Full text of Economic Review (Federal Reserve Bank of Cleveland) : June 1967

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IN

THIS

I SSUE

M onetary Policy,
Financial Liquidity,
and the O utlook fo r
C orporate Profits . . .

3

An Economic Profile
o f T o le d o ....................... 11

C a p ita l Spending Plans
in Cincinnati and
P ittsb u rg h .......................28

FEDERAL



RESERVE

BANK

OF

CLEVELAND

Additional copies of the ECONOMIC REVIEW may
be obtained from the Research Department, Federal
Reserve Bank of Cleveland, P.O. Box 6387, Cleveland,
Ohio 44101. Permission is granted to reproduce any
material in this publication.



JUNE 1 9 6 7

MONETARY POLICY,
FINANCIAL LIQUIDITY,
AND THE OUTLOOK
FOR CORPORATE PROFITS
Rem arks By
A n d re w F. Brim mer
M em ber
B o a rd of G o v e rn o rs of the
F e d e ra l R eserve System

B efo re the
Jo in t M e etin g of the
B oards of D irectors of the
F e d e ra l R eserve Bank of C le v e la n d
a n d the
Pittsburgh a n d C in cinnati B ranches
C in cin n ati, O h io
M a y 17, 1967

One of the most striking features of the

changes in the level and structure of interest

economic scene in 1966 was the considerable

rates. For exam ple, the demand for liquid a s­

reduction in liquidity of financial institutions,

sets — especially by financial institutions —

business firms, and the general public. Since

has pushed short-term rates down substan­

last November, one of the principal objectives

tially below last fall's peak. On the other

of monetary policy has been the restoration

hand, the efforts of corporations to restore

of financial liquidity — along with m aking

their liquidity by borrowing in capital m ar­

credit more generally available.

kets in record volume have tended to push up
long-term rales from the low points reached

However, the methods used by the m ajor

earlier this year.

lending and spending sectors of the econom y

But behind these global developments in

to rebuild liquidity have produced significant

liquidity, a number of important changes have




3

ECONOMIC REVIEW
occurred in specific sectors of the economy:

this year m ay not have been as large as

Com m ercial banks (which have had

indicated by some of the earlier estim ates.

sizable inflows of fime deposits but have

Moreover, when viewed in a somewhat longer

faced a more subdued demand for loans)

perspective, as well a s in the light of improv­

have added substantially to their hold­

ing economic conditions during the rest of

ings of tax-exempt securities. At the sam e

this year, the outlook for corporate profits

time, they have adopted an especially

m ay not be quite as unpromising as some ob­

cautious attitude toward negotiable cer­

servers have suggested.

tificates of deposit.
Other financial interm ediaries (e.g.,
savings and loan associations and mutual

M ONETARY POLICY AND THE
RESTORATION OF LIQUIDITY

savings banks) have also experienced

The expansive m onetary policy adopted

particularly large inflows of funds. How­

by the Federal Reserve System last November

ever, a considerable proportion of the

has had its effects throughout the financial

gains has been used to repay the institu­

system. In the five months following the overt

tions' own debts or to acquire securities

shift in policy, com m ercial bank credit ex­

— rather than to expand m ortgage loans.

panded at an annual rate of 12 percent —

In the business sector, corporations

sparked m ainly by the growth of lime depos­

have used a sizable share of the proceeds

its at a 16-percent annual rate. Savings and

of capital market borrowings to rebuild

loan associations have also enjoyed extrem ely

financial assets, to cover Federal tax lia­

large inflows, which from November through

bilities made unusually large through the

March rose at a season ally adjusted annual

acceleration of collections instituted last

rate of 8.8 percent. During the sam e period,

year, and more recently to repay bank

inflows to mutual savings banks expanded

loans. However, the continued high rate

at an annual rate of 9.1 percent.

of investment in facilities in the face of

The counterpart of these flows is a notice­

declining corporate profits has also been

able strengthening in the liquidity position

a principal force behind the record vol­

of consumers. W hile they have sharply ex­

ume of borrowing by corporations.

panded their savings through intermediaries,

Naturally, the recent downtrend in corpo­

they have not stepped up direct acquisitions

rate profits has engendered much unhappi­

of market securities. At the sam e time, their

ness in the business community. In view of

borrowing in short-term and in m ortgage

the modest increase in total output (and a c ­

m arkets has rem ained low.

tual — though sm all — declines in industrial

With financial institutions in a far more

production) so far this year — combined with

liquid position, the availability of credit to

significant ad vances in labor costs per unit

potential borrowers h as also expanded con­

of output — the b asis of this pessimism is not

siderably. Sim ultaneously, most market rates

hard to find. However, the actu al decline in

of interest have declined substantially from

corporate profits during the first quarter of

their 1966 highs. The declines have been es­

4




JUNE 1 9 6 7

these rates are almost 2 percentage points

of bank reserves made av ailab le by the mone­
tary authorities will also have a m ajor effect

below the peaks set last Septem ber. On the

on the distribution and cost of credit.

pecially m arked in short-term rales: currently

other hand, long-term rates declined more
slowly following the shift in m onetary policy.
Moreover, since February, they have risen
considerably in the w ake of heavy market

LIQUIDITY POSITION OF
COM M ERCIAL BANKS
Com mercial banks have been particularly

flotations: for exam ple, at the end of last week

successful in their efforts to improve their

the A aa corporate new issue rate stood only

liguidity positions. Since November, loans

30-40 basis points below last Septem ber's high.

have accounted for less than half of the

Undoubtedly, much of the huge volume of
flotations this year reflects a real current need

growth in bank credit. In contrast, in the first

for funds by numerous firms and state and

exceeded total asset growth as banks ligui-

local governments. On the other hand, some

dated securities to meet the demand — espe­

of the borrowing in long-term m arkets appar­

cially of business customers. Reflecting ihe

ently has been undertaken in anticipation of

attempt to rebuild liguidity, banks have add­

a revival of economic expansion later in the

ed almost $9 billion to their securities, on a

year which m any believe might usher in an ­

seasonally adjusted basis, since last Novem­

other period of m onetary restraint. Obviously,

ber. However, a noticeable change has oc­

I cannot comment on this latter expectation.

curred in the composition of the banks' secu­

But in passing, I would like to observe that

rities portfolio. At the end of April 1967, the

when so m any borrowers try to sgueeze into

banks held about $56 billion of U.S. Govern­

11 months of last year, the expansion of loans

the market at the sam e time they should not

ment issues, representing roughly 51 percent

be surprised that the conseguence is a b ack ­

of all securities owned. At yearend 1965 and

up in long-term interest rates. Thus, the most

1966, Federal Government issues amounted

recent experience dem onstrates again that

to 56 percent and 53 percent, respectively, of

the interplay of supply and demand in the

their total holdings. But at the sam e time,

market p lace rem ains the basic determinant

bank holdings of participation certificates

of interest rates. This is not to suggest that

(PCs) have increased in importance. For ex­

m onetary policy has not had an influence on

am ple, during the first quarter of this year,

the outcome. Through policy actions, the

the banks made net acquisitions of about $4

monetary authorities have had a substantial

billion of PCs, at a season ally adjusted an­

impact on the level and structure of interest

nual rale.

rales. Undoubtedly, this will continue to be

A particularly sharp in crease has also oc­

Ihe case when the needs of the econom y re-

curred in the banks' holdings of slate and

guire changes in the stance of monetary

local government obligations. In the first

policy. Bui the recent behavior of long-term

guarier, these holdings climbed by approxi­

rates presents clear evidence that private

m ately $7 billion, at a season ally adjusted

decisions on how and when to use the volume

annual rate, compared with an increase of




5

ECONOMIC REVIEW
$3.4 billion in ihe firsi quarter of 1966 and a

year. In April they accounted for only 46

net liquidation of $2.5 billion in the fourth

percent of business loans. If sim ilar develop­

quarter. In fact, com m ercial banks absorbed

ments have occurred in other districts, bank

about two-thirds of the net expansion of state

loan portfolios are now considerably more

and local government issues during ihe first

liquid than they were last year.

quarter of this year, com pared with one-third

W e also know the maturity structure of

in the full year 1966. A sizable amount (over

Government securities at w eekly reporting

$1 billion) of ihe increase in the banks' hold­

banks. Again, however, the C leveland Fed­

ings of m unicipals in the first quarter of this

eral Reserve Bank provides us with the only

year consisted of short-term issues, which

data on the maturity structure of m unicipals

again is indicative of the banks' efforts to re­

held by a group of banks in its District. Since

build their liquidity.

most of the securities (other than U.S. Govern­

Of course, we can never m easure bank

ment issues) held by all banks are munici­

liquidity with any degree of precision. How­

pals, we can use the C leveland District ratio

ever, several rough indicators do suggest that

to estim ate the liquidity (i.e., under 5-year

bank liquidity has improved greatly. For ex­

maturities) of other securities held by w eekly

am ple, by the end of March, the loan-deposit

reporting banks in the country as a whole.

ratio of all banks w as 65.4 percent, down 1.4

Taking the ratio of U.S. Government and other

percentage points from last Septem ber's high.

securities due in less than 5 years to total

This is nearly half the average drop from peak

loans and investments, we find that the port­

to low point in this ratio during those periods

folio liquidity ratio of w eekly reporting banks

since 1951 when m onetary policy shifted from

has expanded rather sh arply— from about 14

restraint to ease. But this ratio com bines all

percent last fall to over 16 percent in March.

forms of loans and deposits, and it hence

The present ratio is about the sam e as that

leaves much to be desired as a liquidity in­

which existed in the fall of 1965, but it is still

dicator.

considerably below that (roughly 30 percent)

A better m easure would distinguish b e­

which prevailed in 1961.

tween ihe liquidity of ihe banks' assets and
the liquidity of their liabilities. Little quantita­
tive information on the maturity of portfolios
is av ailab le, although we can m ake some

ATTITUDE TOW ARD CDs
The

critical

question,

however,

is

not

whether liquidity has risen by any finite

reason able estim ates. For exam ple, the Fed­

amount, or is below some past peak. Rather,

eral Reserve Bank of Cleveland provides us

the key question is whether the ratio is such

with one of the very few sources of term loan

that banks feel relatively comfortable. After

data. These figures show that for the C leve­

all, in the 1960's banks have developed new

land District term loans as a percent of total

sources of liquidity from the use of time de­

business loans (after rising sharply to over

posits (especially CDs) and other borrowings.

