The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY BUSINESS REVIEW Covering financial, industrial and agricultural conditions Vol. 21 Cleveland, Ohio, March 31, 1939 Tardiness or failure of the usual spring expansion to appear in the major industries of this district, and hap penings abroad which seemed to hold up the making of commitments and placing of orders, have offset favorable developments occurring in the four latest weeks. As a result, where allowance is made for the fact that an in crease is customary in basic production as well as in trade at this season of the year, general business has failed to hold to the level prevailing at the beginning of 1939. A re cent survey of steel consumers in this district revealed that no company was anticipating its needs for a longer period than normally is the case while one-third of them were buying for shorter periods than usual. In some of the consumers' goods lines, however, such as shoes, cloth ing, china, paper, and tires, orders received for finished goods were in relatively good volume, although their own buying of raw materials has been on a moderate scale. The steel ingot production rate in the week ended March 25 was half a point higher than in the same week of Feb ruary. In the corresponding period of other recent years, when the weekly operating rate was much higher as well as lower than at present, there was a gain of several points in the national rate. Compared with the low level of 1938, the industry has made a very favorable showing so far this year, but there is some evidence that production has been maintained at a rate slightly in excess of the volume of recent incoming orders. Finished steel inventories have increased since the beginning of the year in this district, according to reports. Automobile production rose each week in March, accord ing to Ward's reports. In the latest period, assemblies were more than 50 percent ahead of the corresponding period of last year, but they were no greater than in midJanuary and also below the level of this season of the years 1935 to 1937. There has been rather a large increase in new car inventories since the beginning of the year, and while retail sales improved in the first three weeks of March, the rise from the first quarter low point in some sections was less than in either 1938 or 1937. Parts plants have had only moderate releases this spring, and sheet steel buying has been limited, in large part because of the heavy ordering last fall. Tire demand was not as great seasonally as expected in early March and employment and payrolls in the rubber industry were down in February from January. In con Fourth Federal Reserve District Federal Reserve Bank of Cleveland No. 3 trast with last year, however, the situation in the rubber industry is much improved. Employment increased about 1 per cent in Ohio and 2 percent in Pennsylvania in February over January and payrolls were up by slightly larger amounts. This was closely in line with seasonal development in Pennsylvania but less than seasonal in Ohio. In Cleveland there was practically no change in employment in the latest month; Pittsburgh was up 1 percent; Toledo declined moderately; while gains of larger than average amounts were evident at Canton, Massillon and Dayton. Retail trade reflected this improvement in payrolls, but the gain over January was less than seasonal and the ad justed index receded one point. In the first half of March dollar sales were larger than in the corresponding period of last year by approximately 3 percent. Inventories at department stores increased more than seasonally for the second consecutive month. Machine tool sales continued to improve until mid-March at which time some hesitancy developed. In February, sales were in excess of the monthly average of 1929. Di versification of the source of buying continued to be the basis for optimism evident in this industry. China and pottery makers have benefited from foreign developments through eliminating sources of competitive merchandise. This industry was reported operating at better levels than at this season in any of the past ten years. Construction contracts awarded in this district in Feb- Source: Bureau of Bus. Research— O. S. U. 2 THE MONTHLY BUSINESS REVIEW ruary were 60 percent larger than a year ago, but in the first half of March the gain over 1938 was 9 percent. Residential awards also were up 60 percent in February, whereas up to mid-March the increase over a year ago was only 30 percent. In this connection, however, con struction turned up last year in March at a better than usual rate following enactment of the F. H. A. amend ments. In the first two months of this year, building re mained at the best levels since 1930. FINANCIAL Federal Reserve At the Federal Reserve Bank of CleveBank Credit land, trends which have been apparent for some time continued during February and the first three weeks of March. Member bank borrow ings were reduced to $76,000 on March 22, and advances made directly to industry declined to $396,000, the lowest volume outstanding since the industrial loan program was launched in 1934. Total holdings of Government securities remained unchanged, but, through the Open Market Com mittee, the Cleveland bank participated in System shifts so far as maturities were concerned. For the first time since the middle of December, the ratio between holdings of Treasury bills, notes, and bonds was altered. In the week ended March 15, note holdings of this bank were reduced about $7,000,000 and bonds equal in amount were purchased. In the following week, Treasury bills valued at $3,000,000 were replaced by notes. Total reserves of both this bank and all member banks within this district reached all-time highs during March. In the week ended March 22, however, member bank bal ances with the reserve bank were reduced and Treasury deposits increased as a result of income tax payments and Government financing. This reduction in reserves is only of a temporary character, for operations of the Government will restore these funds to private hands. Immediately prior to the tax