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Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. CONFIDENTIAL (FR) CLASS II - FOMC October 2, 1981 SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System TABLE OF CONTENTS Page THE DOMESTIC NONFINANCIAL ECONOMY Employment and Average Hourly Business Fixed Manufacturers' Corrigendum Unemployment . Earnings Index Investment . Inventories . . . . . . . . . . iI I1I . . . . . . . TABLES: Changes in Employment . . . . . . Selected Unemployment Rates . Hourly Earnings Index . . . . . . . . . . Business Capital Spending Indicators . . . Business Capital Spending Commitments . . Manufacturers' Inventories . . . . . . . . Manufacturers' Inventory/Sales Ratios . . Monetary Aggregates. . . . . . . . . . . . Commercial Bank Credit .. . . . . . .... Selected Financial Market Quotations . . . U.S. . . . . . . . INTERNATIONAL TRANSACTIONS U.S. Merchandise Trade . . . . . . . . . . . . . 12 SUPPLEMENTAL NOTES Employment and Unemployment The recent indication of weakening in the demand for labor was reflected in a 675,000 drop in total employment in September, as measured by the household survey. This decline was concentrated among adult women, and on an occupational basis among craft and clerical workers. Additionally, the number of persons working part-time for economic reasons rose sharply--by 350,000. The civilial labor force fell by 365,000 in September, and the participation rate declined further and was the lowest since the one-month low last September. Unemployment rose 309,000 to almost 8 million, and the unemployment rate rose to 7.5 percent from 7.2 percent, the average of the rate in the last half of last year. Total nonagricultural payroll employment in September was about unchanged--down 54,000 (considered not to be statistically significant), the same as in July, and 1.4 million higher than a year earlier. Employ- ment by state and local governments fell dramatically in September--by 145,000, reflecting fewer teachers and other school personnel having jobs and to some extent the teachers' strike in the Philadelphia school system. Excluding employment by state and local governments, nonfarm payroll employment rose moderately--90,000--and only a little less than in August. Manufacturing employment rose 20,000 in September-- all at nondurable goods industries as employment at most major nondurable goods industries declined a little. Employment in construction continued to decline, while that in services continued to increase sharply. The work week dropped appreciably--0.5 hour in manufacturing with about half this decline apparently caused by the rare occurrence of the survey's reference week including Labor Day, when reported hours are less because some workers not at work do not draw holiday pay and because overtime work is reduced. Average Hourly Earnings Index Wage rates for private nonfarm production workers as measured by the volatile hourly earnings index rose at a 3-3/4 percent annual rate in September, following a 13-1/2 percent rate of rise in August. Based on the preliminary data, the index for these workers in the third quarter increased at a 7-3/4 percent annual rate from the second quarter; this continues to represent a gradual deceleration in wage increases for production workers so far this year from last year's rapid rate. Over the first three quarters of this year, this measure of wage rate trends has risen at an 8-1/2 percent annual rate compared with 9-1/2 percent over 1980. The wage deceleration has been most pronounced in manufacturing-- from 11 percent during 1980 to a 9-1/4 percent annual rate so far this year; the rate