48.5 percent in the second half of 1966) have

At present rate levels and within the existing

declined during the first four months of this

ceilings on rates p ayable, banks could great­

6




JUNE 1 96 7
ly augment their holdings of liguid assets —

est increases in CD rates offered for longer

if they desired — by aggressively seeking

maturities; but it is still too early to tell if

CDs. However, in M arch and April, banks

these will develop into sustained efforts to

purposely set CD rates at relatively non­

gain additional funds on a somewhat longer

competitive levels to modify inflows, sug­

term basis.

gesting by implication that they felt no par­
ticular strain to add to their liguid assets.

There are also indications from bank liabil­
ities that com m ercial bank deposits are now

If we turn to the liability side of bank b a l­

in somewhat more stable forms. The average

ance sheets, we can see that the sharp growth

maturity of CDs (at 3.7 months) is back to pre­

in time deposits has been a m ajor source of

restraint

the funds used by banks to rebuild liquidity.

time deposits (which proved less volatile in

levels.

Moreover,

consumer-type

The increase w as particularly sharp until

1966 than corporate money) have also in­

mid-February, with over one-half of the in­

creased as a share of bank liabilities.

crease coming from CDs. Since then, CD

On balan ce, if I were to hazard a guess,

growth has moderated, but consumer-type

I would suggest that banks will again find it

time deposits have continued strong and sav ­

desirable to bid strongly for corporate and

ings deposits have increased.

other large time deposits if the strength of

Negotiable CDs had climbed by almost $3

loan demand justifies such action. In my

billion from the end of November to mid-

judgment, the negotiable CD still is — and

February to a total of about $19 billion; from

will rem ain — a viable money market instru­

mid-February to the end of April, they ex­

ment — provided that interest rate ceilings

panded by only $100 million. W hy the banks

are kept realistic in terms of competitive

have adopted this cautionary approach is an
interesting guestion.

market yields.

The main reason apparently w as that
banks were alread y content with their liquid

LIQUIDITY POSITION OF OTHER
FINANCIAL INSTITUTIONS

assets and felt under no pressure to augment

Savings and loan associations in the first

their inflow, particularly with other forms of

guarter of this year experienced an increase

time deposits rem aining so strong. In addi­

in their share capital of about $10 billion at

tion, loan demands have rem ained relatively

a season ally adjusted annual rate. This was

weak as businesses financed them selves so

their best perform ance since 1964. However,

heavily in capital markets, thus reducing in

also during the first quarter, S&L's repaid

turn the need for banks to seek funds. Finally,

almost $3 billion of Home Loan Bank borrow­

after 1966, some banks — particularly in key

ings and reduced by nearly $1 billion their

money m arkets — m ay be somewhat more

outstanding

loans

at

com m ercial banks.

skeptical about using CDs a s a source of

Moreover, they made sizable additions to

funds, having lost $3.1 billion of them from

their holdings of cash and U.S. Government

last August to late November. On the other

securities relative to savings capital. Their

hand, in recent weeks, there have been mod­

efforts to rebuild liquidity, however, limited




7

ECONOMIC REVIEW
their m ortgage acquisitions. Thus, in the first

sold about $7.5 billion of long-term securities

quarter of this year, S&L's holdings of mort­

(including private placem ents). Several fa c­

gages on 1- to 4-family homes rose by just

tors seem to have induced them to offer such

over $3 billion, at a season ally adjusted an ­

a record volume of issues. For one thing, it

nual rate, or about the sam e p ace as in 1966

provided them with funds to help p ay their

as a whole.

large tax bills. In addition, such financing

The S&L's repaym ent of loans from the FHL

fostered a desired re-structuring a s w ell a s a

Banks has also enabled the latter to retire

rebuilding of their financial asset positions.

$1.8 billion of their own outstanding debt

From Decem ber to mid-February, this w as

which matured during the first four months

done m ainly through the acquisition of CDs;

of 1967. In addition, during the sam e period,

since then they have concentrated on other

the FHL Banks were net buyers of $1.7 billion

types of open market paper.

of U.S. Treasury bills. Consequently, the fi­

Moreover, while some bank loans undoubt­

nan cial sector of which S&L's are the fulcrum

edly have been repaid from capital market

— in effect — has channeled $3.5 billion of

borrowings, probably of equal im portance

funds into the short-term debt m arket. This

was an effort to minimize current bank bor­

h as been one of the principal causes of the

rowing in order to preserve credit lines if

substantial decline

interest

m onetary policy should again becom e restric­

rales. Most recently, however, the S&L's have

tive. C learly, the experiences of 1966 are still

been adding to their m ortgage holdings at

very fresh in the minds of m any firms. Indeed,

a faster pace, and this trend will undoubtedly

the effort of some businesses to broaden their

accelerate as the year progresses.

sources of funds by establishing them selves

in short-term

in alternative m arkets h as been an important

REBUILDING LIQUIDITY IN THE
BUSINESS SECTOR

factor in the sharp expansion of the volume
of dealer placed com m ercial paper. In the

During the first four months of this year,

first quarter of this year, the total outstanding

business firms increased their bank loans by

in the market rose by $1.3 billion, season ally

$3.7 billion, or by a relatively rapid 14 percent

adjusted, and probably rose further in April.

season ally adjusted annual rate. However,

Finally, the continued pressure of a high

their tax paym ents during this period, reflect­

level of investment activity on internally gen­

ing the acceleration in collections which b e­

erated funds w as also a prime factor behind

gan last year, were also extrem ely high. After

heavy long-term borrowing in the capital

allowing for tax bills turned in, the cash tax

market. For exam ple, expenditures by non-

paym ents amounted to $35 billion during the

financial corporations for fixed investment in

January-April months, or one-third more than

the first quarter exceeded by $7.2 billion (at a

in the sam e period in 1966. Thus, against this

season ally adjusted annual rate) the amount

background, the expansion in bank loans to

of funds generated internally through undis­

business appears relatively modest.

tributed profits and capital consumption a l­

Over the sam e period, however, businesses
8




lowance. W hen the addition to inventories is

JUNE 1 9 6 7
included, total investment exceeded internal

financial corporations and public utilities,

funds by $12.7 billion (ai a season ally adjust­

profits probably declined little if at all.

ed annual rate) during the first quarter. Al­

All in all, the admittedly incomplete infor­

though this latter figure represents a sizable

mation now av ailab le would suggest that

decline com pared with the excess of close to

corporate profits after taxes were running at

$16 billion which prevailed during the last

a season ally adjusted annual rate of $45-46

three quarters of 1966, it is about double the

billion in the first quarter of 1967, compared

average recorded in 1965 as a whole. Thus,

with levels of $48.7 billion for the first quarter

the liquidity position of corporations rem ains

of 1966 and $48.4 billion for last year as a

under considerable strain. Moreover, despite

whole. Thus, the first-quarter-to-first-quarter

the substantial reduction in inventory accu ­

decline m ay have been in the neighborhood

mulation which is currently taking place, out­

of 6-7 percent — rather than the approxim ate­

lays for fixed investment continue at a high

ly 10 percent figure that has been given prom­

level — while corporate profits are declining.

inence in newspapers.

Thus, it might be both interesting and instruc­

Because this most recent experience has

tive to exam ine profit trends more closely.

assum ed such a cardinal p lace in current

THE CURRENT PROFITS SCENE

be helpful to put the profit picture in better

assessm ents of the business outlook, it m ay
After rem aining almost unchanged through­

perspective.

out 1966, corporate profits declined in the first
quarter of 1967. Yet the decline appears to
have been less than some observers had ex­

A LONGER VIEW OF
CORPORATE PROFITS

pected and it m ay also have been sm aller

An unusual feature of the econom ic expan­

than first reports suggested. With real output

sion that began in 1961 w as the prolonged

declining and unit labor costs rising faster

rise in corporate profits and in profit margins.

than unit prices, after-tax profit m argins in

In each of the three previous periods of eco­

manufacturing declined to about 5 percent,

nomic expansion since World W ar II, after-tax

and total m anufacturing profits were 5 to 10

profits reached a peak annual rate of about

percent below the level a year earlier.

$30 billion after the first year of general ad­

Year-to-year declines in after-tax profits

vance and then leveled off or declined as

were especially sharp in some industries;

rising costs overtook previously rising prices.

they ranged from 25 to 40 percent for motor

In the most recent expansion period, how­

vehicles, building m aterials, and textile prod­

ever, profits rose almost steadily for five

ucts. But these large declines were partially

years, finally leveling off in early 1966 at an

offset by much sm aller declines in a number

annual rate of close to $50 billion. Profits also

of other industries and by year-to-year in­

grew relatively more than most other types

creases in some, such as nonelectrical m a­

of income. Thus, throughout 1965 and into

chinery, fabricated m etals, and petroleum.

1966, the share of national income earned by

In some nonm anufacluring groups, such as

the corporate sector exceeded 13 percent of




9

ECONOMIC REVIEW
the total — the first time it had done so for

tofore been avoided. And as growth in real

any extended period since the mid-1950's.

output slowed, the long rise in profits halted.