payment date, reserves of member banks in this district were estimated to be 63 percent in excess of require ments. Member Bank Credit Weekly reporting member banks in leading cities of the district increased their loans somewhat in the four weeks ended March 22. A slight pick-up in borrowing for commer cial purposes was indicated, and so-called “ other” loans, which include personal as well as term loans to industry, also increased. During the last few weeks, these banks have reported their holdings of Government securities classified as to type. As of March 22, these investments were distributed as follows: Treasury bills, $14,000,000; Treasury notes, $203,000,000; Treasury bonds, $590,000,000; and securities fully guaranteed as to principal and inter est by the Federal government, $106,000,000. During the four weeks ended March 22, note holdings were reduced steadily, while bonds were held constant until the week ended March 15th. At that time, these banks acquired $25,000,000 of bonds, and in the succeeding week added $16,000,000 more. Other security investments showed little change. MANUFACTURING, MINING The weekly operating rate of the steel industry fluctuated between 55 and 56.5 percent of capacity in the four weeks end ed March 25, with weakness in the latest period. This was not a seasonal development. The Board's index al lows for a gain in daily average steel ingot production of about 7.5 percent from February to March, which is usual ly the peak of the year. At this time in 1938, despite the depressed level of general business, the wreekly steel operating rate rose five points in March, and even at the high rate of the first quarter of 1937 a gain of six points in the weekly operating rate was recorded. In February, steel ingot production showed little change from January on a daily average basis, whereas an increase is customary, and the adjusted index declined eight points to 88 percent of the 1923-25 average. Total output, never theless, was 73 percent in excess of the low level of last year and a gain of 79 percent for the first two months was evident. The trend of steel operations in various steel-producing centers was not uniform in the four weeks ended March 25. Youngstown mills experienced the greatest improvement in the period, operations rising from 47 percent to 54.5 per cent of capacity. As a result of heavier demand for struc tural steel products in relation to last year, and because the Pittsburgh district is sharing to a greater extent than heretofore in the country’s total flat-rolled steel require ments, the operating rate at mills in that area has been reasonably stable, fluctuating between 48 and 50 percent of capacity. Cleveland-Lorain plants operated between 54 and 52.5 percent in the four weeks, with weakness at the end of the period. Wheeling mills stepped up operations from 68 to 73 percent early in March, but a drop of ten points occurred in the latest week, while in the southwestern part of the district activity fluctuated between 43 and 55 percent. At Detroit, a curtailment in operating rate from 86 to 73 percent of capacity occurred in the period under review. Cautious buying, even after steel prices were extended for the second quarter with some changes in extras and deduc tions for quantity, has been evident generally. Demand for flat-rolled steel products has been marking time and the looked-for spring purchases by the automobile industry have not appeared in any volume. Railroad buying, although falling short of expected vol ume, has been fairly active and pending business expected to be closed soon represents considerable tonnage. In the first two and one-half months of 1939 more rails were or dered than in the entire year 1938, although the majority of orders placed so far probably will not be scheduled on roll ing mills until the second quarter. Shipbuilding continues to absorb considerable steel ton- STEEL OPERATIONS PE:r e t i IT OF CAP/ CITY 1937 / >---- \ 1939 / i t ..V \ \ Iron and Steel Vi\ b ... \ •'VIA - / 1938 / \I v\ \ V % \ THE MONTHLY BUSINESS REVIEW nage and, as of March 1, there were 180 vessels under con* struction, compared with 83 a year ago. Steelmaking scrap prices remained steady during March, with a slight upward tendency. February pig iron produc tion showed a gain of 4.8 percent in the daily rate over Jan uary, slightly more than seasonal. Cumulative production so far this year was 54 percent in excess of the first two months of 1938. Iron ore stocks were reduced further to 28,840,000 tons as of March 1, compared with 37,158,000 tons a year ago, and there were three more furnaces in blast on March 1 than a month earlier. An attempt was made recently to survey the steel and steel-consuming industries of this district with respect to current conditions in relation to other years, and also to gain, if possible, some idea as to steel requirements in the near future. As far as the steel-producing companies them selves were concerned, it was stated that inventories, gen erally, were under excellent control, although stocks of fin ished steel were reported reasonably high, raw materials lower than the average of past years at this season, and scrap and pig iron were held in fair amounts. Recent steel orders have been quite well diversified, in part, because the automobile industry purchased such large quantities of steel last fall. Orders, generally, are in excess of last year, but they have been on little better than even keel since Decem ber. Data were obtained from thirty-six representative steel consuming companies in this district. Only five of these reported current production in excess of orders; thirteen companies reported new orders in excess of production, with the rest indicating that sales and production were at the same rate. Regarding present purchasing policies, twenty-three con sumers advised they were buying ahead for only a normal period, while thirteen were ordering for a shorter period than usual, and no one was anticipating his needs for a longer period than customary. The firms were about evenly divided between those expecting to consume more steel in the