of increase in this index for workers outside of manufacturing have slowed 3/4 percentage point to an 8-1/2 percent rate. Business Fixed Investment New data on business fixed investment suggest on balance somewhat greater weakness in this--both in the third quarter and in the near-term-than indicated by the earlier information. Revised data show that in nominal terms manufacturers' shipments of nondefense capital goods rose 1.3 percent in August (instead of 2.7 percent as indicated by advance estimates) and in July and August they averaged 2.1 percent below their June peak. In real terms August shipments of these goods are estimated to have declined 0.4 percent, and in July and August together to have averaged 3-3/4 percent below their June level (instead of being about unchanged as indicated by the advance sample data). Data on private nonresidential construction in August indicates that in real terms this was unchanged at the record high July rate 3 percent above the rate in the second quarter. Total contracts and orders for plant and equipment in constant dollar terms show that these have edged down in July and August to about their April-May average. The new data for August for manufacturers show that new orders for nondefense capital goods were about unchanged, instead of rising 2.4 percent as indicated by the advance sample figures; orders for aircraft and parts were revised down about as much as the total for all nondefense capital goods, and they now show a substantial decline for August instead of a small rise. In real terms nondefense capital goods new orders are estimated to have declined 2.6 percent in August. Manufacturers' Inventories The book value of inventories held by all manufacturers rose at a $9.2 billion annual rate in August, down from the large $26.0 billion rate of accumulation in July. Stock of durable goods were built up at a $13.8 billion rate, with increases quite widespread; large increases occurred in primary metals and machinery; inventories of motor vehicles and parts were reduced substantially, apparently as 1982-model cars were transferred to dealers. Nondurable goods producers' inventories were liquidated at a $4.6 billion annual rate; stocks of petroleum and coal products were reduced at a $5.5 billion rate and were at the lowest level since last January, Work in process of all manufacturers rose at a $7.1 billion annual rate and stocks of finished goods increased at a $11.2 billion rate; inventories of materials and supplies were reduced. The ratio of inventories to shipments for all manufacturers rose to 1.62 in August from 1.60 in July, and was the highest since last September; quite large increases occurred from most major types of durable goods producers except transportation equipment. The inventory-shipments ratio for non- durable goods producers edged down slightly, mainly because of the reduction in stocks of petroleum and coal products. Corrigendum: Part I, page I-11, Table on Percent Changes in Gross National Product and Related Items: Compensation per hour in the private nonfarm business sector is projected to change in annual rate percentage terms as follows. 