Survey of Current Business
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DECEMBER 1946 SURVEY OF CURRENT BUSINESS UNITED STATES DEPARTMENT OF COMMERCE B fTTl T^ A TT FOREIGN AND DOMESTIC COMMERCE Survey of CURRENT BUSINESS VOLUME 26, No. 12 DECEMBER 1946 Contents STATISTICAL DATA: THE BUSINESS SITUATION . Page New or Revised Series 22 International Transactions: Third Quarter of 1946 11 Monthly Business Statistics: Page Commodity sections—Con. Page Business indexes S—l Leather and products....... S-30 Business population S-3 Lumber and manufactures.. S-31 Commodity prices S—3 Metals and manufactures: EXPENDITURES FOR NEW PLANT Construction and real estate.. S-5 Domestic trade S—6 Iron and steel S-32 Employment conditions and Nonferrous metals and AND EQUIPMENT IN 1946 . 14 wages S-9 products S-33 Finance * S—15 Machinery and apparatus. S-34 Foreign trade S-20 Paper and printing S-34 Transportation and communi- Petroleum and coal products S-36 cations S-22 Rubber and rubber products. S-37 Commodity sections: Stone, clay, and glass prod- GOVERNMENT FOREIGN TRANS- Chemicals and allied prod- ucts S-37 ucts S-23 Textile products S-38 Electric power and gas S—26 Transportation equipment.. S-40 ACTIONS DURING THE FISCAL Foodstuffs and tobacco S-26 Canadian statistics S-40 YEAR 1946 18 Statistical Index Inside back cover For contents of Volume 26 see outside back cover I 11 OXC—Contents of this publication are not copyrighted and | \, may be reprinted freely. Mention of source will be appreciated f Published by the Department of Commerce, W. AVERELL HARRIMAN, Secretary.—Bu- reau of Foreign and Domestic Commerce, AMOS E* TAYLOR, Director. Subscription price $3 a year; Foreign $4.00. Single copies, 25 cents* Make remittances direct to the Superintendent of Documents, United States Government Printing Office, Washington 25, D. C. THE BUSINESS SITUATION By the Office of Business Economics EMOVAL of virtually all price con- dences that raising the price lid pried R trols in November represented The Month in Review loose supplies of a few scarce items which another major step toward freeing the appeared in stores in larger volume but • domestic economy of the restraints Prices advanced during October with higher price tags. At the other which were imposed to strengthen the and November in response to suc- extreme, there were probably cases where war economy and which were continued, cessive decontrol actions which shipments were delayed pending a clari- with major exceptions, into the recon- culminated in the President's an- fication of the price situation. version period to ease the transition to nouncement terminating virtually peacetime operations. With this action, all commodity price controls on Sales Respond to Holiday Buying November 9. The average price prices again moved higher. The sharp On the distribution front, consumer price advances recorded for many in- rise at wholesale was 11 percent over the 2-month period. A con- buying moved into the swing of the holi- dividual commodities, however, were day season. Retailers noted more cau- tempered by the relative stability of siderable realignment of prices is now underway, with price dispari- tion than last year when heavy retail other prices which typically respond buying was partly in the nature of a more slowly to changes in market con- ties carried over from the long pe- riod of general price control being spending spree associated with the end- ditions or which had already advanced ing of the war. Yet, the crowded condi- because of earlier decontrol. steadily corrected. tions of the stores gave evidence of con- It is still too soon to appraise the ef- The coal shut-down in the third tinued heavy buying and these signs fects of the return to free market pricing week of the month reduced opera- were confirmed by the statistical gains on production and distribution, since the tions in the steel industry but had reported in sales. readjustment of the price structure, both little effect on over-all production Business buying for inventory pur- in terms of its general level and its in- during November. Retail sales poses and for capital investment con- ternal composition, is not yet completed. moved toward the peak of the holi- tinued strong into the fourth quarter. Not only are further price advances to day buying season, after showing The monthly rate of increase in the dol- be expected, but some declines may also the usual seasonal change in Oc- lar value of manufacturers' inventories occur as newly established prices are tober. was stepped up from somewhat over 400 tested in the market. The tendency in Income payments to individuals million dollars in August and September the aggregate is towards higher prices, rebounded to an annual rate of 172 to almost 700 million dollars in October, though in some cases price quotations billion dollars in October, from 166 with