first half of 1939 than in the last half of 1938 and those expecting to consume less. The combined total for all com panies showed a reduction of one-half of one percent. Comparison with the first half of the last two years showed an expected increase in steel consumption of 13.9 percent over 1938, but a decrease of 35 percent from 1937. Steel consumers* dollar inventories indicated there was a rather substantial reduction during the first six to nine months of 1938, with some tendency to rebuild them during the last quarter and the first part of 1939. On February 15 steel inventories of these steel-consuming companies were 13 percent below December 1937, but they were larger than at the end of 1938. So far as finished goods are concerned, stocks were reduced approximately 8 percent by these com panies in the fourth quarter, although in the first six weeks of 1939 a slight tendency to rebuild these inventories was apparent. Efforts to obtain information as to possible capital ex penditures this year, which would require steel in varying amounts, were not very fruitful. Considerable business seemed to be in the contemplated stage so far as new equipment and expansion were concerned, although a “ wait and see” attitude wras quite prevalent. Preparations are being made for a much better ore mining season than in 1938, the expected increase over last year being close to 100 percent. 3 Coal Mining of bituminous coal, both in this district and the entire coal-producing area, increased in the first quarter of 1939 over 1938. Business conditions were better than a year ago and in the first quarter last year consumers were liquidating inventories, while this year stocks were be ing accumulated chiefly because of the possibility of a strike. It is estimated by the trade that coal stocks above ground now approach 50,000,000 tons. On February 1, coal stocks for the entire country exceeded 40,000,000 tons, which was slightly less than a year ago at that time. From the beginning of the year to early March output of coal held at a fairly constant level, but having built up stocks, a reduction in the weekly rate occurred. Prices have held quite steady so far this year, but they are lower than in 1938 at this time. The industry is operating at irregular rates; some miners are working only two days a week, while in other sections they are getting four and five days. In the fourth district February production was 12,004,000 tons. This was an increase of 29 percent over last year and the gain for the first two months was 24 percent. Automobiles It is difficult to appraise the automobile situation at the present time because of several factors for which it is hard to make fair and proper allowance. Efforts to stabilize em ployment, to build up dealer stocks as a precautionary measure in case of possible strikes, and moving forward the date for the automobile show, are among items which tend to confuse and complicate the situation. February output of domestic factories, according to the Department of Commerce, was 297,841 cars and trucks. This was a gain of 60 percent over the low level last year, but was a drop of 12 percent from January, a more-thanseasonal contraction. Last year, when business was at low levels and declining, February assemblies were off 11 per cent from January and in 1937 the drop was only 4 percent. As a result, the Board's seasonally adjusted index of daily average production was down five points in February from January. In the four weeks ending March 25 assemblies increased over the February rate and were running more than 50 percent above March last year. Should this rate of gain be shown for the entire month, domestic production for the first quarter would approximate 970,000 cars and trucks, close to actual output in the fourth quarter of 1938. In the first six months of this model year approximately 1.940.000 vehicles will have been made. In the fourth quar ter of 1937 and the first three months of 1938 output con stituted 64 percent of the total for that model year. In the corresponding periods of the two previous model years the first six months’ production represented approximately 48 percent of the model year output. Present conditions seem to be different from both last year and the two preceding ones so far as automobile production is concerned, but using these ratios as outside limits, the current model year output, October 1938 to September 1939, would range between 3.100.000 and 3,900,000 cars. Passenger car assemblies during much of the first quar ter have been in excess of retail sales, and inventories have accumulated at rather a rapid rate. At the end of January stocks were reported at 345,000, compared with 412,000 a year previous, the recent high point. February output also was in excess of sales, according to preliminary reports, 4 THE MONTHLY BUSINESS REVIEW causing a further gain in field stocks. The current sup ply, however, is smaller in relation to sales than in early 1938 when demand fell off markedly. Preliminary reports concerning March sales revealed that a gain over February was being experienced, but meager data indicated the im provement was not as large as in past years despite favor able weather. The accompanying chart compares weekly new passenger car registrations for the county in which Cleveland is locat ed with monthly data for the entire country. It appears that fluctuations in retail sales in greater Cleveland closely parallel those in the whole United States, at least since 1937. Being located in the North, however, this area seems to experience larger winter declines and spring pick-ups than does the entire country. Sales of new cars in Cleveland rose substantially in March, but apparently did not quite equal the proportionate gain from the February low which was recorded in either 1938 or 1937. The last point plotted on the chart for the whole United States is a preliminary figure for February based on twenty-four states. The Cleveland figure is for the week ended March 24. Truck production so far this year has been 15.6 percent in excess of the first two months of 1938, while passenger