1981: Q1, 11.6, Q2 9.6, Q3 9.1, Q4 8.6; 1982: Q1 8.9, Q2 8.1, Q3 7.9, Q4 7.9. Part II, page 111-14: Footnote 1, second line: "to facilitate sales by buyers ...." should read "to facilitate sales by builders ... " CHANGES IN EMPLOYMENT 1 (Thousands of employees; based on seasonally adjusted data) 1979 1981 1980 Q2 July Q3 Aug. Sept. -Average monthly changesNonfarm payroll employment 2 Strike adjusted Manufacturing Durable Nondurable Construction Trade Finance and services 170 176 34 28 89 117 87 70 265 220 49 27 -54 -36 -5 1 -6 15 30 84 -58 -47 -12 -12 12 79 78 60 18 -44 27 76 37 16 21 -10 50 74 111 55 56 -12 79 95 -18 3 -21 0 75 41 19 -10 29 -19 -5 86 Private nonfarm production workers Manufacturing production workers 103 -9 110 158 293 65 117 -16 -67 57 35 82 -22 45 Total employment 3 Nonagricultural 172 174 -42 -48 -7 -3 -41 -56 570 -18 577 -130 -674 -615 1. Average change from final month of preceding period to final month of period indicated. These figures are revised to reflect new seasonal factors and the 1980 benchmark to the establishment survey data. 2. Survey of establishments. Strike-adjusted data noted. 3. Survey of households. SELECTED UNEMPLOYMENT RATES (Percent; based on seasonally adjusted data) 1979 1980 1981 Q2 Q3 July Aug. Sept. 5.8 7.1 7.4 7.2 7.0 7.2 7.5 16.1 Teenagers 9.0 20-24 years old 3.3 Men, 25 years and older Women, 25 years and older 4.8 17.7 11.5 4.7 5.5 19.2 12.3 4.8 5.7 18.7 11.7 4.8 5.7 18.1 11.3 4.7 5.7 18.8 11.8 4.8 5.5 19.3 12.1 5.0 5.9 5.1 11.3 6.3 13.2 6.6 13.7 6.3 14.6 6.2 13.6 6.1 15.0 6.5 15.1 Fulltime workers 5.3 6.8 7.1 6.9 6.7 6.7 7.2 White collar Blue collar 3.3 6.9 3.7 10.0 4.0 9.8 4.0 9.6 4.1 9.4 3.9 9.3 4.1 10.2 Total, 16 years and older White Black and other HOURLY EARNINGS INDEX 1 (Percentage change at annual rates; based on seasonally adjusted data) 2 1981 1st 1980 Total private nonfarm Manufacturing Durable Nondurable Contract construction Transportation and public utilities Total trade Services Q1 3 Q2 Q3 Aug. Sept. quarters 3 9.6 9.6 8.3 7.7 13.6 3.8 8.6 10.9 11.6 9.8 7.6 9.3 9.4 9.1 9.2 9.7 9.6 10.0 4.9 8.7 8.8 8.4 8.4 8.5 8.9 7.8 6.9 12.9 12.0 14.2 -1.7 9.2 9.3 9.1 7.5 9.4 8.8 9.5 9.4 9.6 9.8 11.0 7.1 8.5 6.1 6.4 8.1 16.4 11.5 23.1 3.7 1.7 -3.5 8.8 7.7 8.8 1. Excludes the effect of interindustry shifts in employment and fluctuations in overtime pay in manufacturing. 2. Changes over periods longer than one quarter are measured from final quarter of preceding period to final quarter of period indicated. Quarterly changes are at compound rates; monthly changes are not compounded. 3. Changes from fourth quarter of 1980 to third quarter of 1981 at compound annual rates. BUSINESS CAPITAL SPENDING INDICATORS (Percentage change from preceding comparable period; based on seasonally adjusted data) 1980 Q4 Q1 Q2 1981 June July Aug. 1.3 .4 Nondefense capital goods shipments Current dollars Constant dollars1 4.2 .6 1.4 .3 3.2 -.5 2.3 2.3 -2.7 -3.3 Sales of heavyAddendum: weight trucks (thousands) 230 246 230 190 200 Nonresidential construction Current dollars Constant dollars 1.8 .3 8.0 5.7 1.7 1.2 1.6 1.7 2.3 1.7 30.4 29.5 Oil and gas well Addendum: drilling (millions of feet) 26.5 24.7 30.1 240 .0 .2 25.0 1. FRB staff estimate. BUSINESS CAPITAL SPENDING COMMITMENTS (Percentage change from preceding comparable period; based on seasonally adjusted data) 1980 Q2 June July Aug. 1.2 -2.5 1.9 .8 -2.7 -3.7 4.3 4.5 -. 1 2.6 6.2 1.1 3.1 3.9 -2.0 6.40 4.79 6.32 4.68 -.8 Nondefense capital goods orders Current dollars Constant dollars Machinery Current dollars Constant dollars1 Addenda: Ratio of current dollar unfilled orders to shipments Total Machinery Nonresidential building permits Current dollars Constant dollars 1. 1981 Q1 10.1 Q4 I FRB staff estimate. 3.4 2.6 -1.8 8.6 .6 6.10 4.62 .5 -1.3 -. 9 -3.5 4.8 -2.2 -4.0 4.7 5.99 4.53 6.17 4.54 6.09 4.53 10.6 31.4 --- 10.6 30.7 --- CHANGE IN BOOK VALUE INVENTORIES: MANUFACTURERS' (Billions of dollars; seasonally adjusted, annual rate) 1981 1980 July(r) Aug.(p) Q4 Stage of Fabrication Materials & Supplies Work-in-Process Finished Goods Q2 June 4.6 5.8 -1.2 Total Durable Nondurable Q1 34.2 18.5 15.2 12.7 9.8 3.0 5.4 12.5 -7.1 26.0 26.1 -. 