SEPTEMBER 1950 U. S. DEPARTMENT OF COMMERCE BUREAU OF FOREIGN AND DOMESTIC COMMERCE OFFICE OF BUSINESS ECONOMICS DEPARTMENT OF COM MERC FIELD SERVICE SURVEY OF CURRENT BUSINESS Albuquerque, N. Mex. Memphis 3, Tenn. 203 W. Gold Arc. 229 Federal Bid Atlanta 3, Ga. Miami 32, Fla. 50 Whitehall St. SW. 36 NE. First S •A No. 9 Baltimore 2, Md. Milwaukee 1, Wis. 103 S. Gay St. 517 E. Wisconson Av SEPTEMBER 1950 Boston 9, Mass. Minneapolis 1, Minn. 2 India St. 2d Ave. S. at 4th S Buffalo 3, N. Y. Mobile, Ala. 117EllicottSt. 109-13 St. Joseph Si Butte, Mont. New Orleans 12, La. 14 W. Granite St. 333 St. Charles Av< L-ontents Charleston 3, S. C. New York 4, N. Y. PAGE 18 Broad St. 42 Broadwa THE BUSINESS SITUATION 1 Cheyenne, Wyo. Oklahoma City 2, Okla Manufacturers' Sales, Orders and Inventories .... 4 206 Federal Office BIdf. 102 NW. Third Si Increased Business Spending for Capital Goods ... 6 Chicago 4, 111. Omaha 2, Nebr. 332 S. Michigan Art. Construction Activity Continues To Expand 8 1319 Farnam St Cincinnati 2, Ohio Philadelphia 6, Pa. Supplies of Selected Basic Materials ........ 11 105 W. Fourth St. 437 Chestnut St Retail Buying High 14 Cleveland 14, Ohio Phoenix 8, Ariz. 925 Euclid Are. Changes in Social Security 16 234 N. Central Ave * * * Dallas 2, Tex. 1114 Commerce St. Pittsburgh 19, Pa. 700 Grant St SPECIAL ARTICLE Denver 2, Colo. 828 Seventeenth St. Portland 4, Oreg. Balance of International Payments, Second Quarter 520 SW. Morrison St, of 1950 18 Detroit 26, Mich. 230 W. Fort St. Providence 3, R. I. * * * 24 Weyboasett St. El Paso 7, Tex. NEW OR REVISED STATISTICAL SERIES . 17, 24 206 U. S. Court House Reno, Nev. Bldg. 118 W. Second St. * * * Hartford J, Conn. Richmond 19, Va. MONTHLY BUSINESS STATISTICS . S-l to S-40 135 High St. 801 E. Broad St. Statistical Index Inside Back Cover Houston 14, Tex. St. Louis 1. Mo. 602 Federal Office BIdf. 1114 Market St. Jacksonville 1, Fla. Salt Lake City 1, Utah 311 W. Monroe St. 350 S. Main St. Published by the U. S. Department of Commerce, CHARLES SAWYER, Kansas City 6, Mo. San Francisco 11. Calif. Secretary. Office of Business Economics, M. JOSEPH MEEHAN, 911 Walnut St. 555 Battery St. Director. Subscription price, including iveekly statistical supplement, $3 a Los Angeles 12, Calif. Savannah, Ga. year; Foj'eign $4. Single copy, 25 cents. Send remittances to any Depart- 312 North Spring St. 125-29 Bull St. ment of Commerce Field Office or to the Superintendent of Documents^ Louisville 2, Ky. Seattle 4, Wash. United States Government Printing Office, Washington 25, D. C. Special 631 Federal Bldg. 909 First Ave. subscription arrangements, including changes of address, should be made directly with the Superintendent of Documents. Make checks payable to Treasurer of the United States. For local telephone listing, consult section devoted to U. S. Government Contents are not copyrighted and may be freely reprinted. SEPTEMBER 1950 Business spending programs for plant and THE equipment have been stepped up BILLIONS OF DOLLARS 24 NONFARM NEW PLANT AND EQUIPMENT EXPENDITURES^ 20 SITUATION 16 By the Office of Business Economics u/NDE, R the stimulus of rising demand by business, 12 consumers, and Government, business activity has continued ©ANTICIPATED to expand and prices have risen further. Increasing sup- plies are reaching final consumers but the expansion is not keeping pace with the rise in demand, which has reflected rising current incomes and increased utilization of cash and consumer buying has risen sharply, credit resources. Accompanying the price advance has been a further rise in wage rates, including upward revisions in SALES OF ALL RETAIL STORES existing contracts. (SEASONALLY ADJUSTED) Consumer purchasing continued at a high rate in August 12 although there was some let-up in the abnormal buying in anticipation of scarcities. The year-to-year increases in department store sales were not so great in August as in July and they tapered further in the first 2 weeks of I ! September. Business buying has continued at a rate sufficiently high to increase backlogs further. The latest quarterly survey 10 of plant and equipment expenditures shows upward revisions in plans for fixed capital investment in the latter half of 1950 (top panel of the chart on the left). The rate of fixed Q| ! I M I I I M M I M M I I ! ! I I I I I I I I ! I I I M I capital expenditure is estimated to be nearing the peak rate attained in the latter part of 1948. resulting in mounting orders placed With buying sharply accelerated, production was no with manufacturers. longer running ahead of final sales as was the case in the 28 second quarter—i. e., inventories were