The long advance in profits reflected, prob­
ably more than anything else, the absen ce

SHORT-RUN O UTLOOK FOR PROFITS

of the im balances in price-cost relationships

The probable course of profits over the re­

which in previous expansions had produced

maining quarters of the year depends on a

sharp but short-lived increases in profit m ar­

variety of factors that are a s yet almost im­

gins in the first year of rapid econom ic growth.

possible to assess singly, let alone in com­

Instead, m aterials prices and unit labor costs

bination. However, the broad outlines of one

rem ained virtually stable while real output

(perhaps the most likely) course can be

expanded substantially. Consequently, profit

sketched. W hile the timing of renewed expan­

m argins increased m oderately but steadily

sion cannot be pinpointed, the inventory ad­

over an unusually long period. From early

justment has proceeded a long w ay, and a

1964 through mid-1966, the ratio of after-tax

substantial increase in real ouput seem s

profits to sales w as at or above 5 x/2 percent

likely later in the year. As production in­

for m anufacturing com panies — higher than

creases and excess cap acity declines, total

it had been for m any years, except for about

profits can be expected to rise also. Yet, if unit

a year in 1955-1956, despite the dampening

costs continue to rise, this m ay bring only

effect of depreciation liberalization on m ar­

limited benefit to m argins — and m aybe even

gins and the profit component of corporate

to total profits. One must recognize, however,

internal funds in the later period.

that short of a precipitous fall — which seem s

Bui as 1966 progressed, pressures on ca p a ­

most unlikely — profits should rem ain at

city, m aterials, and labor began to be reflect­

levels that are high by the standards of any

ed in the in creases in unit costs that had there­

time prior to 1965-1966.

10




JUNE 1 9 6 7

AN ECONOMIC PROFILE OF TOLEDO

Toledo is a m ajor manufacturing and trans­

Industrial

Development.

The early eco­

shipment center for a wide variety of finished

nomic development of Toledo w as influenced

goods and

largely by its location at a m ajor transship­

m aterials. During the

1950's,

Toledo's econom y underwent a fundam ental

ment point, and the availability of certain

economic readjustm ent, and showed little

raw m aterials — iron ore, petroleum, natural

economic growth. Beginning in the early

gas, and quartzite. Iron ore from upper

1960's, however, most m easures of economic

M ichigan provided the raw m aterial for To­

activity indicate a marked improvement in

ledo's first m ajor manufacturing, with the

Toledo's economy.

City's first blast furnace constructed in 1864.

POPULATION GROWTH AND
INDUSTRIAL DEVELOPMENT

producing center, with less than 7 percent of

Although today Toledo is not a m ajor steelmanufacturing employment in the primary

Population. Until 1930, the growth rate of

m etal industry, metal-using durable goods

Toledo's population was slightly higher than

industries rank among m ajor em ployers in

that of the State a s a whole. Since then, the

Toledo, providing almost half of all manu­

C ity's population growth has lagged that of

facturing employment.

the State and of Cleveland, Cincinnati, and
Columbus— the three largest SM SA 's in Ohio

During the late 1800's, two other m ajor in­

(see Chari l) .1 From 1960 to 1965, a 2.6-percent

dustries — oil refining and glass production

rise in Toledo's population w as less than the

— were established. The Lima oil field near

median 4-percent increase for the District's

Findlay, south of Toledo, w as opened in 1885

m ajor SM SA 's, the 5.5-percent gain for the

and shortly thereafter an oil refinery w as es­

State, and the median 8-percent increase for

tablished in Toledo. Even though the Lima

the nation's 55 m ajor SM SA's.

reserves were exhausted, refining continued
to expand in Toledo, utilizing crude oil piped

1 As of July 1, 1966, Toledo w as ihe fourth larges! city in
Ohio (data from Development Department, State of Ohio)
and the fifth largest in the Fourth District, following Pitts­

in from more distant sources. Primary factors
in the development of the glass industry in

burgh, Cleveland, Cincinnati, and Columbus, and leading

the Toledo area were (1) availability of nat­

Dayton, Akron, and Youngstown.

ural gas, considered the ideal fuel for glass




11

ECONOMIC REVIEW

C h a r t T.

POPULATION GROWTH 1870-1970
T o le d o SMSA, O th e r S e le cte d SM SA's in O h io , a n d S ta te o f O h io
Mi l l i ons of p e r s o n s

NO TE :

T o l e d o S M S A i n c l u d e s Luca s a n d W o o d C o u n t i e s , O h i o , o n d M o n r o e C o u n t y , M i c h i g a n .

S o u rc e o f d a t a :

U.S. D e p a r t m e n t o f C o m m e r c e

production, and (2) nearness to raw m aterials

tation equipment industry is separated, Toledo

required by the industry.

ranks second in the State to Cleveland. (Em­

Proximity to Detroit made Toledo suitably

ployment in Cincinnati is heavily influenced

located for various auto parts and accessories

by the aircraft component of the transporta­

com panies. Today, a large "je e p " producer

tion industry.)

and three of the m ajor aulo producers have

In addition to primary m etals, oil refining,

plants in Toledo. In terms of employment in

glass, and transportation equipment, three

the transportation equipment industry, Toledo

other types of manufacturing activity are im­

ranks third in Ohio (behind Cleveland and

portant in Toledo's industrial mix — nonelec­

Cincinnati). W hen employment in the motor

trical m achinery, food and kindred products,

vehicles and parts segment of the transpor­

and fabricated metals. Taken together, these

12




Federal R eserve Bank o f C le v e la n d
C le v e la n d , Oh io

ERRATA
ECONOMIC REVIEW, June 1967

Page 12

Chart 1.
P O P U L A T IO N GROWTH 1870-1970
Toledo SMSA, Other Selected SMSA’ S in Ohio, and State of Ohio

The data p lo tte d for Colum bus in 1960 should be 754.9 thousand persons in ste a d o f
454.9 thousand persons.
persons.




T ra n s la te d to the c h a rt s c a le , the fig u re should be 0.7 5 5 m illio n




JUNE 1 9 6 7
seven industries in 19632 accounted for over
70 percent of total manufacturing employ­

the Toledo SM SA that are in O hio.3 These

ment, value added by manufacturing indus­

1965 was about ihe sam e a s the annual aver­

tries, and capital spending by manufacturing

ag e for 1950 to 1953, unlike the record in the

firms.

nation a s a whole, or in Ohio, which did not

data show that total covered employment in

do as well as the nation (see Table II). The

EMPLOYMENT - DISTRIBUTION
AND TRENDS
Total nonagriculiural employment in To­

data also show that Toledo had substantial
declines in covered employment in 1954,
1958, and 1961, which were years when the

ledo averaged 214,400 during 1966, with

national econom y

manufacturing the largest single source of

economic conditions. Thus, despite some re­

nonagricultural employment. W hile consider­

covery from recession years and annual gains

ab ly above the national average, the share

since 1961, the postwar high in covered em­

experienced

depressed

of the total accounted for by manufacturing

ployment reached in 1952 had not been re­

in Toledo in 1966 w as sm aller than the cor­

gained by 1965 (latest year av ailable in the

responding figure for either Ohio or five of

series). Nevertheless, ihe annual gains since

the seven other m ajor SM SA 's in the State

1961 are indicative of some improvement in

(see Table I). In 1966, Toledo ranked first

Toledo's economy.

among m ajor Ohio SM SA 's in the percent of

Within total covered employment, the pat­

total nonagricultural employment in trans­

terns of individuals groups varied substan­

portation and public utilities, and second in

tially during 1950 to 1965. On the favorable

w holesale and retail trade and services

side, employment in the service category, as

(slightly behind Columbus in both cases).

well as in the finance, insurance, and real

Although share of the total w as larger in three

estate group, showed steady gains in Toledo

other Ohio SM SA 's, the percent employed in

throughout the period. In contrast, four em­

government w as the fourth largest category

ployment categories did not behave favor­

in Toledo as well as the fastest growing. In

ably. Manufacturing employment in 1961 was

contract construction and finance, Toledo was

26 percent below its high reached in 1952,

fifth among Ohio SM SA 's, and below the State

and w as largely responsible for the decline

and national av erag es in both cases.
Complete historical information on non­

in total covered employment during 1952 to

agricultural employment in the Toledo SM S A

ment has increased, but not as much as total

is not av ailab le prior to 1958. However, some

covered employment. Employment in the

insights into employment patterns and trends

transportation and public utilities group also

1961. More recently, manufacturing employ­

in the area can be developed from data on
covered employment for the two counties of

3 Based on employees in Lucas and Wood Counties cov­
ered by the Ohio Unemployment Compensation Law

2 Census of Manufactures data for 1963 are ihe latest

(excludes government employment). Covered employ­

available for Ihe details of manufacturing activity in

ment in 1965 represented 76 percent of total nonagricul­

Toledo.

tural employment in the total Toledo SMSA.




13

ECONOMIC REVIEW
TABLE I
Percent Distribution of Total Nonagricultural Employment
Seven M ajor Employment Categories
Toledo SMSA, Other Selected SMSA's in Ohio, State of Ohio and United States
1966 Annual Average
W holesale and
Retail Trade

M anufacturing
Canton

49.1 %

YoungstownW a rre n

4 3 .7

Dayton

4 2.3

Ohio

United States

Columbus

2 0 .9 %

Toledo

20.8

United States

2 0.7

Cincinnati

20.6

C leveland

20.4

Youngstown-

4 6 .7

Akron

39.5

C leveland

38.6

Toledo

3 6.7

Cincinnati

35.8

Ohio

18.4

Canton

18.2

29.9

Youngstown-

Columbus

25.8

Dayton

W a rre n

17.8

7 .8 %
7.3
6.5

D ayton

17.5

United States

17.0

O h io

13.8

Cincinnati

13.2

Toledo

12.8

Akron

12.5
12.1

Columbus

15.0

Toledo

14.5

C leveland

13.9

Cincinnati

13.4

W a rre n

13.0

Ohio

12.7

Akron

12.6

C leveland

Dayton

12.1

Youngstown-

Canton

11.6

Contract
Construction
United States
Columbus

United States

2 1 .1 %

W a rre n
Canton

and Utilities

Cincinnati

Columbus

16.8

Transportation

Toledo

1 5 .0 %

19.2

Akron

United States

G overnment

Services

5 .1 %

Columbus

6 .2 %

Cincinnati

5.3

United States

4.8

Cleveland

4 .7

Ohio

3.9

4 .7
4 .7

Akron

6.4

C leveland

6.2

Ohio

4.3

O hio

6.0

Cincinnati

4.3

D ayton

4.3

Canton

3.3

Columbus

6.0

Toledo

4.2

Toledo

3.2

C leveland

3.9

Akron

2.8

5.5

Akron

3.5

Dayton

2.8

Canton

5.3

Canton

3.5

Youngstown-

D ayton

3.9

YoungstownW a rre n

8.6

Finance, Insurance,
Real Estate

YoungstownW a rre n

9.5

W a rre n

2.5

NOTE: Toledo SMSA includes Lucas and W o o d Counties, O hio, and M onroe County, M ichigan.
Sources: U. S. D epartm ent o f Labor and Division o f Research and Statistics, Ohio
Bureau o f Unemployment Compensation

peaked in 1952, remaining below fhe peak

through 1965. The construction employment

until 1965, when a particularly sharp year-to-

record is a reflection of the w eakness in resi­

year increase occurred. Coniract construction

dential and nonresidential construction dur­

and trade employment also peaked during

ing much of the period (see Table IV). Thus,

the 1950's, and rem ained below peak levels

the covered employment record of the 1950's

14




TABLE II
Trends in C o ve re d E m p lo y m e n t
Toledo, State of O hio, and United States

1950-1965
1950

1951

1952

1953

1954

1 95 5

195 6

1957

195 8

1959

1 96 0

1961

1962

196 3

1964

1965

Total
(Less Government)
Toledo (thous.)
O hio (thous.)
U nited States (mil.)