2 9.2 13.8 -4.6 2.7 5.6 -3.7 10.1 13.3 10.8 .9 4.0 7.8 2.1 -6.4 9.8 18.3 7.5 .1 -9.1 7.1 11.2 Detail may not add to totals because of rounding. r = revised p = preliminary MANUFACTURERS' INVENTORY/SALES RATIOS 1980 Q4 Total Durable Nondurable r = revised. p = preliminary. Q1 Q2 1981 June 1.68 2.21 1.14 1.58 2.09 1.11 1.60 2.05 1.12 1.57 2.01 1.10 July(r) Aug.(p) 1.60 2.08 1.10 1.62 2.12 1.09 -9MONETARY AGGREGATES (Based on seasonally adjusted data unless otherwise noted)1 1981 Q1 Q2 ---- Money stock measures 1. M1-A 2 2. (Adjusted) 3. M1-B 2 4. (Adjusted) 5. M2 6. M3 Selected components 7. Currency e -20.8 (-1.7) 4.9 (-0.8) 8.3 L2.4 Q3 July Aug. Sept.e Percentage change at annual rates ---- -5.3 (5.1) 8.7 (5.3) 10.6 10.6 -3.7 (-1.5) 0.3 (-0.7) 7.3 LO.4 -2.0 (1.8) 3.6 (2.6) 7.4 8.7 1.0 (6.5) 7.5 (6.9) 7.9 5.5 Sept. '80 to Sept. ' 8 1 e 5.0 9.0 4.0 -1.0 12. 1 13.9 -R. -6.9 n.a. 4.9 n.a. 8.7 11.5 C (-5.2) -2.8 (-4.0) 7.3 8.6 6.4 8. Demand deposits -32.9 -11.8 -8.0 -7.6 1.5 -11.7 -12.7 9. Other checkable deposits 372.3 107.4 21.5 34.0 31.3 27.1 183.9 10. 11. 12. 13. 14. 15. 16. 17. 18. M2 minus Ml-B (11+12+13+16) 3 Overnight RPs and Eurodollars, NSA Money market mutual fund shares, NSA Commercial banks savings deposits small time deposits Thrift institutions savings deposits small time deposits 9.4 0.0 84.5 6.0 -30.5 30.2 3.5 -29.6 19.0 11.3 58.9 113.7 4.2 -11.9 13'.4 -12.6 4.7 9.7 22.5 87.8 6.8 -19.6 21.0 -2.9 -23.0 5.1 8.7 -15.1 112.4 5.7 -11.5 14.5 -6.2 -21.1 -0.7 13.6 52.0 99.2 10.8 -29.9 31.3 -3.9 -25.4 4.4 10.5 -76.3 94.9 6.3 -21.7 19.7 0.4 -28.6 10.8 10.0 16.1 100.6 6.9 -17.0 23.5 1.1 -19.1 11.0 19. 20 21. Large time deposits 4 at commercial banks, net at thrift institutions 39.6 40.6 34.7 10.3 10.1 11.2 24.9 27.1 14.3 12.9 13.6 7.5 27.3 28.8 22.3 6.5 4.8 14.6 27.9 28.1 27.6 22. Term RPs, NSA 18.1 12.2 38.6 31.1 -2.8 74.7 33.6 - 0.3 --Average monthly change in billions of dollars-MEMORANDA: 23. Managed liabilities at commercial banks (24+25) 24. Large time deposits, gross 25. Nondeposit funds 26. Net due to related foreign institutions, NSA 5 Other 27. 28. U.S. government deposits at 6 commercial banks 3.8 5.1 -1.3 8.5 7.5 1.0 6.0 7.0 -1.0 7.9 8.8 -0.9 10.9 9.6 1.3 -0.8 2.5 -3.3 -1.6 0.2 0.5 0.5 0.8 -1.7 -0.1 -0.8 4.3 -3.0 -1.9 -1.4 1.2 -0.3 0.9 -2.6 -0.3 -0.7 -0.2 1. Quarterly growth rates are computed on a quarterly average basis. 2. Figures in parentheses have been adjusted to remove the distorting effects since the beginning of 1981 Based on a variety of of shifts of funds out of demand deposits and other accounts into NOW accounts. evidence, it is estimated that 77-1/2 percent of inflows into other checkable deposits--in excess of "trend"-was from demand deposits in January, and 72-1/2 percent in subsequent months. 3. Overnight and continuing contract RPs issued to the nonbank public by commercial banks, net of amounts held by money market mutual funds, plus overnight Eurodollar deposits issued by Caribbean branches of U.S. Excludes retail RPs. member banks to U.S. nonbank customers. 4. Net of large-denomination time deposits held by money market mutual funds and thrift institutions. 5. Consists of horrowings from other than commercial banks in the form of federal funds purchased, securities sold under agreements to repurchase and other liabilities for borrowed money (including borrowings from the Federal Reserve), loans sold to affiliates, loan RPs, and other minor items. Changes since October 1980 are partially estimated. 6. Consists of Treasury demand deposits at commercial banks and Treasury note balances. n.a.