car output was up 76 percent. This wide spread was due more to the fact that truck production did not decline so sharply last year than to the marked improvement in the passenger car field. Makers of auto parts and steel entering into the auto mobile have been rather disappointed with the volume of orders and releases that have been forthcoming so far this year. Steel buying has been largely on a day-to-day basis and has consisted chiefly of fill-in orders. There was a gain in parts orders in March over February, but, in most cases, it was not marked and entirely sea sonal. At Ohio parts plants employment in February was about 6 percent in excess of the low level of a year ago at that time, but there was a greater increase in the number of hours worked. Both were still below this pe riod of 1937. Rubber, Tires A slight decline in crude rubber consumption occurred in February as com pared with January, but a gain of 77.5 percent over last year was evident. Part of the recent falling-off wras due to the shorter month, although there was a moderate contraction in operations in the first half of March in order better to balance output with incom ing orders. In February, production was over 600,000 tires in excess of shipments from manufacturers, despite the fact that shipments in the period were 63 percent better than in February 1938. Even after the February rise in manufacturers’ stocks, they were still more than 1,000,000 casings smaller than in early 1938. The rubber industry is in much better position than for some time. Accumulation of finished inventories is not regarded unusual for this season, for tire orders from dealers are accepted in the fall, for delivery the following spring at the manufacturer’s convenience. The moderate advance in tire prices in February was followed by con siderable dealer forward buying, not so much, according to reports, because of increased retail sales at that time as it was to anticipate spring requirements where such was not done last fall. According to the Rubber Manufacturers Association, replacement sales were larger in January than in Decem ber and they were nearly 40 percent above early 1938. Sales to auto assembly plants in January were slightly smaller than in December, but the gain over last year exceeded 1,000,000 tires, or 155 percent. A lag in consumer buying in the first half of March was reported, considering the mild weather that pre vailed and the reported rise in gasoline consumption, but the industry wras not disturbed with respect to the imme diate outlook. Crude rubber consumption in February exceeded im ports from producing areas by nearly 6,000 tons and do mestic stocks, at 231,475 long tons, were down more than 60,000 tons from last year at this time. Rubber prices have fluctuated in a narrow range around 16 cents a pound so far this year. The recent peak was 17 cents last November, while a year ago in March it was 13.7 cents a pound. Clothing: Favorable weather, a slightly advanced Easter date, and better conditions in the consumers’ field than a year ago are working together to the benefit of the clothing and tex tile industry. Inventories of manufacturers are lower than at this time in 1938, according to reports, and while more advance spring buying was done than for some time, manufacturers are looking for a further seasonal rise in fill-in orders. They are proceeding with caution in this connection, not wishing to have large supplies of finished merchandise on hand at the close of the season should such demand fail to develop. Retail clothing sales at stores in this district in Feb ruary lagged somewhat. Women’s apparel sales were 1.8 percent ahead of last year, but men’s clothing sales were off 4.5 percent. When allowance is made for price changes from last year, volume sales were about on a par or slightly in excess of that period. Fairchild's index was slightly lower on March 1 than a month earlier. Stocks of women’s wrear on March 1 were valued at 5.6 percent less than a year ago, while men’s clothing stocks were off 18 percent by the same comparison. Consumption of apparel wool in January, the latest available, was at more than double the rate of the pre vious year, although it was down slightly from December. Prices of domestic wool have been quite firm so far this year with a slight upward tendency. Employment at Ohio men’s clothing factories in Feb- THE MONTHLY BUSINESS REVIEW ruary was up 2 percent from January, a seasonal change, but it was still less than a year ago. Other Manufacturing Moderate gains in sales and operations were reported in some of the smaller industries of the district in February and early March. In several of the consumers’ goods lines the gain was reported as larger than the average increase at this season of other recent years. China and dinnerware production in the first ten weeks of 1939 was reported to have been in excess of the corre sponding period of the previous two years. Despite this, and the fact that production was estimated to be at around 85 percent of capacity, inventories have declined since the beginning of the year. Employment in the stone, clay, and glass industries in February was 11 per cent in excess of last year at that time and more hours were being worked in most cases. New orders for machine tools increased contra-seasonally in February, the index of the National Machine Tool Builders Association rising 17 points to the highest level since October 1937 and 12 points above the average for 1929. The recent increase was a result of expansion in both domestic and foreign buying, with the former ac counting for a greater share of the gain. Improvement continued in the first half of March, according to reports, but a slackening was evident after that. Diversification of sources of new buying recently was basis for the mod erately optimistic feeling in the industry, although a rather spotty condition still exists. Foundry equipment orders also increased in February and were 50 percent larger than a year ago. Unfilled orders rose by approximately 15 percent. Small tool demand, prior to mid-March, im proved slightly more