SURVEY of CURRENT BUSINESS August 1947

AUGUST 1947 SURVEY OF CURRENT BUSINESS UNITED STATES DEPARTMENT OF COMMERCE BUREAU OF FOREIGN AND DOMESTIC COMMERCE Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Survey of CURRENT BUSINESS VOLUME 27, No. 8 AUGUST 1947 Statutory Functions: "The Bureau of Foreign and Domestic Commerce... to foster, promote, and develop the foreign and domestic commerce of ( the United States'9 [Law creating the Bureau Aug. 23, 1912 [37 Stat. 408].]. Contents Page Classification of THE BUSINESS SITUATION 1 Statistical Sections National Product and Income in the First Half of 1947. • 4 Page Business indexes ..........*•.....• S—l Business population S-3 Redemption of Armed Forces Leave Bonds 7 Commodity prices S-3 Construction and real estate.............. S—5 Domestic trade. S-6 STATE INCOME PAYMENTS IN 1946 9 Employment conditions and wages. .*.*..* S—9 Finance S-15 Foreign trade S-20 Transportation and communications. .*..* 3*21 Commodity sectionsi Chemicals and allied products S-23 Electric power and gas S-25 Foodstuffs and tobacco................. S—26 Leather and products................... S-29 Lumber and manufactures.. .......*.... S—30 Metals and manufactures: g^ Iron and steel • S-31 STATISTICAL DATAi N on ferrous metals and products S-32 Machinery and apparatus 8-33 Paper and printing.... S—34 Monthly Business Statistics. S-l to S-40 Petroleum and coal products S-35 Rubber and rubber products. S-37 Statistical Index * Inside back cover Stone, clay, and glass products.. ........ S-37 Textile products S—38 Transportation equipment S-40 Canadian statistics S-40 11 O 1(3—Contents of this publication are not copyrighted and [1 ( may be reprinted freely. Mention of source will be appreciated^ Jr Published by the Department of Commerce, W. AVERELL IlARRIMAN, Secretary—Office of Business Economics, AMOS E. TAYLOR, Director. Subscription price, including weekly statistical supplement, $3 a year; Foreign $4. Single copies, 25 cents. Make remittances direct to the Superintendent of Documents, United States Government Printing Office, Washington 25, D. C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Chart L-COMPOSITION OF GROSS NATIONAL PRODUCT The BILLIONS OF DOLLARS 150 Business Situation By the Office of Business Economies 100 100 IRMING of commodity prices during July was accompanied F by seasonal declines in retail trade and manufacturing 7 5 \ PERSO SJAL CONSUMPTION \ 75 activity. At the same time, total employment was at a high j LX PENDITURES^r^"^ i point, as a result of the summer rise in agriculture, construction, and various service trades, and the flow of personal income was being bolstered by further upward adjustment of wage rates. 50 50 With consumer, business, and foreign demand remaining rela- tively steady, apart from seasonal influences, and with Govern- ment purchases showing only minor variations, there was appar- ently little change—other than that resulting from the upward 25 25 drift of prices—in the aggregate value of production as the econ- omy entered the second half of the year. In the second quarter of 1947 gross national product was at an annual rate of 226 billion dollars, according to the estimates presented in this issue. o, i \ r \ . 0 This dollar rate is somewhat higher than the war peak, reflect- ing the substantial price increases during the postwar period. The recent advances in the weekly wholesale price index have occurred not merely in the volatile farm and food sectors, but in 25 the industrial sector as well. Thus, the 3-month period of rela- GROSS PRIVATE * . tive steadiness in the over-all price index for commodities other DOMESTIC INVESTMENT I than farm products and foods was terminated in July as new increases were made effective for a wide range of industrial 0, U .j \ L , 0 products. Among the increases which will affect raw material costs for an important segment of industry was the advance in prices of principal steel products, amounting to about 6 dollars a ton, on the average. NET FOREIGN _XP 0, , o Inventory Rise Slackens, Foreign Investment Stepped Up vCVJffiftSffiftl&y*'*' Data now available covering the second quarter show the magnitude of the counterbalancing changes that served to sus- tain private expenditures. On the downside was the decline in 100 the rate of inventory accumulation which, on a national product basis, dropped from an annual rate of 2.7 billion dollars in the first quarter to 1.5 billion dollars in the second quarter. The month-to-month changes in the book value of total business 75 inventories were minor in both May and June, with actual declines—largely seasonal—being recorded at the distributive level in the 2 months. On the upside, net foreign investment in the second quarter 50 rose to 10.6 billion dollars, at seasonally adjusted annual rates, an increase more than sufficient to offset the drop in net inventory buying. Although the value of shipments abroad in June 25 was lower than in the 3 preceding months, it seems that the 25 decline was associated with the 3-day work stoppage at many j GOVERNMENT PURCHASES* ' ocean ports. Developments in International Field J 1945 1946 1947 There were two significant economic events in the interna- QUARTERLY TOTALS, SEASONALLY ADJUSTED, AT ANNUAL RATE tional field in July: First, the establishment of convertibility of *GOODS AND SERVICES. 