--not available. e--estimated. -10COMMERCIAL BANK CREDIT AND SHORT- AND INTERMEDIATE-TERM BUSINESS CREDIT (Percentage changes at annual rates, based on seasonally adjusted data) 1980 Q3 04 ------ 1. Total loans and investments 2 at banks Treasury 4. 5. Total loans Business loans 7. Security loans 8. Real estate loans 9. Consumer loans Commercial Bank Credit ------ 10.5 6.2 7.5 5.7 4.9 9.2 14.8 15.7 18.4 1.3 6.9 21.0 60.1 11.9 11.1 12.3 15.6 4.5 -7.6 Aug. 10.2 -10.2 2 6. July 10.3 15.4 2 June 5.7 11.5 Other securities securities Q2 Aug. 80 to Aug. 81 5.7 10.2 3. Q1 14.6 39.1 Investments 1981 7.3 12.9 20.5 2. 1 11.1 -10.0 1.6 2.7 13.1 7.7 5.3 5.4 12.3 10.5 6.6 10.1 15.3 18.3 19.8 15.0 27.3 36.2 23.9 -58.5 7.3 5.3 6.2 -1.1 1.4 -0.7 11.0 -0.2 -1.4 -110.8 13.0 12.7 9.7 8.9 -1.4 -1.0 -- Short- and Intermedate-Term Business Credit -Total short- and intermediateterm business credit (sum of lines 14, 15 and 16) 11. 12. Business loans net of bankers acceptances 14.3 Commercial paper issued by 3 nonfinancial firms 13. -19.3 10.3 Sum of lines 11 & 12 14. Line 13 plus loans at 4 foreign branches 15. 16. 8.9 9.6 14.5 13.9 14.8 21.5 21.1 n.a. n.a. 24.2 5.8 9.0 14.3 18.1 23.2 15.8 -3.0 30.7 40.9 82.9 7.8 77.1 24.6 21.2 8.3 12.6 22.0 16.9 29.8 16.8 19.6 11.6 12.7 22.3 18.7 31.7 17.4 Finance company loans to 5 business -4.6 14.6 8.5 19.3 30.8 26.8 n.a. n.a. Total bankers acceptances outstanding5 21.0 -15.7 35.6 23.1 5.8 28.9 n.a. n.a. ---- -- - Average of Wednesdays for domestic chartered banks and average of current and preceding ends months for foreign-related institutions. 2. Loans include outstanding amounts of loans reported as sold outright to a bank's own foreign branches, unconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and unconsolidated nonbank subsidiaries of the holding company. 3. Average of Wednesdays. oans at foreign branches are loans made to U.S. firms by foreign branches of domesticered banks. . Based on average of current and preceding ends of months. n.a.--not available. -11SELECTED FINANCIAL MARKET QUOTATIONS 1 (Percent) 1981 FOMC FOMC July 7 Aug. 18 June _Low Oct. 1 Change from: June FOMC Low Aug. 18 Short-term rates Federal funds2 18.40 19.93 18.19 15.00 Treasury bills 3-month 6-month 1-year 13.72 13.45 12.65 14.89 14.47 13.63 15.72 15.62 14.74 14.57 14.80 14.63 .85 1.35 1.98 -1.15 Commercial paper 1-month 3-month 6-month 16.54 15.65 14.58 17.92 16.68 15.38 18.02 17.63 17.09 15.38 15.89 15.94 -1.16 .24 1.36 -2.64 -1.74 -1.15 16.76 16.12 15.25 17.97 17.34 16.66 18.14 18.08 18.20 15.59 16.71 16.97 -1.17 .59 1.72 -2.55 -1.37 -1.23 16.75 16.75 18.86 18.19 18.66 18.73 16.40 17.61 -.35 .86 -2.26 -1.12 20.00 20.00 20.50 19.50 -.50 -1.00 U.S. Treasury (constant maturity) 3-year 10-year 30-year 13.86 13.08 12.59 14.73 14.04 13.42 15.99 14.79 13.95 16.40 15.75 15.14 2.54 2.67 2.55 .41 .96 1.19 Municipal (Bond Buyer) 10.59 10.854 11.944 12.93 2.34 .99 Corporate Aaa New issue Recently offered 14.35 14.59 14.94 5 16.63 5 17.75p 3.16 1.12 16.645 17.275 1981 Aug. FOMC 18.365 Large negotiable CDs 1-month 3-month 6-month Eurodollar deposits 1-month 3-month -3.40 -3.19 -. 82 -. 11 3 2 Bank prime rate Intermediate- and longterm rates Primary conventional mortgages 16.62 1980 Dec. 31 Stock Prices Dow-Jones Industrial NYSE Composite AMEX Composite NASDAQ (OTC) 1. One-day quotes except as 2. 3. High 963.99 1,024.05 77.86 79.14 348.99 380.36 202.34 223.47 noted. Averages for statement week closest Secondary market. 924.37 75.55 367.94 207.01 to date shown. Oct. 1 1.74 1.09 Percent change from: Aug. 1981 High FOMC -16.8 -7.8 852.26 67.50 -14.7 -10.7 300.00 -21.1 -18.5 181.09 -19.0 -12.5 4. One-day quotes for preceding Thursday. 