than seasonally, but the gain was attributed to preparedness buying. Heavy hardware sales were approximately 4 percent larger in February than a year ago and further seasonal improvement was reported in the first half of March. Inventories are smaller than in early 1938 and also under last fall. In the electrical machinery, equipment, and supply in dustry employment was up slightly in February over Jan uary and payrolls increased to a greater extent, but the former was not up to the level of last year which was low in relation to 1936 and 1937. Current orders are at a higher rate than shipments and the increase was reported as more than seasonal. Household equipment demand, particularly refrigerators, has been especially good. MiLLioNsppiVATE AND TOTAL CONSTRUCTION F.W D O C ►CE C O f?p . TOT- 40 30 20 \ /\ \ \ \ * * / \ \ / — " p f *IV A T t \ / J J 1938 S O N D J F M A M _________________________ 1939 _______ 5 Window and plate glass production in February was off from January, chiefly because of the shorter month, but each was in excess of last year by rather large amounts. The plate glass branch of the industry then was operat ing at very depressed levels in an effort to reduce the large inventories on hand. With these out of the way production is now fluctuating with demand. Window glass output in February was 50.6 percent in excess of last year, although the industry was operating at less than 50 percent of capacity. Shoe production at fourth district factories, on a daily average basis, was greater in February than in January and was slightly ahead of last year. In the first two months a gain of 6.4 percent was evident. Local plants are behind in deliveries, according to reports, and em ployment is in excess of 1938 at this time. The gain in production, however, was not as large as that reported for the entire country. Employment in February was 1.3 percent greater than in January and payrolls were up 5 percent. Paper and boxboard manufacturers experienced a gain in orders and have stepped up operations more than sea sonally in recent weeks. Prices are firm. Early March orders were better than since last May. The situation with respect to book and fine papers also has improved re cently and sales and operations are somewhat above a year ago. CONSTRUCTION The construction industry in this district continued in a strong position during February, despite the fact that total contracts awarded fell from the preceding month. A c cording to the F. W. Dodge Corporation, projects started in February were valued at $22,734,000, a decline of 16.7 percent from January, but 60 percent ahead of last year, and the largest February total in any year since 1930. The accompanying chart, based on data pertaining to a slightly larger area than is included in the Fourth Federal Reserve District, shows that private construction increased slightly in the first two months of the year. This develop ment is in sharp contrast with the decline experienced in the same months last year and is contrary to the usual seasonal trend. This pick-up was felt to a small extent in non-residential and public utility construction, but wras most noticeable in the field of residential building. Contracts for private dwellings awarded in February totaled 3 percent more than in January and 13 percent more than in December. The extent of recovery from the low levels of last year is shown by the fact that these contracts were 50 percent ahead of the similar month of 1938. Most of the activity in the residential field was confined to one-family houses. So-called “ speculative” builders have been slightly more active throughout the district than in any other recent year, but their operations do not compare with those of the 1920’s. Home building by owners is likewise higher than in other recent years, but does not compare with the volume of fifteen years ago. The chart also shows the declining relative importance of public projects after the close of the year. Although some of the current P.W .A. program is only nowT being reflected in figures for contracts awarded, a large portion of this work was far enough along to have entered the 1938 totals. For that reason, publicly-financed contracts, which had 6 THE MONTHLY BUSINESS REVIEW amounted to 78 percent of the total in December, fell to only 53 percent in February. Wholesale lumber dealers report that their business has not yet been affected to a large extent by purchases grow ing out of more numerous contracts for new construction. Some firms report increased business in the last half of February and the first half of March, but sellers of hard wood flooring indicate that they have not felt the effects of increased residential building. Retail lumber yards apparently are continuing to buy only as their immediate needs dictate. TRADE Retail Retail trade was slightly more active in February than in January. Department stores, wearing apparel shops, retail fur niture dealers, and chain drug stores all reported gains over the preceding month. Grocery chains were the only ones to show a small decline. Indicated gains, however, appar ently were not as large as is customary at this time of year. The seasonally adjusted index of department store sales fell more than a point to 86.5 percent of the 1923-25 level. It is now six points below the recent high reported for December. In spite of the less-than-seasonal increases, comparisons with last year showed improvement, but at this time a year ago business was falling off rapidly. Department stores experienced a February-to-February gain of 1.5 percent, whereas a decline of about the same amount had been indi cated a month earlier. Wearing apparel shops still reported February sales slightly under those of last year, whereas in January the drop from early 1938 was 5 percent. Furni ture retailers sold about ten percent more home furnishings than they did a year ago, but this was far from their 1937 volume. During the first three weeks of March, weekly re porting department stores indicated a continuation of the retail trade advances over last year, but part of this gain is undoubtedly due