136.2

148 .0

150.6

150.5

136.9

145.2

145.1

1 4 5 .7

131.3

134 .9

137.5

129.8

131 .9

134 .9

137.7

145.3

2 ,4 6 5 .0

2 ,6 4 7 .2

2,696.3

2 ,8 2 5 .9

2 ,6 9 6.3

2 ,7 8 4 .6

2 ,8 6 2 .9

2 ,8 6 3 .9

2 ,6 2 7 .7

2 ,7 2 5 .8

2 ,7 4 8 .0

2 ,6 3 1 .8

2 ,6 7 5 .0

2 ,7 1 1 .9

2 ,7 7 1.7

2 ,8 9 4 .9

3 9.2

4 1 .4

4 2.2

4 3 .6

4 2.2

4 3.8

35.1

4 5.3

4 3.5

45.2

4 5 .9

4 5 .4

4 6 .7

4 7 .5

4 8 .7

5 0.0

M anufacturing
Toledo (thous.)
O hio (thous)
United States (mil.)

7 2 .6

8 0 .7

83.0

81.3

68.8

7 3 .7

72.2

7 1 .8

63.5

6 6 .7

6 7.6

61.4

6 3.0

6 5.3

66.9

69.4

1 ,2 1 7 .7

1 ,3 3 6 .9

1,358.7

1,444.2

1,311.8

1,368.3

1,391.4

1,3 6 8.8

1,196.5

1 ,2 6 2.6

1,262.8

1,181.3

1,216.2

1,2 3 3.4

1,253.7

1,317.1

15.2

16.4

16.6

17.5

16.4

16.9

17.2

17.2

15.9

16.7

16.8

16.3

16.9

17.0

17.3

18.0

T rade
Toledo (thous.)
O hio (thous.)
United States (mil.)

3 4 .7

3 5.3

35.7

3 6.7

3 5.9

37.2

38.5

39.1

34.5

3 5.0

36.2

35.1

3 5.6

3 6.0

36.4

38.2

506.1

5 2 4 .7

5 38 .3

558.1

5 5 6 .7

5 7 2 .0

5 9 8 .6

6 0 9 .9

5 8 6 .5

6 0 3 .4

6 19 .2

601.1

6 0 4 .9

6 1 2 .4

6 2 7 .7

6 52.4

9.4

9 .7

10.0

10.2

10.2

10.5

10.6

10.9

10.8

11.1

11.4

11.3

11.6

11.8

12.2

12.7

Services
Toledo (thous.)
O h io (thous.)
United States (mil.)

10.0

10.3

10.4

10.7

10.5

10.8

11.5

11.8

11.2

11.5

11.9

12.2

12.3

12.5

13.1

14.2

2 8 1 .4

2 8 7 .4

296.1

3 0 7 .9

312 .6

3 2 3 .4

3 4 0 .0

3 5 1 .9

3 4 9 .2

3 6 0 .9

3 7 1 .9

3 7 3 .2

3 8 0 .9

3 9 3 .2

4 09 .6

4 2 7 .6

5.4

5.6

5.7

5.9

6.0

6.3

6.5

6.7

6.8

7.1

7.4

7 .7

8.0

8.3

8.7

9.1

Transportation and
Public U tilities
Toledo (thous.)
O h io (thous.)
U nited States (mil.)

7.1

8.6

8.9

8.5

7 .7

8.1

8.2

8.3

8.0

8.4

8.5

8.1

8.4

8.5

8.6

9.3

2 2 3 .3

2 3 6 .6

235.1

240.1

221 .5

2 2 3 .0

2 2 9 .0

2 2 6 .5

2 0 7 .7

2 0 8 .6

2 08 .8

198.6

1 98.3

197.2

197.8

202 .3

4 .0

4.2

4.2

4.3

4.1

4.1

4.2

4.2

4.0

4.0

4 .0

3.9

3 9

3.9

4.0

4.0

Finance
Toledo (thous.)
O hio (thous.)
United States (mil.)

3.8

3.9

4.0

4.1

4.2

4.4

4 .7

4.9

5.0

5.2

5.3

5.4

5.5

5.5

5.6

5.7

8 1 .7

85.4

91.1

95.2

98.6

102.3

106.8

110.5

112.5

116.4

120.4

123 .0

124.3

126.5

128.9

131.5

1.9

2.0

2.1

2.2

2.2

2.3

2.4

2.5

2.5

2.6

2.7

2.7

2.8

2.9

2.9

3.0

C ontract Construction
Toledo (thous.)
O h io (thous.)
United States (mil.)

7 .5

8.7

8.2

8.7

9.2

10.5

9.7

9.3

8.7

7.6

7.5

7.0

6.6

6.7

6.6

8.1

1 2 6 .7

149 .6

152.3

157.1

174.0

173.4

174.7

173.8

154.9

153.5

144.9

135.4

131.4

130.5

134.2

144.6

2.3

2.6

2.6

2.6

2.6

2.8

3.0

2.9

2.8

3.0

2.9

2.8

2.9

3.0

3.1

3.2

NOTE: Toledo d a ta represent covered em ploym ent in Lucas and W ood Counties a v a ila b le through 1965.
Sources: U. S. D ep a rtm e n t o f Lab o r a nd Division o f Research and Statistics, Ohio
Bureau o f U nem ploym ent Compensation




ECONOMIC REVIEW
points to the type of economic adjustment

performing com parably to Ohio, but lagging

experienced by Toledo in that period.

slightly behind the nation. Manufacturing

The total nonagricultural employment se­

and w holesale and retail trade registered

ries (excluding government) provides more

moderate gains from 1961 through 1966, in

complete information on the Toledo SM SA

both cases lagging the nation but performing

for recent years (see Chart 2). Most important­

reasonably sim ilar to Ohio. Employment in

ly, the data reveal patterns basically similar

transportation and public utilities in Toledo

to those of the covered employment data.

improved m arkedly beginning in 1964, ex­

Thus, nonagricultural employment in Toledo

ceeding the nation's and Ohio's performance.

rose each year from 1961 to 1966, despite de­

Although employment in contract construc­

clines in certain components that continued

tion in the United States rose in each year

beyond 1961.4 Although employment growth

from 1962 through 1966, the reversal of long­

accelerated considerably from 1963 to 1966,

term declines in Ohio and Toledo did not

Toledo continued to lag the nation.
Government has been the fastest growing

occur until 1964 and 1965, respectively.

component in Toledo's employment mix since

PROFILE OF M AN UFACTURING
ACTIVITY

1961 (see Chart 2). Despite the phasing out
of a Federal ordnance depot during the early

The data in Table III show the relative con­

1960's, employment at all levels of govern­

tributions to value added, capital spending,

ment in Toledo increased by over a third from
1961 to 19665 compared with 17 percent in

and manufacturing employment of the m ajor

the State and 26 percent nationally. Begin­

three-fourths of manufacturing activity. The

ning in 1963, State and local government em ­

data clearly indicate the predominant role

ployment, especially in education, expanded

of the transportation eguipment industry in

sharply, with much of the increase occurring

Toledo as well as the strong secondary role

at State and municipal universities in the

played by the stone, clay, and glass industry.

industries in Toledo that account for about

Toledo metropolitan area.
Service employment in Toledo grew stead­

About one-fourth of value added by Tole­

ily from 1961 to 1966, performing m arkedly

do's manufacturing industries originated in

better than both Ohio and the nation after

transportation equipment in 1963, much more

1963, as shown in Chart 2. Employment in fi­

than in Ohio or in the United States. The rela­

nance, real estate, and insurance also gained

tive contribution of the stone, clay, and glass

throughout the 1961-1966 period, with Toledo

industry to value added w as also far greater

4 The indexes shown in Chari 2 are based on averages
of ihe years 1958-1960. The series on governmenl employ­
ment is based on 1960.
5 An annual average series for ihe Toledo SMSA, includ­

in Toledo than in the State or nation (17 per­
cent a s com pared with 5 percent and 4 per­
cent, respectively). The relative contribution
to value added by the petroleum and coal

ing Lucas and Wood Counties, Ohio, and Monroe County,

products industry in Toledo also considerably

Michigan, is available only since 1960.

exceeded that in the State and the nation.

16FRASER
Digitized for


C h a r t 2.

TRENDS in NO N AGRICULTURAL EMPLOYMENT
T o l e d o S M S A , S ta te o f O h i o , a n d U n i t e d S ta te s

INDEX 1958-60=100

INDEX 1 9 5 8-60= 100
T R A N S P O R T A T IO N a n d PUBLIC UTILITIES

110

100
\

----

90

F IN A N C E

M A N U F A C T U R IN G

C O N T R A C T C O N S T R U C T IO N

TRADE

SERVICES
140
/V

130

/ /
ry
/
/

120

7
/

i

„

110
100

90
1958

’6 0

’62

’64

’66

1958

’60

’62

’64

'6 6

PLOTTED A N N U A L L Y
NO TE :

T o l e d o SM SA in c l u d e s Luc a s a n d W o o d C o u n t i e s , O h i o , a n d M o n r o e C o u n t y , M i c h i g a n .