5. One-day quotes for preceding Friday. -12- U.S. International Transactions U.S. Merchandise Trade. In August the U.S. merchandise trade deficit was substantially larger than in July. Exports declined somewhat from July levels, and the value of imports rose substantially. About one-third of the import increase was in oil as the volume imported rose to 6.5 million barrels per day from low July rates (see the table on the next page); the price of imported oil declined by about 60 cents per barrel to average about $33.10 per barrel in August (8 percent below the April peak price). The remaining two-thirds of the August import increase was broadly spread among industrial supplies (partly steel), machinery, consumer goods, and automotive imports from both Canada and from other countries. U.S. Merchandise Trade* 1981 July/Aug. June July August 1Q 2Q 244.4 50.9 193.5 241.9 44.3 197.6 229.5 38.5 191.0 239.4 41.0 198.4 232.9 38.2 194.7 226.0 38.8 187.2 Imports Petroleum Nonpetroleum 263.1 83.3 179.8 269.6 84.8 184.8 265.7 72.6 193.1 264.8 84.1 180.7 245.7 66.2 179.5 285.8 79.0 206.8 Trade Balance -18.7 -27.7 -36.2 -25.4 -12.8 -59.8 Value (Bil. $, SAAR) Exports Agricultural Nonagricultural Volume (Bil. 72$, SAAR) Exports -Agricultural -Nonagric. Imports -Petroleum -Nonpetrol. */ 19.5 17.5 n.a. 16.5 15.7 n.a. 73.2 73.3 n.a. 73.7 70.6 n.a. 6.3 67.8 6.2 70.7 n.a. n.a. 6.2 69.7 5.1 69.2 n.a. n.a. International Transactions and GNP basis. -13- When July and August are taken together, the trade deficit was only moderately larger than the second-quarter average. fell about 5 percent. The value of exports Declines in such items as agricultural commodities (particularly corn), civilian aircraft, and metals more than offset the strong pick-up in coal exports (following the strike) and in other items such as automotive shipments to Canada and construction machinery. Imports in July-August combined declined by 1 percent from the second-quarter level. A sharp decline in oil imports outweighed a 5 percent rise in nonoil imports. The volume of oil imported in July- August averaged 9 percent less than in the second quarter. Despite sharp month-to-month fluctuations, the trend in oil imports this year has been downward as a result of a drawdown of U.S. oil stocks as well as a continued decline in consumption. 1Qtr. Volume (mbd, SA) Price ($/BBL) Value (Bil.$,SAAR) 6.59 34.63 83.3 1981 U.S. Oil Imports 2Qtr. July/Aug. 6.52 35.62 84.8 5.96 33.39 72.6 June July 6.48 35.40 84.1 5.38 33.69 66.2 August 6.54 33.09 79.0 The average price of imported oil declined by about $2.30 per barrel from June to August, reflecting the continued weakness in world oil markets. The August meeting of OPEC failed to reach an agreement on a unified OPEC oil price. Although the Saudis apparently were willing to increase their price by $2 per barrel in conjunction with corresponding decreases by other producers, they decided to freeze their price at $32/barrel in the absence of an agreement. At the same time, the Saudis cut production by 1 mb/d in September as a gesture of cooperation as well as to encourage -14- price cuts by producers facing recent large declines in sales. Nigeria cut its oil price by $4/barrel (10 percent) following the OPEC meeting, and similar pressure exists for Libya and Algeria to reduce their prices. The increase in nonoil imports in July-August was spread primarily among industrial supplies (natural gas and steel in particular), machinery, consumer goods, and automotive imports from Canada. A small increase was recorded in the value of automotive imports from Japan and Europe; the increase was about equally divided among passenger cars, trucks, and parts.
@FedFRASER