47-400 sterling received by other countries in payment for exports of Digitized for 755297—47FRASER - 1 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis SURVEY OF CURRENT BUSINESS August 1947 goods and services to the United King- Construction Activity Up, Awards Lag other retail outlets was halted during the dom; and, second, the sale of debentures On the construction front, activity second quarter of the year. This devel- by the International Bank for Recon- continues to show the usual seasonal opment came about as a result of the struction and Development. gains, with the largest relative increases shift in buying policy instituted by the The requirement to convert sterling occurring in residential building and larger merchandisers in the latter part paid out on current transactions into public highway construction. The cum- of 1946, as a result of developments dollars or other "hard" currencies begin- ulative dollar value of new construction which influenced other retailers with ning with July 15, 1947, is part of the this year through July was 35 percent some lag. Late this spring, however, loan agreement between the United above the value in the same period of there was evidence that this policy had States and the United Kingdom which 1946. The year-to-year gains in June produced the desired stock-sales ratios was signed on July 15, 1946. The latest and July were 22 and 16 percent, respec- in some segments so that new orders step makes currently earned sterling bal- tively. began to pick up to a point more in line ances generally transferable in world Both the number of new permanent with current sales. The widespread re- trade even when the United Kingdom is private dwelling units started and the newal of summer sales indicates the re- not a partner. Over the last several number completed in June were higher turn of prewar policies of not carrying months, however, the list of countries than in the preceding month. June over seasonal merchandise, but these whose sterling receipts could be con- "starts" totalled 75,000, probably the clearances are being accompanied by the verted had been gradually extended, so highest for any month since the period building up of fall stocks. that only very few additional countries of the twenties, and completions were Federal Reserve Board statistics cover- remained to be added when the deadline 63,000. ing stocks, sales, and outstanding orders of July 15th arrived. It is important to The value of contract awards for con- of 296 large department stores indicate note that the obligation to exchange struction declined from May to June to an increase in new orders in both May dollars for sterling does not apply to pre- about the same volume as in March and and June from the low point reached in vious obligations, particularly to sterling April, even though some rise is normally April. Although some pick-up in order obligations incurred during the war, ex- expected during this season of the year. placing is customarily expected at this cept in so far as specific agreements For the first half of the year, the total time, the increase this year was larger with the creditor countries made them value of contract awards was about 10 percentagewise than that which took convertible. At the present time the loan percent below the value in the same place between April and June a year ago. arrangement with the United States is period a year ago. Awards for nonresi- The rise in new orders, in addition to the meeting the current deficit, but these dential building, due partly to official re- low level of merchandise receipts in June, dollar resources are being depleted at a strictions in effect this year, were almost brought about the first increase in total more rapid rate than contemplated at one-fourth less than last years' volume, outstanding commitments of these stores the time the loan was negotiated, for a but contracts for public utilities and since the first of the year. variety of reasons. These include the heavy engineering construction were inability of the United Kingdom to meet running ahead of a year ago. Industrial Production Edges Downward the projected export schedule at the Industrial production continued to same time that increased prices of goods Little Change in Retail Sales edge downward in June and July, chiefly obtained from the United States and Retail sales have shown the least va- as a result of slackening activity in some other countries raised the expenditures riation since the first of the year of all nondurable goods manufacturing indus- for imports.

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