Sources o f d a ta :

U.S. D e p a r t m e n t o f C o m m e r c e ; U.S. D e p a r t m e n t o f L a b o r ; M i c h i g a n E m p l o y m e n t S e c u r i t y C o m m i s s i o n ;
P e r s o n n e l D e p a r t m e n t , St at e o f O h i o ; D i v i s i o n o f R e s e a r ch a n d S t a t is t ic s , O h i o B u r e a u o f U n e m p l o y m e n t C o m p e n s a t i o n




ECONOMIC REVIEW
TABLE III
Profile of Manufacturing Activity

outlays by the petroleum and coal products

Toledo SMSA, State of Ohio, and United States

1963, and accounted for nearly half of the

industry in Toledo were relatively heavy in

1963

Share o f Value A d d e d by
Selected M anufacturing Industries

Toledo
SMSA
1963

Petroleum and coal products

24.4%
17.4
8.9
7.3
7.5
6.5
6.5

Seven-Industry Total

78.6%

Transportation equipm ent
Stone, clay, and glass products
M achinery, e xcep t electrical
Food and kindred products
Fabricated m etal products
P rim ary m etal industries

Ohio
1 96 3

United
States
1 96 3

1 5 .9 %

1 1 .9 %

Petroleum and coal products
Seven-Industry Total

77.7%

M achinery, e xcep t electrical
Food and kindred products
F abricated m etal products
Prim ary m etal industries

3.8

and provided 23 percent of total m anufactur­

8.9

6.8

11.2

ing employment in Toledo in 1963. The stone,

3.7

6.2

clay, and glass industry in Toledo w as ahead

14.2

8.0

of the State and nation in relative share of

1.0

1.9

6 4 .4 %

5 2 .0 %

1 1 .1 %

9 .4 %

Seven-Industry Total

72.9%

Food and kindred products
Fabricated m etal products
Prim ary m etal industries

The m arked slowdown of Toledo's m anu­

5.7

5.0

9.9

7 .0

6.0

11.3

cated in Chart 3. Despite some intervening

facturing activity during the 1950's is indi­

7.3

5.5

increases, value added by m anufacturing in

2 4 .7

12.3

0.9

3.8

Toledo in 1961 w as about the sam e a s in

6 5 .6 %

5 4 .2 %

1956. A number of industries contributed to
ing stone, clay, and glass, nonelectrical

Petroleum and coal products

M achinery, e xcep t electrical

total manufacturing employment.

the failure of value added to increase, includ­
23.2%
11.4
10.6
6.8
9.4
6.6
2.9

Stone, clay, and glass products

important in Toledo than in the State or nation

4.8

Share o f Total Employment in
Selected M anufacturing Industries
T ransportation equipm ent

ment industry w as also considerably more

TRENDS IN M AN UFACTURING ACTIVITY
31.3%
14.9
7.5
5.8
5.2
4.6
8.3

Stone, clay, and glass products

Employment in the transportation equip­

13.1

Share o f C a p ita l Spending b y
Selected M anufacturing Industries
Transportation equipm ent

State total for that industry.

9 .5 %

m achinery, and primary m etals. The more

5.0

3.4

13.5

8.6

favorable perform ance by Toledo's transpor­

6.2

9.6

tation equipment industry partly offset the

9.3

6.4

behavior of other industries. During the early

12.5

6.6

0.5

0.9

1960's, the transportation equipment industry

6 0 .3 %

4 5 .0 %

contributed the bulk of the increase in value

1 3 .3 %

NOTE: Toledo SMSA includes Lucas and W o o d Counties,
O hio, and M onroe County, M ichigan.

added by manufacture in Toledo.6

Source: U. S. D epartm ent o f Commerce

6 The value added series for Lucas County is available
only fhrough 1963. However, the U. S. Department of

In 1963, Ihe transportation equipment in­
dustry accounted for 31 percent of total
capital spending and the stone, clay, and
glass industry for 15 percent (see Table III).
C apital spending by these two industries w as

Commerce has prepared the following preliminary esti­
mates for the Toledo SMSA (millions of dollars):
1963

1964

1965

1966

$911

$l,243p

$l,350p

$l,449p

(actual)
p — Preliminary.

about three times as important in the Toledo

These data indicate the marked advance in economic

a rea as in Ohio or the nation in 1963. C apital

activity since 1963.

18FRASER
Digitized for


C h a r t 3.

TRENDS in MANUFACTURING ACTIVITY
T o le d o , S ta te o f O h i o , a n d U n it e d S ta te s
M i ll i o n s o f d o l l a r s

M illio n s o f d o lla r s

v ,M U E ADDED b y M /
—

500

EDO*

100,000-

2,000-

clA P IT A L EXPENDITURES N EW )

O H IO

\
1

/

>

/

.■

/
/ .

I

/

\

/

\ >

X

x ✓

I

O H IO

/

1,000 —

t-

/

800-

y

600 —

—50

/
1

20,000
T O L I EDO

V

■30

200,000

...........

1 1

40

10 ,0 0 0 -!

i

200

TO LED O

3 0 0 ,0 0 0 -

r-

o -i

-------- .

—100
-9 0
—80
70
—60

1 5 ,0 0 0

\

i 1

TO LED O

O H IO

U.S.

OHIC

1,000

20,000n

A C T lJR J

/

/

r

i
...........

15,000-

I
U .S .

20

10,000
"

U.S.

M A N U F A C T U R IN G
A C T IV IT Y
IN D E X 1 9 5 8 - 6 0 = 1 0 0

,

L

160
— 140

■

-1 2 0

5,000

1

...

U .S ,

■
O H IO

:

100
M A N U F A C T U R IN G
EM PLO YM EN T

80
:

DO +

IN D E X 1 9 5 8 - 6 0 = 1 0 0
150

■

TO LED O *
r c

H IO

100
-

t

| U.S.

ill
A N f*JUAL

RATIC3 SCALE
...1

_

1954

'5 6

50
’58

’60

'6 2

'6 4

’66

* L u c a s Co un ty .
^ I n c l u d e s m a rk e t a r e a o f el ec tri c u t il it y firm.
^ In c l u d e s Lucas a n d W o o d Co un tie s , O h io , a nd M o n r o e C o u n t y , M ic h i g a n .
Sou rce s o f d a t a :

U.S. D e p a r t m e n t o f Co m m e r c e ; M ic h i g a n E m p l o y m e n t S e cu ri ty C o m m is s io n; D e v e lo p m e n t D e p a r t m e n t , State o f O h i o ;
Di vis io n of Research a n d Statistics, O h i o Bu rea u o f U n e m p lo y m e n t C o m p e n s a t i o n ; B o ar d o f G o v e r n o r s
o f the Fe d er a l Reserve System; F e d e r a l Reserve Bank o f C le v e l a n d




U.S

ECONOMIC REVIEW
Manufacturing activity in Toledo, as shown

The stone, clay, and glass, fabricated m etals,

in Chart 3, h as followed patterns sim ilar to

nonelectrical m achinery, and food and kin­

the value added series. Reasonably com par­

dred products industries had sim ilar gains in

ab le data are av ailab le through 1966 for To­

Toledo and the United States.

ledo, the Fourth District, and the nation.7

Manufacturing employment dropped to a

After lagging ihe District through 1961, and

low level in 1961. Despite steady increases

then experiencing nearly

identical gains

since that time, m anufacturing employment

from 1962 to 1964, the Toledo index moved

in 1966 w as still below the 1955 peak, and,

ahead of the Fourth District index in 1965

in fact, w as no higher than the 1954 level

and 1966. (The Toledo index also caught the

(see Chart 3). As shown in Chart 4, the lack ­

national index in 1966.)

luster perform ance of manufacturing em ploy­

Because 1966 w as such a banner year in

ment during the 1950's is explained largely

Toledo, it m ay be of interest to look at some

by the substantial and steady decline in the

details of developments in that year. A review

food and kindred products industry, as well

of increased output by m ajor industries (as

as by the even steeper declines in the petro­

reflected by their electric power use) reveals

leum and coal products, nonelectrical m a­

that the greatest advances were registered

chinery, primary metal, and stone, clay, and

by ihe transportation equipment and petro­

glass products industries. (Employment also

leum and coal products industries. G ains in

fell sharply in the electrical m achinery in­

these two industries, as well as in primary

dustry, which is not shown separately in

m etals, were substantially greater than in

Chart 4 because com parable annual data

the United States.

are not available.) Since the early 1960's a

M anufacturing Activity
Percent Changes, 1965 to 196 6

number of industries have registered favor­

Toledo*

United
Statesf

Stone, clay, and glass products

+

+

5%
4

Industry

5%

ab le employment perform ances, including
nonelectrical m achinery, fabricated m etals,
and primary metals.

Prim ary m etal industries

+ 17

+

Fabricated m etal products

+ 12

+ 10

M achinery, e xcep t electrical

+ 15

Transportation equipm ent

+ 21

+ 13
+ 13

mixed pattern. Expenditures increased sub­

Food and kindred products

+

4

+

3

stantially in 1955 and 1956, reaching a long­

Petroleum and coal products

+ 22

+

4

time peak in 1956. Slight year-to-year declines

* W e ig h te d electric p ow e r use, Federal Reserve Bank o f
Cleveland.
f Index o f Industrial Production (M anufacture), Board o f
Governors o f the Federal Reserve System.