to the earlier Easter. Departmental sales figures show a spotty condition. In comparison with last year, men’s furnishings departments reported increases, while sales of men’s clothing decreased. Woolen dress goods moved in larger volume, whereas wash yard goods did the opposite. Home furnishings departments, in general, sold only a slightly larger dollar volume than in February last year, although the preceding month had shown substantial increases. Small volume in some depart ments is partly attributed to relatively low inventories and the resulting lack of necessity to push distress merchandise. This situation may have been party responsible for an inclination to expand purchases in expectation of better spring business, but some of the increase in inventories may have been due to the less-than-seasonal gain in February sales. Department store stocks were eight percent larger at the end of February than at the beginning, and the adjust ed index rose two points for the second consecutive month to 69.7 percent of the 1923-25 base period. At the begin ning of March they were still 9 percent below the level of a year previous. A slightly larger use of credit facilities has been evi dent in the department store field during the last few months. Installment sales at these stores in February amounted to 11 percent of the total, and regular thirty-day charge accounts made up 44 percent. Collections continued strong, particularly on installment accounts. Wholesale Although department stores increased their stocks slightly more than seasonally during February, wholesale firms in this district reported their sales off 3 percent from the Jan uary level. When allowance is made for the shorter month, sales were about equal in February to those in January and they were slightly above February 1938. The best showing was made by clothing and dry goods firms. Distributors of electrical appliances, who, in the first month of the year, had reported very favorable com parisons with 1938, failed to maintain their position, and sales in February were 4.5 percent below those of last year. Wholesalers of furniture and other house furnishings, on the other hand, continued to show a gain of approximately 22 percent over a year ago. AGRICULTURE Market conditions have shown little change recently, but the general level of prices received by farmers in midMarch was slightly lower than in mid-February. Prices of beef cattle rose somewhat, while dairy and poultry prod ucts declined. The Bureau of Labor Statistics index of wholesale prices for farm products, at 68 percent of the 1926 base in the middle of March, was four points lower than in March 1938 and approximately 25 points below the level of March 1937. Interrelationships between groups of farm prices have shown considerable change during these years. Two years ago the index of livestock and poultry prices was at the same level as the index of all farm prices; in mid-March this year it was 12 percent above this level. On the other hand, grain prices two years ago were 20 points higher than the general farm index. A year ago they were only slightly above the level of all farm prices, and last month were 12 points below this level. These altered price relationships may be partly respon sible for changes evident in farmers’ planting plans for 1939, but activity of the Federal Government through soil conservation and acreage allotment programs is also an important factor. Department of Agriculture data pertain ing to prospective plantings for 1939 show that farmers in this district expect to plant less grain this year than in 1938, but plan to expand their acreage of hay and forage crops. In the country as a whole, 18 percent less winter wheat was sown last fall than a year previous. Approximately the same reduction is indicated for spring wheat. Ohio farmers are planning to reduce their acreage of corn by about 4 percent, but farmers in other states of the district expect to make no reduction or a small increase. Acreage planted to oats will be reduced about 1 percent in Ohio and Pennsylvania if present plans are carried out. Hay land, on the other hand, will be increased 2 percent. The amount of land devoted to tobacco in the whole United States is expected to be about 4 percent larger than last year, but in Kentucky there is an indicated reduction of 1 percent. Expansion in the outer Bluegrass region may be hindered by lack of barn room, according to reports. Last year’s crop used the existing capacity quite fully, and it is not believed that many new barns will be built. TOE MONTHLY BUSINESS REVIEW Wholesale and Retail Trade Fourth District Business Statistics (1939 compared with 1938) Percentage Increase or Decrease STOCKS SALES SALES Februaryfirst 2 February 1939 1939 months D E P A R T M E N T STORES (54) — 6 .9 + 1 8 .4 + 1 3 .0 A k ro n .......................................................... — 6 .9 — 1.3 — 3.5 Cincinnati................................................... — 6 .9 — 2 .7 0.8 — Cleveland.................................................... — 10.0 + 4 .2 + 3.2 Columbus.................................................... — 5.5 + 1 3 .3 + 1 9 .1 D ayton......................................................... — 12.9 — 3 .4 — 0.6 Pittsburgh................................................... — 8.6 — 0 .7 + 1.5 T oled o.......................................................... — 19.0 — 0. 6 6.2 Wheeling...................................................... — 4 .4 + 2.0 Other Cities........................................................ +4.3 — 9 .2 — 0 .3 District................................................................. + 15 W E A R IN G A PPA R E L (13) Cincinnati............................................................ — 11.4 — 14.8— 1.8 1.6 Cleveland............................................................. +2.1 +1.8 Pittsburgh........................................................... — 7.3 — 7.4— 10.6 District................................................................. — 0 .8 — 2.7— 3.7 F U R N IT U R E (40) Cincinnati............................................................ — 4 .8 — 4.9 Cleveland............................................................. + 1 0 .7 + 8.1 Columbus............................................................. + 2 1 .6 + 1 0 .3 D ayton................................................................. +2.0 — 3.1 T oled o.................................................................. — 19.9 — 16.4 Other Cities........................................................ + 2 9 .0 + 2 1 .1 District................................................................. +9.7 +5.9 C H AIN STORES* Drugs— District (4 ).......................................... +6.6 +2.8 +4.5 + 3.4 Groceries— District ( 4 ) .................................... W HOLESALE T R A D E ** Automotive Supplies (1 2 )................................ + 6 .4 + 1 3 .8 — 10.6 Clothing and Furnishings (4 ) ......................... +8.5 1 +9.4 Drugs and Drug Sundries (4)......................... +8.8 +7.7 Dry Goods (6 ).................................................. + 1 7 .3 + 1 3 .0 — 8. 8 Electrical Goods (1 4 )...................................... — 4.5 +6.9 — 34.6 Farm Products (Consumer Goods) ( 1 0 ) . .. . +7.1 1 + 2 5 .9 Furniture & House Furnishings (4 ) ............... + 2 2 .1 + 1 9 .9 1 Groceries & Foods (exc. Farm Products) (57) —- 2 . 2 — 3.5 — 14.2 Total Hardware Group (3 7 )......................... +4.1 +7.4 — 9.6 General Hardware (8 )................................ +2.3 +2.5 —H ^ Industrial Supplies (1 0 ).............................. +3.8 + 9 .6 3. 2 Plumbing & Heating Supplies & Equip ment (19) .................................................... +6.4 + 1 1 .8 — 6 .6 Jewelry & Optical Goods (3 ) ....................... + 1 2 0 .0 + 4 0 .0 1 Leather & Shoe Findings (3 )....................... — 12.5 — 15.7 1 Lumber and Building Materials (4 ).......... + 1 1 .2 +3.1 1 Machinery, Equip. & Sup. (exc. Elect.) (6). . — 5.3 — 18.6 1 Metals (3 )........ .................................................. + 8 0 .0 + 6 3 .0 i Paints and Varnishes (6 )............................... — 10.3 1 — 6.1 Paper and its Products (10)......................... — 0 .4 +3.3 — 12.5 Tobacco and its Products (1 9 ).................... — 8 .0 — 5.4 — 21.5 Miscellaneous (1 9 )............................................ + 7.5 + 1 3 .2 — 2.1 District-—All Lines (221)................................ +1.4 + 7 . 2 — i jL. / * Per individual unit operated. ** Wholesale data compiled by U. S. Department of Commerce. 1 Not available. + Fourth District Business Indexes (1923-25 = 100) Bank debits (24 cities)......................................... Commercial Failures (N um ber)........................ ” ” (Liabilities)..................... Sales— Life Insurance (O. and P a .)................... ” — Department Stores (48 firm s)............... ” — Wholesale Drugs (4 firm s).................... ” — ” Dry Goods (6 firm s)........... ” — ” Groceries (57 firm s)........... ” — ” Hardware (8 firm s)............. ” — ” All (75 firms)....................... ” — Chain Drugs (4 firm s)**....................... Building Contracts (T o ta l)................................. ” ” (Residential)....................... Production— Coal (0 ., W. Pa., E. K y .)........... — Cement (0 .,W . Pa., E. Kv . ) . . . . — Elec. Power (O., Pa., K y.)*. . . . ” — Petroleum (O., Pa., K y .)* ........... -— Shoes................................................ * January, ** Per individual unit operated* Feb. 1939 67 41 18 80 71 106 41 62 57 61 91 48 41 66 19 204 115 121 Feb. 1938 64 66 63 69 70 98 35 63 56 61 86 30 26 51 15 187 120 120 7 Feb. Feb. 1937 1936 70 81 58 38 50 27 82 88 70 82 93 110 41 49 66 73 76 56 63 73 90 93 37 28 14 34 81 88 12 31 174 199 109 116 122 117 Feb. 1935 60 58 65 96 56 86 40 62 47 58 67 14 10 74 5 156 113 103 (000 omitted) Fourth District Unless Feb. % change Jan.-Feb. Otherwise Specified 1939 from 1938 1939 Bank Debits— (24 cities). ........ S I,826.000 + 5.2 33,945,000 Savings Deposits— end of month l 40 banks, O. and W. Pa, ..........3 781,231 + 0.1 Life Insurance Sales: Ohio and Pa....................... .........3 76,979 + 1 5 .2 3 181,912 Retail Sales Dept. Stores— (54 firm s). . .........3 16,531 + 1.5 32,716 Wearing Apparel— (13 firm s).. .3 634 — 0 .8 1,339 Furniture— (40 firm s). . , .........3 620 + 9 .7 1,156 Building Contracts— Total, .......... 3 22,734 + 5 8 .9 350,036 7,118 + 6 0 .9 15,382 r ” — Residential.3 Commercial Failures— Liabilities 3 779 — 72.2 2,238 602 — 38.1 1522 ” ** — N u m b er.. . Production: Pig Iron— U. S.............. 2,059 + 5 7 .7 4,235 Steel Ingot— U. S............ 2,955 + 7 3 .4 6,142 Auto— Passenger Car— U. S........ 239,9832 + 7 2 .2 520,0232 ’ — Trucks— U. S........... 57,8582 + 2 2 .7 116,9702 Bituminous Coal, O., W. Pa., E. K y......................................,. tons 12,004 + 2 9 .2 24,693 Cement— O., W. Pa., W. Va. bbls. 229 + 3 0 .9 523 Elec. Power, O., Pa., Ky 1,7093 + 9.1 ............................Thous. k.w.h. 2,1183 — 4 .8 Petroleum— O., Pa., K y .. . . bbls. 4 4 + 0 .6 Tires, U. S......................... casings 4,344 + 1 0 1 .5 8,925 not available, January. actual number. confidential. % change from 1938 + 1.2 + 3 2 .2 — 0 .3 — 2.8 + 5.9 + 4 8 .5 + 8 8 .5 — 57.2 — 20.4 + 5 3 .9 + 7 8 .8 + 7 6 .3 + 1 5 .6 + 2 3 .6 + 2 0 .0 + 6 .4 + 8 3 .9 Debits to Individual Accounts (Thousands of Dollars) Year to Date 4 Weeks % change Dec. 29, 1938 ended March 22, from to 1939 1938 Mar. 22, 1939 + 1 2 .3 A kron............. 3 169,076 3 58,134 + 3.1 23,033 7,928 Butler............ 88,795 31,047 + 1 2 .1 C anton.......... — 0 .4 850,765 Cincinnati. . . 286,248 1,454,393 Cleveland. . . . 461,714 + 6.2 + 13.2 167,578 454,130 C olum bus.. . . 58,458 + 2.3 169,410 24,309 + 9 .6 70,150 7,164 — 4.2 Franklin.......... 2,444 6,107 — 1.2 18,122 Greensburg . . 9,816 — 2.7 28,634 H am ilton........ 7,549 Hom estead.. . . 2,606 + 4 .0 18,627 + 2 .9 84,954 Lexington........ 11,303 — 12.9 34,177 Lim a................ + 9 .4 12,457 4,380 M iddletow n, . 9,394 + 19.5 26,796 9,037 — 5.3 25,933 Oil C ity .......... 563,659 1,681,524 Pittsburgh + 1.9 Sharon............. 