordinary life insurance sales increased sharply. Total farm marketings declined in March because smaller shipments of beef, eggs, hogs, milk, and some vegetables more than offset increased shipments of broilers, potatoes, and citrus fruit. The average of prices re ceived by farmers moved down in March largely because of lower prices for hogs, milk, eggs, potatoes, and vegetables. Citrus fruits, however, brought favorable prices. Meanwhile, cold wet weather held farm work at a minimum in most areas. Nevertheless, farm employment rose slightly as spring farm work began. Demand deposits at banks in rural areas, seasonally adjusted, held steady in February but were above a year earlier. Jk Borrowing frow *' ’,9m1‘ I *' ’ ’ W571' ’ ’ 1‘ ‘ ' 1‘ ' Member bank loans and deposits increased, after seasonal adjustment, in all states in February; loans particularly rose at banks in leading cities. Banks reduced their investments and borrowed more from the Federal Reserve Bank of Atlanta. In March, total loans outstanding at banks in leading cities rose more than in most corresponding periods of previous years partly because of strength in real estate loans. Effective March 16, the Federal Reserve Bank of Atlanta raised its discount rate from 2l/2 to 3 percent.
@FedFRASER