C apital spending in Toledo has shown a

took p lace in 1957 and 1958, followed by a
sharp drop in 1959. Expenditures were at
stable, though depressed, levels from 1959

7 Data for Toledo and the Fourth District are based on

to 1963. A sharp turnaround in capital spend­

electric power used in each manufacturing industry

ing occurred in 1964 and a new high w as

weighted by value added per kilowatt hour of electricity

reached in 1965.

used in each industry. For a more complete discussion of
this index see, "Manufacturing Activity in Metropolitan
A reas," Economic Review, Federal Reserve Bank of
Cleveland, Cleveland, Ohio, October, 1965.

20




PORT OF TOLEDO
In the 1840's, the channel of the M aum ee

TRENDS in MANUFACTURING EMPLOYMENT
T o le d o , S ta te o f O h i o , a n d U n it e d S ta te s

IN D E X 1 9 5 8 - 6 0 = 1 0 0

ALL M A N U F A C T U R IN G

120 ---- --------------

PRIMARY M ETAL INDUSTRIES

IN D E X 1 9 5 8 - 6 0 - 1 0 0
— ------ ------ ------- 1 6 0

TO LE D O

T R A N S P O R T A T IO N EQ U IP M E N T

F O O D a n d KIN D R ED PRODUCTS
S T O N E , C LAY , a n d G LA S S

PETRO

M A C H INER Y, EXCEPT

UM a n d C O A L PRODUCTS

ECTRICAL

SEVEN-INDUSTRY TO TAL

FABRICATED M ETAL PRODUCTS

1954

'5 6

'5 8

’6 0

’62

'6 4

'6 6

OTHER M A N U F A C T U R IN G INDUSTRIES

1954

'5 6

'5 8

'6 0

PLOTTED ANNUALLY
NOTE:

T o l e d o in c lu d e s Lucas a n d W o o d Co unt ies , O h io .

* A d ju s t e d to c o r r e s p o n d w it h Census o f M a n u fa c tu re rs d a t a .
So urc es o f d a t a : U.S. D e p a r t m e n t o f C o m m e r c e ;

O h i o B u re a u o f U n e m p lo y m e n t


U.S. D e p a r tm e n t o f L a b o r ; D iv is io n o f Research a n d Statistics,
C o m p e n s a t io n

'6 2

'6 4

'6 6

ECONOMIC REVIEW
River w as utilized as pari of Iwo can als — the

tivity in Toledo provide further evidence of

Miami and Ohio (connecting Cincinnati and

recent trends in the area (see Table IV). As a

Toledo) and the W abash and Erie (connecting

general matter, these series confirm the slug­

Evansville and Toledo) — and the City b e­

gish economic activity during much of the

cam e the main lake port for the lower Ohio

1950's and the improvement in the 1960's.

River V alley region (just as Cleveland, con­
nected by can al with M arietta and Ports­

Unemployment Rate, Help Wanted Index,

mouth, served the upper Ohio River territory).

and Wage and Salary Income. A decline in

W hen the railroads subsequently followed

the unemployment rate and a rise in the help

the old can al routes, Toledo's tie with the

wanted index are signs of a growing demand

Ohio V alley region w as strengthened. As

for labor, and, by association, of expanding

other railroads linked the City with M ichigan

economic activity. The av erage annual rate

to the north and with the grain-growing areas

of unemployment in Toledo decreased from

to the west, Toledo becam e a m ajor trans­

8.4 percent in 1961 to 3.4 percent in 1966; the

shipment point. Today, Toledo is served by

rate in 1966 w as slightly above the State

eight m ajor rail lines.

level but below the national figure (3.1 per­

Bituminous coal from central and southern

cent and 3.9 percent, respectively). The im­

Ohio is the largest single tonnage item at the

provement in Toledo's econom y w as rela­

Pori of Toledo. Toledo ranked first in coal

tively greater than in the nation. The help

shipments on the Great Lakes. With the acti­
vation of iron ore mines in the Lake Superior

wanted index in the Toledo area more than
doubled from 1963 to 1966, reflecting signifi­

region in the mid-1800's, Toledo becam e an

cant improvement in the demand for lab or.9

important "low er la k es" iron ore port.8 Ore

W ages and salary income of those in cov­

tonnage handled at the port is currently sec­

ered employment also provides an indication

ond to that of coal. Grain, which w as the first

of the course of economic activity, as well

m ajor export of the Toledo port, currently

as of employment patterns and of buying

ranks third among commodities handled by

power. From 1958 to 1965 covered employ­

the Port and petroleum products rank fourth.

ment income in Toledo climbed 38 percent,

In 1966, these four bulk cargo items — coal,

com pared with gains of 43 percent in Ohio

iron ore, grain, and petroleum products —

and 47 percent in the nation. The bulk of the

accounted for 98 percent of the total volume

gain in Toledo's covered payrolls occurred

of cargo through the Port. Total tonnage ad­

after 1961, with relative perform ance more

vanced substantially from 1961 through 1965,

favorable than in either Ohio or the United

and then declined slightly in 1966.

States.

OTHER ECO N O M IC INDICATORS

9 In a generally strong labor market such as prevailed

Several broad indicators of economic ac-

nationally in 1965 and 1966, it should be recognized that
industry seeks employees outside its immediate geo­

8 The volume of ore handled at Cleveland, however, is

graphic a re a ; thus, all of the increase in the help wanted

more than double that of Toledo.

index m ay not be due to local demand.

Digitized for22
FRASER


JUNE 1 9 6 7
Electric Power Sales. In 1966, loial electric

porting banks increased by 35 percent com ­

power sales in Toledo were 73 percent above

pared with gains of 79 percent in Ohio and

1958 levels com pared with an 82-percent gain

69 percent in the nation. Interestingly, as with

in the nation. Over the 1958 to 1966 period,

other economic indicators, com m ercial and

residential consumption of electric power in

industrial loans advanced strongly relatively

Toledo increased 51 percent com pared with

recently (1964), like

a 93-percent increase nationally. Industrial

and the United States. The distribution of

use of electricty in Toledo advanced 79 per­

com m ercial

cent over the sam e period, or slightly less

m ajor industries in Toledo differs in several

and

the situation in Ohio

industrial

loans

among

than the 83-percent rise nationally. However,

respects from that in the State (see Table V).

from 1961 through 1966, ihe percent gain in

In 1966, the three most important categories

industrial use of electricity in Toledo exceed­

of business loans at Toledo banks were trade,

ed that of the nation.

manufacturing, and services, in that order.

Building Contracts. In Toledo, as in most

In Ohio, the ranking w as manufacturing,

areas, building contracts data are ch aracter­

trade, and services. From mid-1962 to mid-

ized by sharp fluctuations. For this reason,

1966, the percent change in dollar volume at

year-to-year changes m ay be less signficant

Toledo banks shows much greater growth in

as m easures of change in business activity

loans to manufacturing firms (59 percent)

than longer term trends. Reasonably similar

than to trade concerns (15 percent). At all

percent changes from 1958 to 1966 were reg­

reporting banks in Ohio, the in creases were

istered for total and nonresidential building

trade, 72 percent, and m anufacturing, 67 per­

in Toledo and the nation, with Ohio lagging.

cent.

On the other hand, residential construction
in Toledo lagged both Ohio and ihe United

debits in Toledo from 1958 to 1966 lagged

States in ihe sam e period. The composition

gains in ihe State (89 percent) and the naiion

Bank Debits. The 79-percent rise in bank

of total construction during 1958 to 1966

(106 percent). The growth of bank debits in

shows that 43 percent of the total in Toledo

Toledo from 1958 to 1962 w as more rapid than

was residential, compared with 54 percent

in the Slate or nation, but slowed noticeably

in Ohio and 56 percent nationally.

from 1963 to 1966, in contrast to an accelerated

Commercial and Industrial Loans. Between

growth in Ohio and the nation. W hile this

1959 and 1966, com m ercial and industrial

m ay seem surprising in view of the generally

loans outstanding10 at Toledo's w eekly re­

more favorable

10 The limitations of data for a single area should be
considered when comparisons are made with Stale or

perform ance

of Toledo's

economy in the recent period, it can be at­
tributed, at least in part, to the fact that eco­

national series. Because financing of large projects may

nomic activity is not alw ays financed in the

not be undertaken locally, and since direct loans or

sam e area in which it physically takes place.

participation loans by local banks m ay assist in the
financing of business activity outside ihe local area,
business loan data only partly reflect the course of local
economic activity.




(See footnote 10.)
Department Store Sales. G ains in depart­

ment store sales in the Toledo metropolitan
23

TABLE IV
Selected Econom ic Series
Toledo, State of Ohio, and United States

1958-1966

Percent
195 8

195 9

Unem ploym ent Rate, Total

Toledo

n.a.

n.a.

(annual averages)

O hio

n.a.

n.a.

United States

6 .8 %

1 96 0

5 .5 %

1961

1 96 2

5 .0 %

8 .4 %

6 .2 %

5.3

7.3

5.6

6.7

196'

19 6 6 p

1 96 5

>64

5.

4 .4 %

5.7

5.

5.6

5.

Change*

3 .7 %

3 .4 %

—

32%

4.2

3.5

3.1

—

42

5.2

4.6

3.9

—

30f

H elp W a n te d Index

Toledo

69

116

123

86

1 27

1

156

229

2 78

+

3 03

1 9 5 7 -5 9 = 100

United States

78

1 11

1 04

97

110

1

123

155

1 90

+

143

Item
Unemployment Rate

D efinition o f Toledo

Source

1 9 6 0 -6 3 , Lucas County

Division o f Research and

1 9 6 4 -6 5 , Lucas and W o o d Counties,

Help W a n te d Index

Statistics, O hio Bureau o f

O hio, and M onroe County,

Unem ploym ent

M ichigan

Compensation

N ew sp a pe r m arket area

N atio n a l Industrial
Conference Board, Inc.

(annual averages)
W a g e s and Salaries

Toledo

(millions o f dollars)

Ohio
United States

656

713

739

706

741

7

827

905

n.a.

+

38

W a g es and Salaries

11,302

1 2 ,5 0 7

12,8 36

12,5 54

1 3 ,3 07

13,8

1,862

16,1 86

n.a.

