OCTOBER 1956 U. S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS DEPARTMENT OF COMMERCE FIELD SERVICE No. 10 Albuquerque, N. Mex. Memphis 3, Term. 321 Post Office Bldg. 22 North Front St. OCTOBER 1956 Atlanta 23, Ga. Miami 32, Fla. 50 Seventh St. NE. 300 NE. First Ave. Boston 9, Mass. Minneapolis 2, Minn. U.S. Post Office and 2d Ave. South and Courthouse Bldg. 3d St. Buffalo 3, N. Y. New Orleans 12, La. 117 Ellicott St. 333 St. Charles Ave, Charleston 4, S. C. New York 17, N. Y. Area 2, 110 E. 45th St. PAGE Sergeant Jasper Bldg. THE BUSINESS SITUATION.. 1 Cheyenne, Wyo. Philadelphia 7, Pa. 307 Federal Office Bldg. 1015 Chestnut St. Recent Changes in Manufacturing and Trade. 2 National Income and Corporate Profits 7 Chicago 6, III. Phoenix, Ariz. 226 W. Jackson Blvd. 137 N. Second Ave. Cincinnati 2, Ohio Pittsburgh 22, Pa. * * * 442 U. S. Post Office 107 Sixth St. and Courthouse Portland 4, Oreg. SPECIAL ARTICLES Cleveland 14, Ohio 520 SW. Morrison St. 1100 Chester Ave. Financing Corporate Expansion in 1956 11 Dallas 2, Tex. Reno, Nev. Major Shift by Areas in Foreign Aid in Fiscal 1114 Commerce St. 1479 Wells Ave. 1956 17 Denver 2, Colo. Richmond 19, Va. 142 New Customhouse 1103 East Main St. * * * Detroit 26, Mich. St. Louis 1, Mo. 1114 Market St. MONTHLY BUSINESS STATISTICS S-l to S-40 438 Federal Bldg. Houston 2, Tex. Salt Lake City 1. Utah Statistical Index Inside back cover 430 Lamar Ave. 222 SW. Temple St. Jacksonville 1, Fla. San Francisco 11, Calif. 311 W. Monroe St. 555 Battery St. Kansas City 6, Mo. Savannah, Ga. 911 Walnut St. 125-29 Bull St. Los Angeles 15, Calif. Seattle 4, Wash. Published by the U. S. Department of Commerce, SINCLAIR WEEKS, 1031 S. Broadway 909 First Ave, Secretary. Office of Business Economics, M. JOSEPH MEEHAN, Director. Subscription price, including weekly statistical supplement, is $4.00 a year; foreign mailings $5.75. Single copy, 30 cents. Send remit- tances to any Department of Commerce Field Office or to the Superintendent of Documents, United States Government Printing Office, Washington 25, D. C. Special subscription arrangements, including changes of address, should be For local telephone listing, consult section made directly with the Superintendent of Documents. Make checks payable devoted to U. S. Government to Superintendent of Documents. OCTOBER 1956 By the Office of Business Economics USINESS activity has continued strong into the fall seasonB . High consumer demands are being supported by Personal Income rising incomes, and business capital investment continues 'J~ -, i upward. Increases in investment reflect primarily the demand for producers' durable equipment as evidenced by 81LLIONS OF DOLLARS rising backlogs in durable goods industries. Private con- 350 struction activity, both residential and nonresidential, was stable in the third quarter on a seasonally adjusted basis. A decline occurred in seasonally adjusted retail sales from August to September, mostly due to a reduction in sales of 326 - motor vehicle dealers, but the total for the third quarter was above that of the second quarter. Price advances in whole- sale markets were reported for many items in September. Employment has changed mostly in accordance with seasonal influences in the past few months. In September, 300 - total employment was down seasonally from August, and was 1.3 million higher than a year earlier with the advance in the past year principally in nonmanufacturing industries. Manufacturing employment has been relatively steady dur- ing 1956. Unemployment was also seasonally lower in 275 September, declining to 2 million. Factory gross hourly earnings advanced further in Septem- 250 ber to reach $2.00 per hour, with both an increase in overtime work and higher pay scales contributing to the rise. The advance recorded in the factory workweek from August to September was particularly pronounced in durable goods WAGE AND SALARY industries. 225 DISBURSEMENTS Rise in income Following the slight setback in July occasioned by the steel strike, personal income in August rose to $328 billion 2OO at a seasonally adjusted annual rate. This was $20 billion higher than in the same month last year. Since the end of 1955, the bulk of the income rise has been, in the large wage and salary component, as shown in the accompanying chart. In percentage terms, however, other types of income in the aggregate have been increasing at about the same rate as payrolls. J25 Private industry payrolls in August, on a seasonally cor- rected basis, were over 4 percent higher than last December. Payrolls advanced during most of the months of this year OTHER INCOME with the rise being predominantly in nonmanufacturing in- I DO dustries. Payrolls in the latter industries have increased by almost 6 percent so far this year, maintaining roughly the same rate of advance as during 1955. Manufacturing pay- rolls, which increased sharply throughout last year, have risen by 2 percent since December, with most of the rise 75 j^..j i....!.. t l.i, t I i I....) ill I i II...'