7,006 + 1 1 .6 21,273 Springfield , . . + 1.0 45,790 15,956 8,327 23,693 Steubenville + 1 0 .9 308,621 T o le d o ............. + 0 .3 104,210 8.111 + 1 0 .2 23,350 Warren............ 27,929 81,106 + 14.0 111,758 + 15.0 Youngstown. . 39,528 + 17.7 21,729 7,534 Zanesville........ 35,844,382 T otal.............. .31,951,390 + 4 .4 Year to Date Dec. 30, 1937 to Mar. 23, 1938 3 155,910 24,372 83,291 850,621 1,336,396 431,314 173,686 71,229 7,944 18,406 28,803 7,825 88,579 38,770 12,277 23,018 28,001 1,712,476 20,882 47,239 22,390 303,691 21,266 74,507 105,495 19,832 35,708,220 % change from 1938 + 8 .4 — 5.5 + 6 .6 + 0.02 + 8.8 + 5.3 — 2.5 — 1.5 — 9 .8 — 1.5 — 0 .6 — 3.5 — 4.1 — 11.8 + 1.5 + 1 6 .4 — 7 .4 — 1.8 + 1-9 — 3.1 + 5.8 + 1.6 + 9 .8 + 8.9 + 5 .9 + 9 .6 + 2.4 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Board of Governors of the Federal Reserve System In February industrial activity continued at the January rate, with out showing the usual rise, and retail trade increased less than seasonally. In the first three weeks of March, however, industrial activity and trade showed seasonal increases. Commodity prices continued to show little change. INDUSTRIAL PRODUCTION Production Index of physical volume of production, adjusted for seasonal variation, 1923-25 average = 100. By months, January 1934 to February 1939. Latest figure 98. FACTORY EMPLOYMENT Index of number employed, adjusted for seasonal variation, 1923-25 average = 100. By months, January 1934 to February 1939. Latest figure 91.3. CONSTRUCTION CONTRACTS AWARDED Volume of industrial production was at about the same rate in February as in the two previous months, although usually there is an increase, and the Board’s seasonally adjusted index declined further to 98 percent of the 1923-1925 average. In the steel industry activity did not show the usual seasonal advance. Pig iron production increased, but new orders for steel were in limited volume and ingot production remained at about 54 percent of capacity throughout the month. There was some decline in automobile assemblies, following a period of considerable in crease. Output of lumber and plate glass continued to decrease in Feb ruary, while cement production, which had been curtailed in January, increased considerably. In the first three weeks of March steel production increased to about 56 percent of capacity and automobile output was also in somewhat larger volume. Textile production in February was at about the same rate as in January. At cotton and woolen mills activity increased somewhat but at silk mills there was a marked decline. Output of shoes and tobacco products continued at high levels. In the meat-packing industry activity declined further and there was also a decrease in activity at sugar refineries. Bituminous coal production was maintained in February, and crude petroleum output likewise continued in substantial volume. Anthracite output declined in February, and in March was reduced further as mine owners and workers agreed on a curtailment program. Value of construction contracts awarded declined in February, ac cording to F. W. Dodge Corporation figures, owing principally to a further decrease in awards for publicly-financed work. Contracts for privatelyfinanced residential building increased further, while awards for private nonresidential building remained at the low level of other recent months. Employment Factory employment and payrolls increased somewhat less than is usual between the middle of January and the middle of February. Changes in nonmanufacturing lines were largely of a seasonal nature. Distribution Department store sales were in about the same volume in February as in January, although some increase is usual, and sales at variety stores increased less than seasonally, while mail order sales rose by slightly more than the seasonal amount. In the early part of March department store sales increased. Freight-car loadings declined somewhat from January to February, reflecting for the most part reduced shipments of grains, forest products, and miscellaneous freight. Three-month moving averages of F. W. Dodge Corporation data for value of con tracts awarded in 37 Eastern States, ad justed for seasonal variation. Latest figures based on data for January, Febru ary, and estimate for March. MONEY RATES IN NEW YORK CITY Commodity Prices Wholesale commodity prices were generally maintained with little change during February and the first three weeks of March. As is usual at this season prices of livestock and meats increased while dairy products declined. Silk prices advanced considerably in this period. In the early part of March current prices of pig iron and of semifinished and finished steel were reaffirmed for the second quarter of this year. Bank Credit ■ftSUHY NOTES ^ j - -----------L — TREASURY BILLS ^ 1934 1935 1936 1937 1938 1939 Discount rate of Federal Reserve Bank; weekly averages of daily yields on 3- to 5year Treasury notes and on Treasury bonds callable after 12 years, and weekly average of daily d e a le r quotations on 90day Treasury bills or rate on new bills offered in week. For weeks ending Janu ary 6, 1934, to March 18, 1939. Investments in United States Government obligations by New York City banks increased considerably in February and the first half of March. In this period member banks reduced their holdings of Treasury notes and increased their bonds, reflecting in part exchanges of notes for new bond issues on March 15. Excess reserves of member banks continued somewhat below the high level of $3,600,000,000 reached at the end of January, fluctuating largely in accordance with changes in Treasury bal ances at the Federal reserve banks. Money Rates Average yields on United States Government securities declined to new record low levels from February 27 to March 10, following the announce ment by the Treasury that no cash would be raised in the March financing. Yields rose slightly after the middle of March accompanying renewed tension in Europe. New issues of 91-day Treasury bills continued to sell on practically a no-yield basis during March. Other open-market rates con tinued unchanged.
@FedFRASER