+

43

(Toledo and O hio, covered

merce; Division o f

196 ,38 2

2 1 2 ,5 3 8

2 2 2 ,1 0 8

2 2 5 ,8 6 9

2 4 0 ,1 3 2

2 5 1 ,6

>,288

2 8 9 ,1 4 5

n.a.

+

47

em ploym ent; United States,

Research and Statistics,

wages and salaries)

O hio Bureau o f Unemploy

U. S. D epartm ent o f Com­

Lucas and W o o d Counties

ment Compensation
Electric Power Sales

Toledo-Residential

(billions o f kwh's)

Industrial
Total

0.5

0.5

0.5

0.6

0.<

0.6

0.7

0 .7

+

51

1.4

1.7

1.8

1.7

1.9

2.C

2.1

2.3

2.6

+

79

2.3

2.6

2.7

2.7

2.9

3.1

3.2

3.5

3.9

+

83

165.0

180.0

196.0

2 0 9 .0

2 2 6 .0

242.1

2.0

2 8 1 .0

3 1 8 .4

+

93

Industrial

3 8 1 .7

422.1

4 5 9 .8

4 8 1 .9

518.1

554.:

>2.5

6 35 .0

6 9 8 .0

+

83

Total

5 7 0 .0

6 2 8 .0

6 8 4 .0

7 2 2 .0

7 7 8 .0

833.(

>2.0

9 5 3 .0

1,035.3

+

82

United States-Residential

Building Contracts

0.5

Toledo-Residential

$

26

N onresidential

Residential and N onresidential

Ohio-Residential
N onresidential

30

$

42

31

$

53

30

$

41

30

$

,

43

;

62

28

$

36

30

+

15

62

+

74

$

46

62

72

84

71

58

(

105

82

92

+

49

681

1,056

894

852

966

1,0.

,0 1 7

1 ,0 4 7

951

+

40

Total

(millions o f dollars)

$

36

835

676

656

717

628

6'

863

979

1,099

+

32

1,516

1,732

1,550

1,560

1,594

1,7:

,8 8 0

2 ,0 2 6

2 ,0 5 0

+

35

14,6 96

17,1 50

15,1 05

1 6,123

1 8 ,0 39

20,5i

),565

2 1 ,2 4 8

1 7 ,8 2 7

+

21

N onresidential

10,9 48

1 1 ,3 87

1 2,2 40

12,1 15

1 3,0 10

14 ,3;

5,522

1 7 ,2 19

1 9,3 93

+

77

Total

2 5 ,6 4 4

2 8 ,5 3 7

2 7 ,3 4 5

2 8 ,2 3 8

3 1 ,0 4 9

34,8;

>,087

3 8 ,4 6 7

3 7 ,2 2 0

+

44

Total
United States-Residential

Electric Power Sales

U tility service area

Toledo Edison Com pany

Building Contracts

Lucas County

F. W . D odge C om pany

Service a rea o f commercial

B oard o f G overnors o f the

Commercial and Industrial Loans

Toledo

n.a.

I

63

35

Commercial and Industrial

O utstanding a t W e e k ly Reporting

Ohio

n.a.

1,031

1,159

1,145

1,158

1,2:

,3 2 4

1,579

1,846

+

79

Loans Outstanding

Banks (m idye a r 1 9 5 9 -1 9 6 6 ,

United States

n.a.

3 2 ,9 0 4

3 1 ,6 3 2

3 1 ,7 6 9

3 3 ,3 5 4

35,5.

},7 4 8

4 6 ,8 3 9

5 5 ,7 6 9

+

69

$

62

$

66

$

66

$

64

$

$

74

$

84

banks

Federal Reserve System/
Federal Reserve Bank o f

millions o f dollars)

C leveland

Index o f Bank Debits

Toledo

88.7

101.1

110.2

1 15 .7

136.3

137.7

14.9

152.2

158.5

+

79

1 9 5 8 -6 0 = 100

Ohio

9 1.9

102.0

106.1

108.4

117.4

125.^

8.3

154.0

173.3

+

89

United States (excl. N.Y.C.)

91.2

101.9

106.9

112.8

124.4

135.4

8.1

164.6

187 .7

+

106

Bank Debits

Service a rea o f commercial

Board o f Governors o f the

banks

Federal Reserve System,Federal Reserve Bank o f
C leveland

D epartm ent Store Sales Index

Toledo

111

114

1 18

i:

129

140

n.a.

+

26

1 9 5 7 -5 9 = 100

Ohio

n.a.
96

n.a.
105

104

106

110

1

122

131

n.a.

+

26f

United States

99

105

106

109

114

1

1 20

136

n.a.

+

28f

D epartm ent Store Sales

Lucas and W o o d Counties, Ohio,
and M onroe County, M ichigan

U. S. D epartm ent o f Com­
merce; Bureau o f Busines

Research, The O hio State
University; Board o f
G overnors o f the Federal
Reserve System; Federal
Reserve Bank o f
C leveland

p — Prelim inary,
n.a.— N o t a v a ila b le .
* Change from 1 95 8 o r e arliest y e a r in series,

f

Percent change from 196 0 .




ECONOMIC REVIEW
TABLE V
Commercial and Industrial Loans Outstanding
At Weekly Reporting Banks,* By Industry
Selected Dates, 1962 to 1966
Percent o f Total Outstanding on
Percent Change
June 27,
1962

June 26,
1963

June 2 4,
1 964

June 3 0,
196 5

June 2 9,
1 96 6

in D ollar Volume
(1 9 6 2 to 1 96 6 )

Toledo
T r a d e ................................................................................

48%

37%

41%

39%

43%

+

15%

Total m a n u f a c t u r in g ....................................................

25

31

30

32

31

+

59
54

D urable g o o d s ........................................................

15

21

21

22

18

+

N on d u rab le g o o d s ....................................................

10

10

10

9

13

+

66

A ll other, m ainly s e r v ic e s ..........................................

16

18

17

18

18

+

42

Transportation, communication,
and o th e r public utilities
......................................

3

6

4

6

5

+ 143

Construction

..................................................................

6

6

7

5

4

—

M in in g ................................................................................

1

1

1

10 0 %

100%

100%

t
100%

t
100%

T r a d e ................................................................................

22%

22%

22%

23%

Total m a n u f a c t u r in g ....................................................

40

41

40

38

D urable g o o d s ........................................................

26

26

26

N ondurable g o o d s ....................................................

14

15

A ll other, m ainly s e r v ic e s ..........................................

17

Transportation, communication,
and other public utilities
......................................

T o t a l f ....................................................................................

16

— 78
+

31

22%

+

72

41

+

67

25

25

+

61

14

13

16

+

79

16

19

19

16

+

56

Ohio

10

10

10

11

11

+

74

...........................................................................

8

7

7

7

7

+

36

M in in g ...........................................................................................

2

2

2

2

3

+ 108

10 0 %

100%

100%

100%

100%

Construction

T o t a l ! ....................................................................................

+

66%

* 1 9 banks in O hio re p o rt w eekly on the distribution o f loans outstanding b y business or borrowers,
f A ll columns m ay not a d d to 1 00 percent due to rounding.
J Less than 1 percent.
Source: Federal Reserve Bank o f Cleveland

area from 1960 to 1965 were com parable to

lier, Toledo's economy went through a funda­

gains in the Slate, but slightly less than in

mental economic readjustment during the

the nation. A strong performance in Toledo

1950's. Since that time, however, particularly

during 1964 and 1965 matched favorable

since 1963, most m easures of economic activ­

showings in Ohio and the United Slates.

ity indicate a resurgence in Toledo.

CON CLU DIN G COMMENTS

of longer-run implications, Toledo appears to

If developments in 1966 are representative
Recently, activity in Toledo has followed the

have an industrial mix with considerable

pattern of m any developed industrial centers

growth potential. Three of the City's seven

across the United States. As indicated ear­

m ajor industries showed relatively greater

26




JUNE 1 9 6 7
gains than in ihe nation from 1965 to 1966;

nonmanufacturing components of the n a­

gains in the other four industries were similar

tion's economy — the service industries and

in Toledo and the United States.

government, especially education. Finally,

A m ajor plus factor for Toledo has been its

the Port of Toledo is expected to share in any

strength in two of the most rapidly growing

expansion of com m erce on the Great Lakes.




27

ECONOMIC REVIEW

CAPITAL SPENDING PLANS IN
CINCINNATI AND PITTSBURGH

The 1967 spring survey of capital spending

In contrast, total spending for 1967 is now

plans of business firms in selected metropoli­

expected to exceed earlier plans (last fall's)

tan area s of the Fourth District again indi­

by a sm all margin. Firms planning larger

cates that local spending m ay differ from the

spending than previously for 1967 slightly

broad pattern revealed by sim ilar surveys

outnumber the firms that reduced spending

on a nationwide s c a le .1

plans for this year in the interval betw een
the two surveys.

CINCINN ATI

Revised figures of 1966 actual spending and

Results of the latest survey by the Federal

1967 planned spending indicate that total

Reserve Bank of Cleveland in cooperation

spending by the manufacturing group will

with the G reater Cincinnati Cham ber of Com­

exceed last year's by about 31 percent (see

m erce in the seven-county Cincinnati metro­

Table I). Previously, a 2-percent drop betw een

politan a rea reveal that manufacturing firms

1966 and 1967 had been reported by partici­

in 1966 actually spent somewhat less for new

pating firms. The pattern of higher spending

plant and equipment than had been antici­

for 1967 in relation to 1966 than previously

pated in the fall survey. W hile sim ilar propor­

reported prevails among all individual in­

tions (four out of every ten firms reporting in

dustries in both the durable and nondurable

both surveys) reported spending either more

portions of manufacturing in Table I. Follow­

or less than had been expected in the fall,

ing the anticipated rise this year, spending

total capital spending outlays in 1966 fell

by manufacturing concerns in 1968 is expect­

short of the figure anticipated in the previous

ed to be 24 percent below 1967 (see Table I).

survey.