.'...1 ' I ' I 1 'I 1 ...I.... t I.J I. representing higher disbursements to salaried personnel. 1954 195$ 195$ Among the various nonmanufacturing industries, payrolls SEASONALLY ADsJUSTED, AT ANNUAL RATES have risen in construction, trade, mining, finance, communi- cations, public utilities, and services primarily because of -U- S< Deportment of Commerce, Office of Business Economics 56 ~39* rising average earnings, but employment gains have also been important, especially in construction and finance. 399865°- SURVEY OF CURRENT BUSINESS October 1956 In transportation, the rise that has occurred in payrolls quently. Other industries with lower payrolls in August nas been attributable entirely to gains in hourly earnings, than at the end of last year were textiles and leather. since employment has been stable this year except for the Manufacturing industries showing the sharpest payroll reduced levels in July and August which were affected by increase in 1956 were nonelectrical machinery, electrical the steel strike. machinery, and instruments. Payrolls have also risen significantly in paper, printing, and chemicals. In those manufacturing industries characterized by Manufacturers' payrolls approximate stability in wage payments this year, such as apparel, food, lumber, and furniture, manhours have declined In the manufacturing sector, production worker payrolls but wage rates have risen enough to offset the reduction. have been relatively stable since last December. Declines Government payrolls were 3K percent higher in August in employment and hours worked were approximately offset than at the end of last year, with the principal factor being by a rise in hourly wage rates. On an industry basis, pay- the continuing upward trend in State and local employment. rolls were stable in about half of the major industry groups, with the other major groups showing divergent movements. Other types of income By far the sharpest decline over the 8-month period has been in transportation equipment. Auto payrolls were one- Among the other personal income components, dividends, third lower in August than the high point reached last De- interest, and nonfarm proprietors' income have risen some- cember. In transportation equipment industries other than what more percentagewise this year than payrolls. autos, payrolls were stable through June and showed a rise Farm proprietors' net income advanced fractionally during in July and August. 1956, following the declines of the preceding few years. Payroll movements in fabricated metals and rubber were Transfer payments were generally up during this year, in general downward into the summer months, reflecting with most of the increase representing the continuing rise in the close relationship of these industries to the auto indus- old-age benefits. Unemployment benefits, after a January try. In primary metals, the steel strike in July cut rise that reflected the institution of higher average payments wage payments sharply but they have recovered subse- in a number of states, were stable through August. Recent Changes in Manufacturing and Trade MANUFACTURING and trade activity continued upward this and inventory movements have generally been similar and summer. Sales of retail stores, on a seasonally adjusted stock-sales ratios have varied within a very narrow range— basis, reached successive new highs in July and August. about the equivalent of 1% months' sales over this period. September sales were off from the August rate—primarily Within this total, the manufacturers' stock-sales ratio has reflecting lower motor vehicle sales. Factory sales recovered risen over the past year—from 1.6 to 1.8 months—while the from the effects of the setback in steel. The flow of new ratio in trade has remained unchanged. In both manu- orders to manufacturers, after declining from May to July, facturing and trade, current stock-sales ratios are lower than rose substantially in August. Incoming business continued in the 1952-54 period; the current ratio for retailers is about to exceed the value of shipments, and the backlog of unfilled as low as in any month since the outbreak of Korean hostili- orders rose to a point $10 billion higher than in mid-1955. ties. The rise in aggregate business inventories in July and August was at a slower rate than in other recent months. The book-value increase of $200 million in each month, after POSITION OF MANUFACTURING seasonal adjustment, compared with an average monthly INDUSTRIES increment of $600 million in the first 6 months of 1956. A substantial part of the increase in the dollar value of Manufacturers' sales in August totaled $27% billion, only inventories this year is attributable to higher replacement a little higher than in August 1955; sales in the 1956 month costs. were still affected by the work stoppages in primary metals.