SEPTEMBER 1963 survey of CURRENT BUSINESS U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS SEPTEMBER 1963 VOL. 43, NO, 9 U.S. Department of Commerc Luther H. Hodges Secretary Office of Business Economics George Jaszi Director Contents Louis J. Paradiso THE BUSINESS SITUATION PAGE Associate Director Summary. 1 Murray F. Foss Editor K. Celeste Stokes Billy Jo Hu Corporate Profits and National Income in Second Quarter Statistics Editor Graphics 1963..., 2 STAFF CONTRIBUTORS TO THIS ISSUE Plant and Equipment Programs, Second Half 1963—Con- Business Review and Features: Francis L. Hirt tinued Rise Projected 5 Robert B. Bretzfelder Genevieve B. Wimsatt Manufacturers Expect Higher Inventories and Sales in Second Marie P. Hertzberg Leonard G. Campbell Half of 1963 7 Martin L. Marimont Article: GNP by Major Industries, 1958-62—Revised and Updated. 9 Charles S. Friedman Robert M. Wiley The Balance of International Payments During the Second Quarter 11 ARTICLE Subscription prices, including weekly g Stocks of Passenger Cars: Postwar Growth and Distribution. 17 tistical supplements, are $4 a year for mestic and $7.50 for foreign mailing. Sir issue 30 cents. CURRENT BUSINESS STATISTICS Make checks payable to the Supei tendent of Documents and send to I General S1-S24 Government Printing Office, Washingt Industry. S24-S40 D.C., 20402, or to any U.S. Departmenl Subject Index Inside Back Cover Commerce Field Office. U.S. DEPARTMENT OF COMMERCE FIELD OFFICES Albuquerque, N. Mex., 87101, U.S. Courthouse. Phone Denver, Colo., 80202, 142 New Customhouse. Phone New York, N.Y., 10001, Empire State Bldg. LO 3-3377. 247-0311. 534-4151. Philadelphia, Pa., 19107,1015 Chestnut St. WA 3-2400. Anchorage, Alaska, 99501, U.S. Post Office and Court- Detroit, Mich., 48226,438 Federal Bldg. Phone 226-6088. Phoenix, Ariz., 85025, 230 N. First Ave. Phone 261-3285. house. BR 2-9611. 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By the Office of Business Economics JJUSINESS activity in August dif- because of a decline in primary metals month. Otherwise there was a very fered little from the July pace, after but mainly because of a rather sharp small improvement in nonmanufactur- allowing for the usual seasonal move- drop in the transportation equipment ing and public (mainly State and local) ment between the 2 months. The rate industry. The latter development may employment. The seasonally adjusted so far in the third quarter, however, is be considered an irregular change—due rate of unemployment edged down a bit, well above that of the second. Im- to the early shutdown for model change- from 5.6 to 5.5 percent of the civilian portant economic measures for August overs in the automobile industry—which labor force. such as income, employment, and will tend to average out the following With payrolls about unchanged from industrial production did not change the month before, personal income rose much from July, on a seasonally ad- only $0.7 billion to a seasonally ad- BUSINESS INVESTMENT justed annual rate of $465 billion; the justed basis. In part, the August pic- Business Plans to Increase Fixed Capital ture reflected the effects of the auto- Outlays Through Fourth Quarter year-ago total was $445 billion. The mobile shutdown and the marked rise over the month was accounted for Bill!on $ by small increases in proprietors' in- reduction in steel output associated 50 with liquidation of steel stocks which PLANT AND EQUIPMENT EXPENDITURES come, interest, and transfer payments. 40 had been built up earlier. Most other - rr, rn r Retail sales rate above second quarter elements of the economy were about the nr - n nn same as the month before, as the 30 The upward momentum in retail details on income and employment 20 i sales that was evident in June and July, indicate. \ when monthly increases of 1 percent Brighter spots in current develop- 10 were registered, did not extend into ments are the rise in business plant and August, according to the preliminary 0 i equipment expenditures, outlined in Anticipated Census data. However, because of the another section of this review, and the Manufacturers Expect Further Inventoriy higher level achieved thus far, the third- resumption of the uptrend in State and Accumulation but Below Second Quarter Rate quarter seasonally adjusted sales rate local outlays, which dipped temporarily Billion $ is running a full 2 percent higher than in the second quarter. On the other CHANGE IN BUSINESS INVENTORIES the second-quarter average and some Tofo/ hand, housing activity, which spurted 10 Other \ Mfg. 5% percent above the corresponding in the spring months, has slowed down H"r^ r— l F3 1962 figure. The June and July im- = li tm b3 P?3 ca P^ K£! ^ ^ this summer, reflecting a moderate Anticipc ted provement, it will be recalled, followed decline in housing starts in the past 2 a a period of almost 6 months' duration months. The strong upward move- -10 during which sales were little changed, ment in retail sales, evident in June and •lousing Expenditures Level Off in Early Part aside from the usual seasonal move- July, was not maintained in August, on <af Third Quarter as Housing Starts Ease ments. the basis of advance reports. On Bill on $ Million Units Spending in nondurable goods stores balance, with activity at the start of RESIDENTIAL NONFARM HOUSING in August increased again, paced by the third quarter already at a high 40 Starts a rather sharp gain in department store Outlays 1 right scale) point, a good rise in GNP over the (/eft scale) sales. Durable goods sales, however, second quarter is assured. 30 1.6 fell back from the July rate mainly \^ ^^s Jtm " m because of an apparently greater than 20 ~ - 1.4 Employment and income little & .-*• -- • M '* seasonal decline in purchases of new changed 10 " 1.2 automobiles, a development attribut- Nonfarm establishment employment able to the limited supply of new cars 0 1.0 rose a little less than seasonally in 1961 1962 1963 in dealers' hands. Last year a similar August, and at 57.3 million stood some Quarterly, Seasonally Adjusted, at Annua Rates pattern showed up toward the end of 1.3 million higher than the August 1962 * Outlays Based on July-Augusf, the model year: Seasonally adjusted total. Manufacturing fell by approxi- Housing Starts July sales in both August and September mately 100,000 over the month, in part U.S. Department of Commerce, Office of Business Economics £3-9-1 were clearly below both the average 1 SUEVEY OF CURRENT BUSINESS September 1963 for the first 7 months of 1962 and the an expansion in steel output can be fourth-quarter schedules at present call rate in the closing quarter. looked for in the coming quarter. for a record assembly of more than 2.1 Steel decline flattening out Auto production scheduled to rise million units. Whether auto output will give the economy an additional lift The steel industry appears to have In the automobile industry, August over and above the high levels of late largely completed its downward adjust- production reflected plant shutdowns spring and summer—seasonal factors ment in production following the earlier for model changeovers; only 156,000 aside—will depend, of course, on how stockpiling. In late August and early units were produced last month. By consumers react to the 1964 models, and September, the weekly rate of steel the end of August, all producers were it is too early to come to any firm ingot production was running about turning out the new 1964 models, determination on that score. Aside the same as the August average; the though in relatively small volume. from the early postwar period, there halt in the downturn was partly fore- Activity in the industry will be at shadowed by the July improvement in least an important sustaining force in have not been 3 successive years of new orders received by producing mills.