no longer increasing MANUFACTURERS1 NEW ORDERS and in some lines they were being reduced. As a result, stock-sales ratios declined sharply, falling somewhat below 24 usual relationships, affording the basis for the greatly en- larged flow of orders to manufacturers. Government defense expenditures are in a rising phase, and the expanding forward commitments have had a much 20 larger effect upon business buying over the past 2 months than the absolute increase in expenditures. Prices advance 16 In the first few weeks following the Korean invasion rapid price rises occurred in industrial raw materials of both foreign 19i M I M I I I I I I I I I I I I I I I I I I I M I I I I I I I I I and domestic origin. Farm prices likewise rose rapidly and 1948 1949 I960 foods advanced at all stages of distribution, whereas indus- U QUARTERLY TOTALS, SEASONALLY ADJUSTED, AT ANNUAL RATES, trial prices other than raw materials moved upward less it 3-MONTHS MOVING AVERAGES, CENTERED AT MIDDLE MONTH. rapidly although at a substantial pace. SOURCE OF DATA: EXPENDITURES, U. S. DEPARTMENT OF COMMERCE, OFFICE OF BUSINESS ECONOMICS, AND SECURITIES AND EXCHANGE COMMISSION: Since the beginning of August, the price rise has entered a SALES AND NEW ORDERS, OFFICE: OF BUSINESS ECONOMICS. second phase in which the increases at primary markets and U. S. DEPARTMENT OF COMMERCE, OFFICE OF BUSINESS ECONOMICS. 50-259 in food have been smaller but a more general advance has SURVEY OF CURRENT BUSINESS September 1 occurred in secondary and retail markets. The earlier in- prices, indicated a slight easing during August. Wholes creases brought higher costs of fabricating goods, and are food prices were appreciably higher in late August and ea being followed by price advances in finished commodities. September than in Juty, however, and in the past there 1 As the price rise has continued and broadened, there has been on the average only a few weeks lag between t been a growing tendency for these increases to become im- wholesale and retail food price series. bedded in the basic cost structure of the economy. Wage rate increases are also operating in this direction. Employment at new high Expanding business activity resulted in a rise in tot Chart 2.—Wholesale Prices employment to 62.4 million during August. This rcpreser INDEX, 1926 = 100 a gain of 1 million from the preceding month and is 750,0' 225 r higher than the previous peak reached in July of 1948. Wi a substantial pick-up in the number of factory workers, tot i non agricultural employment rose 1.4 million—little of whk WHOLESALE PRICES, ALL COMMODITIES is attributable to seasonal influences—reaching 54.2 inillio: / Corresponding changes took place in unemployment, whk declined to 2.5 million, the lowest since the beginning \ BOTHER THAN FARM 1949. The sharp change in the manpower situation from PRODUCTS AND FOODS few months earlier was emphasized by the announcement ( the President that the armed forces would be expanded froi 100 1/2 to 3 millions. 300 Incomes rising generally The trend of personal incomes is upward. The increas from June to July of 82 billion at an annual rate to $21 billion does not reflect the extent of the rise that has occurred Further expansion—not yet measurable by available data- occurred in August. Most ol the rise in July accrued to farm and nonfarm pro prietors reflecting the rise in prices and in retail sales. Wages and salaries were slightly higher in July than a month earlier, following substantial advances in preceding months. Part of the rise in payrolls reflects increasing employment, but in recent months increased earnings per employee have be- come important. In manufacturing, average weekly earn- ings had shown little change for more than a year prior to March of 1950, but since that time they have increased from $56 per week to $59 in July, with both higher rates of pay and longer working hours contributing to the rise. 1 Data include meats also shown separately. Although later comprehensive figures are not available, Source of data: U. S. Department of Labor, Bureau of Labor Statistics. partial tabulations indicate that pay raises have become more In the 10 weeks between June 27 and September 5, the all- Table 1.—Changes in Weekly Wholesale Price Index cornmodity wholesale index of the BLS rose 6.6 percent, of [Index, June 27, 1950=100] which 4 percent occurred in the first half of the period. Most of the rise in the last half of the period—i. e.7 since August 1—has been in building materials, textiles and chemicals. As Item Percent change indicated in the accompanying table, since the invasion of Jan. 3 June 27 Aug. 1 Sept. 5 Jan.