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Survey of Current Business August 1956

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Survey of Current Business August 1956 AUGUST 1956 U. S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS DEPARTMENT OF COMMERCE FIELD SERVICE No. 8 Albuquerque, N. Mex. Memphis 3, Tenn. 321 Tost Office Bldg. 22 North Front St. AUGUST 1956 Atlanta 23, Ga. Miami 32. Fla. 50 Seventh St. NE. 300 INE. First Ave. Boston 9, Mass, Minneapolis 2, Minn. U. S. Post Office and 2d Ave. South and Courthouse Bid*. 3d St. Buffalo 3, IV. Y. New Orleans 12, La. 117El!irott Si. 333 St. Charles Ava Charleston t, S. C. New York 17. N. Y. Area 2, 110 E. 45th St. PAGE Sergeant Jasper BItJg. BUSINESS SITUATION. .................. 1 Cheyenne, Wyo. Philadelphia 7, Pa. :U)7 Federal Office Bldg. 1015 Chestnut St. •'<• /^National Income and Product — ;.v -..,;/ A Review of the Second Quarter. **.......» 3 Chicago 6, 111. Phoenix, Ariz. 226 W. Jackson Blvd. 137 N. Second Ave. * if * Cincinnati 2, Ohio Pittsburgh 22, Pa. 442 U. S. Post Office 107 Sixth St. and Courthouse Portland 1, Dreg. SPECIAL ARTICLES Cleveland 14, Ohio 520 SW. Morrison St. 1100 Cheater Ave. Personal Income by States in 1955. .......*.. 8 Dallas 2, Tex. Reno, Nev. (growth of Foreign Investments 1114 Commerce St. 1479 Wells Ave. in the United States and Abroad* ......... 14 Denver 2, Colo. Richmond 19, Va. 142 New Customhouse 1103 East Main St. Detroit 26, Mich. St. Louis 1, Mo. * * * 438 Federal Bldg. 1114 Market St. BUSINESS STATISTICS ..... S-l to S-40 Houston 2, Tex. Salt Lake City 1, Utah 430 La mar Ave. 222 SW. Temple St. Statistical Index. .-.'. .......... .Inside back cover Jacksonville 1, Fla. San Francisco 11, Calif. 311 W. Monroe St. 555 Battery Si. Kansas City 6, Mo. Savannah, Ga. 911 Walnut St. 125-29 Bull St. Loa Angeles 15. Calif. Seattle 4. Wash. Published by the U. S. Department of Commerce, SINCLAIR WEEKS, 1031 S. Broadway 909 First Ave. Secretory. Office of Business Economics, M. JOSEPH MEEHAN, Director. Subscription price, including iveekly statistical supplement, is $3*2& a year; foreign mailings $4*25, Single copy, 30 cents. Send remit- tancestoany Department of Commerce Field Office or to the Superintendent of Documents, United States Government Printing Office, Washington 25, D. C. For local telephone listing, consult section Special subscription arrangements, including changes of address, should be madedirecdy ivith the Superintendent of Documents. Make checks payable devoted to U. S. Government to Sup&iitt&ndent of Documents. AUGUST 1956 By the Office of Business Economics Business Indicator Changes DUSINESS activity so far this summer has continued along1 the path which was set in the first half of the year when in- PERCENT CHANGE, FIRST HALF 1955 TO FIRST HALF 1956 come and output were at record highs. The work stoppage in the steel industry, which ended in early August, resulted -5 0 t5 tlO t!5 in some reduction in industrial output and employment during July, However, in the major fabricating industries GROSS NATIONAL PRODUCT activity was maintained during the 5-week tieup by drawing down of steel stocks. Employment in many industries not affected by the steel work stoppage moved up somewhat in Personal consumption July from the highs of previous months, on a seasonally adjusted basis. There was no slackening in the July pace1 Durable goods of retail sales which continued at the high June rate and above the average for the first half. Nondurable goods Services Business above year ago The general pattern of business improvement this year in Fixed investment comparison with the like period of 1955 is depicted in the chart at the left. Most of the basic economic indicators shown in this first half comparison were up significantly. Other GNP The sizable increase in fixed investment, with the advance in plant and equipment outlays considerably more than compensating for the drop in residential construction, pro- vided a major stimulus to general business and continues to PERSONAL INCOME be a source of strength. A 7-percent increase in personal income—a considerable change for this series—led to pro- Wage OF salary nounced increases in consumer spending for nondurable' goods and services; the reduction in durable goods purchases Other income from the exceptional pace of a year ago was due to lowered demand for passenger cars. Moderate!