Among m ajor industries, transportation
equipment accounts for about 40 percent of

1 For a discussion of capital spending plans in Cleveland

total capital outlays planned by reporting

and noriheaslern Ohio see ECONOMIC REVIEW, Federal

manufacturing firms for both 1967 and 1968,

Reserve Bank of Cleveland, May, 1967.

while combined spending by the chem icals,

28




JUNE 1 96 7
TABLE I
C a p ita l S p e n d in g b y C in c in n a ti A re a Firm s

portation equipment industry will be for

(S p ring 1967 S urvey)

Figures for the food and chem icals industries

Year-to-Year Percent Changes
1 9 6 6 (actual)
to
1 9 6 7 (planned)
MANUFACTURING . . . .

structures in 1967 and 1968 (see Table II).
indicate that a rather large share of total

1 9 6 7 (planned)
to
196 8 (planned)

+

31%

—

24%
15

outlays will be for structures in both years.
Between six and seven out of every ten
dollars of total spending will go for expansion

+

8

—

Prim ary and fa b ric a te d
m e ta ls * ............................

+

14

+

17

M a c h in e r y ........................

—

4

+

51

TABLE II

Electrical equipm ent

+

50

—

31
38

C a p ita l S p ending b y C in c in n a ti A re a Firm s
(S pring 1967 S urvey)
Percent Distribution o f Total Spending by Type*

D urable g o o d s ...................

.

.

Transportation equipm ent

+

9

—

O the r d u ra b le s f . . . .

—

10

+

. .

+

62

F o o d .................................

+

10

A p p a r e l ............................

+

83

—

P a p e r .................................

+ 1 18

—

55

Printing and publishing

+

31

—

49

+ 1 06
+ 83

—

34

19 66

1967

196 8

1966

1 96 7

1968

—

69

MANUFACTURING 2 1 %

35%

26%

62%

70%

65%

23

62

66

60

N ondurable goods

.

.

C h e m ic a ls ........................
O the r n on durablesj

. .

3

— 33

(Between Structures and Equipment and Between
Expansion and Replacement)

-0 90

Structures f

16

12

16

Primary and fa b ­
ricated metals § 8

27

50

34

56

72

Machinery

25

17

11

70

57

45

Electrical
equipment

20

19

16

52

54

47

| Includes ru bber, leather.

Transportation
equipm ent

14

3

2

70

77

69

Source: Federal Reserve Bank o f Cleveland

O the r durables §■ 1 3

15

18

69

63

62

N ondurable goods 2 7

PUBLIC UTILITIES
TOTAL

. . . .

.................................

+

21

+

+

28%

—

Durable goods

Expansion %

8%

* Combined in o rd e r to preclude disclosure o f individual
establishment d a ta ,
f Includes furniture and fixtures, stone, clay, and glass,
instruments, miscellaneous m anufacturing.

51

36

62

73

70

food, and m achinery industries accounts for

Food

31

53

44

56

67

48

A p p a re l

15

71

20

55

9

10

another 40 percent. Anticipated spending in

Paper

9

47

11

49

74

57

1967 by the utilities — about two-thirds of the

Printing and
publishing

total reported by all participating m anufac­

Chemicals

turing firms — w as revised upward between

O ther
nondurables § §

9

16

15

28

35

66

36

59

39

83

87

82

2

70

25

57

75

25

the two survey dates, but the percent increase

PUBLIC UTILITIES

28

32

32

75

70

74

over 1966 is still expected to be less than the

TOTAL

22%

34%

27%

65%

70%

67%

increase by manufacturing firms. Current

*

spending plans of the utilities for 1968 show

Based only upon returns in which these breakdowns
w ere supplied.

f

Spending fo r equipm ent equals 100 percent less the
percentage shown fo r structures.

\

Spending fo r replacem ent equals 100 percent less the
percentage shown fo r expansion.

a further increase, unlike the anticipated de­
cline in spending by manufacturers.
Distribution of total spending
structures

and

equipment varies

between
greatly

§ Combined in o rd e r to preclude disclosure o f individual
establishment d a ta .
§

Includes furniture and fixtures, stone, clay, and glass,
instruments, miscellaneous manufacturing.

among m ajor industries. An insignificant pro­

# # Includes ru bb e r, leather.

portion of the m assive spending in the trans­

Source: Federal Reserve Bank o f Cleveland




29

ECONOMIC REVIEW
of present manufacturing facilities, with high­
er proportions in chem icals and transporta­
tion equipment. Spending for expansion in
manufacturing, although still very high, is

TABLE III
Capital Spending by Pittsburgh Area Firms
(Spring 1967 Survey)
Year-to-Year Percent Changes
1 9 6 6 (actual)
to
1 9 6 7 (planned)

down slightly from the proportion revealed
in last O ctober's survey. This m ay indicate
somewhat reduced capacity pressures on
m anufacturing firms, since in April only 22

MANUFACTURING . . . .
D urable g o o d s ...................
Stone, clay, and glass

percent of reporting manufacturing firms con­

Prim ary metals

sidered capacity "less than required," com ­

Fabricated metals .

pared with 25 percent last October.
Among manufacturing firms answering the
question on financing plans, 86 percent ex­

.

. . . .
.

.

M achinery (incl. electrical)
N ondurable goods

.

+

25%

—

28%

+

21

—

24

—

47

+

81

+

17

—

18

+

13

—

63

+ 143
45

.

+
+

49

— 48

Printing and publishing

.

+

43

—

71

C h e m ic a ls ........................

+

38

—

42

+

32

+

12

—

11

—

2

—

99

—

20%

TRANSPORTATION

a drop from a reported 90 percent in 1966. In

PUBLIC UTILITIES

total dollars, internal financing declined from

RETAIL TR A D E ........................

+

29

TOTAL

+

21%

93 percent in 1967. Utilities expect only 50

2
+
— 45

.

pect to use internal financing entirely in 1967,

an actual 95 percent in 1966 to an anticipated

1 9 6 7 (planned)
to
1 9 6 8 (planned)

.

.

.

. . . .

.................................

Sources: University o f Pittsburgh and
Federal Reserve Bank o f C leveland

percent of total spending this year to be
financed from internal sources, in contrast to
an actual 78 percent last year.

ward revision occurred in nondurable goods
manufacturing as a group. Only the trans­
portation industry, among reporting indus­

PITTSBURGH
The most recent survey of business firms

tries, revised its spending plans downward
between the two survey dates.

in the four-county Pittsburgh metropolitan

Spending by the whole manufacturing

area, conducted by the University of Pitts­

group accounts for about half of total outlays

burgh under arrangem ents with the Federal

reported by Pittsburgh business firms that

Reserve Bank of Cleveland, indicates a 21-

returned completed questionnaires. Within

percent increase in new plant and equipment

the manufacturing group, primary m etals

spending in 1967. Manufacturing firms antici­

ranks first in amount of spending, accounting

pate a 25-percent increase in spending in

for about 55 percent of total outlays by m an­

1967 (see Table III).

ufacturing firms in each of the three survey

The latest survey reflects a considerable

years. A m ajor portion of spending by pri­

upward revision in spending expectations

m ary m etal manufacturers is designated for

from the fall 1966 survey. At that time, manu­

replacem ent of equipment.

facturing firms anticipated only a 2-percent

In 1968, spending of reporting firms is ex­

increase in spending for 1967, while combined

pected to drop below the 1967 level by about

spending by all participating firms w as ex­

one-fifth for all industries and by over one-

pected to rise by 11 percent. The largest up-

fourth in manufacturing (see Table III).

30




JUNE 1 9 6 7
In 1967, slighily less than one dollar in four
will be spent for siruciures by all firms com­
TABLE IV
Capital Spending by Pittsburgh Area Firms
(Spring 1967 Survey)

bined, and only one dollar in five by all m an­
ufacturing concerns (see Table IV). Spending

Percent Distribution of Total Spending by Type*

plans of m achinery firms for 1967 and 1968

(Between Structures and Equipment and Between

indicate a considerably larger proportion of
total spending for structures. The large share

Expansion and Replacement)

of construction outlays by retail firms reflects

Expansion +

Structures f
1966

1967

1 96 8

1966

1967

196 8

MANUFACTURING 2 0 %

19%

17%

23%

40%

35%

the nature of retail operations.
Distribution of total capital spending b e­

D urable goods

21

21

19

19

35

37

Stone, clay,
and glass

43

-0 -

-0 -

15

2

8

Prim ary metals

19

18

17

12

30

33

Fabricated
metals

34

12

12

36

40

6

marily by expansion plans of the printing and

M achinery
(incl. electrical)

14

30

28

26

44

56

publishing and the chem ical industries. C a­

N ondurable goods 10

10

4

53

68

13

pacity pressure does not appear to be a fa c ­

13

1

6

2

30

8

6

22

4

64

66

45

10

7

3

59

77

6

5

3

24

1

1

20

34

39

32

56

56

53

§

§

-0 -

28%

37%

39%

Food
Printing and
publishing
Chemicals
TRANSPORTATION
PUBLIC UTILITIES
RETAIL TRADE

98

71

-0 -

TOTAL

24%

24%

24%

* Based only upon returns in which these breakdowns
w ere supplied.
f Spending fo r equipm ent equals 1 0 0 percent less the
percentage shown fo r structures.

tween replacem ent and expansion shows a
sharply rising share for expansion, particu­
larly between 1966 and 1967, spurred pri­

tor in the decision to expand, as a sm aller
portion of respondents in manufacturing than
last fall reported "less than ad eq u ate" ca p ac­
ity in the latest survey.
In 1966, less than 60 percent of all actual
capital spending w as financed internally,
with three-fourths of all reporting firms rely­
ing exclusively on internal financing. Plans
are to finance over 70 percent of expenditures

\ Spending fo r replacem ent equals 1 0 0 percent less the
percentage shown fo r expansion.

internally in 1967, with over four-fifths of re­

§ Less than 1 percent.

porting firms expecting to use only internal

Sources: University o f Pittsburgh and
Federal Reserve Bank o f C leveland

sources. Manufacturing firms expect to fi­




nance 95 percent of dollar outlays internally
this year — against 70 percent in 1966.

31




Fourth Federal Reserve District