part of the rise traceable to higher are now more fully representative of billion in the previous month. prices. At the same time there was a prices actually paid than formerly when Changes in farm income again comparable stepping-up of inventory dominated the monthly movement. there were some transactions at extra- ***** buying by distributors. Business capi- legal prices. tal expenditures, however, are rising less Most of the statistical series rapidly than earlier in the year, on the used in this review of the business Coal Shut-down Cuts Steel Rate basis of the quarterly surveys. The be- situation will be found in the sta- havior of these expenditures is analyzed The forward move in production, tistical section at the back (pp. S-l in a special article in this issue. which in October had raised output to to S-40). the highest point of the reconversion Income Payments Resume Rise period, was temporarily slowed by the Total income payments to individuals, work stoppage at the bituminous coal for a time to compel a recasting of out- which declined in September under the mines in the third week of November. put expectations for durable goods. To influence of unseasonally low market- This event, however, had very little ef- a considerable extent steel has been the ings of agricultural products, rose to a fect upon over-all production in that gauge of progress toward high peace- new record in October when higher farm month. Increases in output over broad time production in the heavy industries. prices and increased marketings resulted sectors of the economy more than The steel rate is rising now that the 17- in a sharp recovery in farm income. counterbalanced the turn of events pre- day mine shut-down has been termi- The annual rate of payments, seasonally cipitated by the coal stoppage. The nated, but it will not be possible to re- adjusted, was 172 billion dollars in Octo- mine shut-down was ended on December store practical capacity operations im- ber, which compares with the third 7, just as a drastic rail freight embargo mediately. quarter average rate of 168 billion dol- was being made effective and large-scale lars and the full-year total of 161 billion lay-offs of workers were impending in Contrasting Response to Decontrol dollars in 1945. important industries. From the standpoint of the flow of The slashing of the steel ingot pro- goods to the market, the pattern of re- Commodity Price Control Ends duction rate by 30 percent in the first sponse to the lifting of price ceilings was Developments leading to the practical week of the soft coal stoppage threatened not uniform. There were scattered evi- termination of the commodity price 723513—47 1 l SURVEY OF CURRENT BUSINESS December 1946 control program came in rapid succes- leather manufacturers. The effect of law of supply and demand operating in sion during October and November. these developments and of the further the market place will, from now on, The statutory requirement of removing steps toward decontrol in early Novem- serve the people better than would con- price ceilings from all items unimpor- ber—just prior to the action decontrol- tinued regulation of prices by the Gov- tant to living or business costs resulted ling commodity prices generally—was to ernment." Residential rents, rice, and in the removal of many nonfood items leave in the controlled area only about sugar were the only items continued from control, while the decision to free two-fifths of the business economy and under price control. livestock, meat, and meat products from one-third of the value of consumer pur- price control in October was soon fol- chases (including rent costs). Prices Undergoing Realignment lowed by the lifting of practically all The final development was acceptance ceilings on foods still under control. At of the fact that the policy of selective The movement of the wholesale price the end of that month controls were re- price control could not be effective after index, and its three broad subgroups, moved from hides and leather products so large a segment of goods had been is shown in chart 1. Farm products and in recognition of the disruptions which freed. The President thereupon an- foods have advanced most since the tem- had appeared in the flow of hides to nounced on November 9 that "... the porary lapse of OPA controls last July, with two rapid advances in July and Au- gust and again after the October decon- Chart 1.—Wholesale Prices trol action. Wholesale prices of other than farm products and foods again INDEX, 1926- iOO INDEX, 1926 = 100 started to move up after November 9 at 160 160 a rate approximating that of the mid- summer period when controls were off. The combined wholesale price index rose 11 percent from the first week of 140 - - !40 October to the final week of November (the latest figures shown in the chart are for the week ending November 23).