}7 higher prices con- tributed to the rise in the dollar figures for income and EMPLOYMENT business sales. The increase in wholesale prices reflected an advance in industrial prices which was partly offset by lower prices for farm products. Consumer prices averaged slightly higher. BUSINESS SALES Changes in employment and trade Employment continued strong in most activities in July, WHOLESALE PRICES with the total well above a year ago. On a seasonally adjusted basis employment in nonagricultural establish- Farm ments, which excludes workers out on strike, declined from products 51.6 million in June to 51.1 million in July mostly as a result Other than farm Q foods of the reduction in industries affected by the steel shutdown. In most industries not affected by this tieup, July employ- ment either rose more or declined less than usual for the month and hence registered increases after seasonal adjust- CONSUMER PRICES ment. In the metal-producing and some related industries, such as mining and transportation, the strike was the dom- inant factor in declines. The fact that seasonally adjusted employment rose in such steel-consuming industries as fabri- Data: Employment, Census; cated metal products, machinery, and instruments suggests Prices, BLS, Others, OBE that accumulated steel inventories held by fabricators and U. S. Department of Commerce, Office of Business Economics warehouses supported production. M(J28('^°—56 1 SURVEY OF CURRENT BUSINESS August 1956 Except for the apparel and related products industry, where of durable-goods stores in July were 2 percent higher than seasonally adjusted employment registered a 3-percent drop the monthly average for the second quarter, with furniture to a total equal to that of a year ago, nondurable-goods and appliance stores up relatively more. Although sales manufacturing establishments showed only small, offsetting by the automotive group (wilich includes motor vehicle changes in employment during the month. dealers and parts and accessories stores) were below a year Consumer purchasing at retail stores continued strong in ago, they have been rather steady in the past 4 months, on the opening month of the third quarter. Total retail sales a seasonally adjusted basis. in July, after adjustment for seasonal and trading day In nondurable-goods stores, sales in the last 3 months have differences, were maintained at the high June rate, slightly been on a high plateau, nearly 7 percent above the same above the average for the second quarter of the year and months a year ago. about 3 percent above the year-ago figure. This strength in retail activity was evident in both the durable and nondurable sectors. Seasonally adjusted sales Price advance The wholesale price average in early August was rising moderately following a period of stability since May. From Rising Capital Outlays and May to June farm product prices rose, but the decline of nonfarm products led by sharp reductions in iron and steel Machinery Business scrap and nonferrous metals pushed the Bureau of Labor BILLIONS OF DOLLARS (ratio scale) Statistics' combined index fractionally below the May figure. 60 These movements were reversed in July as farm product 50 _ PLANT AND EQUIPMENT EXPENDITURES prices receded while prices of nonfarm products turned (ANNUAL RATES) slightly upward, again under the leadership of steel scrap and 40 some nonferrous metals. Food prices continued to advance. The rise of nonagricultural product prices became more 30 pronounced in early August. The terms of settlement of the labor dispute in the steel industry included a substantial increase in labor costs. Higher prices of steel products were 20 announced with the resumption of steel shipments from mills. Some raw industrial materials other than crude metals also moved higher, among them burlap, wool tops, and rubber. ©ANTICIPATED Production developments 10 i i t i I 1 1 I 8 Industrial production dropped about 5 percent from June 7 - INDUSTRIAL MACHINERY to July as steel was down sharply and carried with it coal 6 and iron ore shipments. 5 On the whole, industrial production was rather stable UNFILLED ORDERS (end of quarter) during the first half of this year following the rapid advance 4 during 1955. This stability resulted from the fact that output in important industries, such as machinery, chemicals, and petroleum, continued to forge ahead during 1956, offsetting declines in the automobile industry and its sup- pliers, particularly the rubber products groups and certain segments of the textile industry. The group of rising indus- tries include those stimulated by the high rates of investment and nonresidential construction and of consumer spending SALES for goods other than automobiles. The strong upward trend of business expenditures for new plant and equipment and the stimulus it has imparted to the machinery industry I I I l I are shown in the chart at the left. 30 The decline in automobile output was checked in July OTHER MACHINERY when assemblies increased slightly from the June rate of (INCL. ELECTRICAL) 518,000 cars and trucks. Additional reductions in dealers' 20 new-car inventories during the month brought them into an improved relationship with the volume of sales. August UNFILLED ORDERS (end of quarter) production is expected to be sharply lower, however, with major plants discontinuing assembly as they move into the model changeover period. Primary metals output increased following the settlement 10 9 of the steel strike and steel output was expected to be close 8 to capacity by the end of August. 7 Manufacturing and trade inventories at the end of June were valued at $85.2 billion, 9 percent higher than a year 6 ago.
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