SEPTEMBER 1959 U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS U.S. DEPARTMENT OF COMMERCE FIELD SERVICE Albuquerque, N. Mex. Memphis 3, Tenn. No. 9 321 Post Office Bldg. 22 North Front St. CHapel 7-0311 JAckgon 6-3426 Atlanta 3, Ga. SEPTEMBER 1959 Miami 32, Fla. 66LuckieSt.NW. 300 NE. First Are. JAckson 2-4121 FRanklin 9-5431 Boston 9, Mass. U. S. Post Office and Minneapolis 1, Minn. Courthouse Bldg. 2d Are. South and Liberty 2-5600 3d St. FEderal 2-3244 Buffalo 3, N.Y. 117 Ellicott St. New Orleans 12, La. MAdiaon4216 333 St. Charles Are. EXpress 2411 Charleston 4, S.C. PAGE Area 2, THE BUSINESS SITUATION Sergeant Jasper Bldg. New York 1, N.Y. RAymond 2-7771 350 Fifth Ave. LOngacre 3-3377 Introduction 1 Cheyenne, Wyo. 207 Majestic Bldg. Tel. 8-8931 Philadelphia 7, Pa. Continuing Recovery in 1015 Chestnut St. WAlnut 3-2400 Plant and Equipment Expenditures....•«..•...•••••• 3 Chicago 6, 111. 226 W. Jackson Bird. Output of Consumer Goods , 6 ANdover 3-3600 Phoenix, Ariz. 137 N. Second Ave. Balance of Payments in the Second Quarter. 8 Cincinnati 2, Ohio ALpine 8-5851 36 E. 4th St. DUnbar 1-2200 * * * Pittsburgh 22, Pa. 107 Sixth St. SPECIAL ARTICLE Cleveland l,Ohio GRant 1-5370 E. 6th St. & Superior Ave. Size of Business Firms 14 CHerry 1-7900 Portland 4, Oreg. 520 jW. Morrison St. Characteristics of Size Distributions • • 15 Dallas 1, Tex. CApitol 6-3361 500 South Ervay St. Employment Share of Larger Firms 18 Riverside 8-5611 Reno, Nev. 1479 Wells Ave. Denver 2, Colo. Tel. 2-7133 Business Turnover 20 19th & Stout St. KEy stone 4-4151 * * * Richmond 19, Va. Detroit 26, Mich. llth and Main St. REVISED STATISTICAL SERIES 20 438 Federal Bldg. Milton 4-9471 WOodward 3-9330 MONTHLY BUSINESS STATISTICS S-l to S-40 St. Louis 1, Mo. Greensboro, N.C. 1114 Market St. Statistical Index Inside back cover 407 U.S. Post Office MAin 1-8100 Bldg. BRoadway 3-8234 Salt Lake City 1, Utah Houston 2, Tex. 222 SW. Temple St. 405 Main St. EMpire 4-2552 CApitol 2-7201 San Francisco 11, Calif. Published monthly by the U.S. Department of Commerce, FREDERICK H. Jacksonville 1, Fla. 555 Battery St. MUELLER, Secretary. Office of Business Economics, M. JOSEPH MEEHAN, 311 W. Monroe St. YUkon 6-3111 Director. Subscription price* including meekly statistical supplement, is ELgin 4-7111 $4.00 a year; foreign mailings $7.50. Single copy, 30 cents. Send remit' Kansas City 6, Mo. Savannah, Ga. 911 Walnut St. 125-29 Bull St. tances to any Department of Commerce Field Office or to the Superintendent of BAltimore 1-7000 ADams 2-4755 Documents, United States Government Printing Office, Washington 25, D.C. Los Angeles 15, Calif. Seattle 4, Wash. Special subscription arrangements, including changes of address, should be 1031 S. Broadway 909 First Ave. made directly with the Superintendent of Documents. Make checks payable Richmond 9-4711 MUtual 2-3300 to Superintendent of Documents. SEPTEMBER 1959 3k. by the Office of Business Economics X HE EISE in the Nation's total production has been in- terrupted by the steel strike which has cut output in this Bu:siness Investment industry and others directly affected. Demand and con- sumption have remained high with inventories being drawn Billion Dollars down in some industries to sustain deliveries. 50 In August, seasonally adjusted iionfarm employment was PLANT AND EQUIPMENT EXPENDITURES off by over a half million from the July rate. In construc- tion, trade, utilities, finance, and government, employment 40 was up or little changed from July. Other comprehensive measures of business activity were at or near the high rates attained in the second quarter. Nonmanufacturing Personal income at a seasonally adjusted annual rate of $381i/£ billion in August was off $2% billion from the high 20 reached in June and July. The dip from the preceding month reflected mostly a drop in payrolls in the industries 10 affected by the steel tieup. Manufacturing ^ Sales of the major durable goods stores were maintained at the second quarter rate in the summer months, after t i i 1 i i I I I I I 1957 1958 1959 * allowing for the usual seasonal factors. Buying also held Quarterly Totals, Seasonally Adjusted, at Annual Rates at the high second quarter rate in all major nondurable * 3rd and 4th quarters anticipated trade. General merchandise stores were actually up sig- Biliion Dollars Millions nificantly for the 2 months on a seasonal adjusted basis. HOUSING, PRIVATE NONFARM Rising investment 25 Residential Activity .^^^^W. Capital investment is continuing to expand. The latest (left scale) ' ^T ^ quarterly survey of business fixed investment plans indicate 20 that businessmen intend to step up outlays for plant and equipment during the remaining months of this year. Out- lays in the third quarter are scheduled to reach $34.3 billion, 15 ~ Starts — 2 (right scale) "^v. seasonally adjusted annual rate, as compared with a low of $30 billion for 1958 and a high of $37 billion in 1957. The 1 results of this survey are analyzed in a following section. Most major types of construction in 1959 have been run- ning well ahead of a year earlier. During the first 8 months L - - 1 1 1 1 1 1 I 1 1 1 1 1 I 1 1 1 1 1 1 0 of 1959 the total value of work put in place was 15 percent higher than in the corresponding period of 1958. Only a 20 small part of the rise was attributable to higher construction CHANGE IN MANUFACTURING costs. AND TRADE INVENTORIES During the summer months activity has shown somewhat 10 less than the usual seasonal advances. Residential construc- tion has eased somewhat from the advanced rate reached this spring, but has been substantially higher than a year 0 earlier. Private seasonally adjusted nonfarm housing starts \^/ , have edged downward from the spring peak. The continued 10 high rate of mortgage financing has been accompanied by a 1957 1958 1959 considerable increase in interest rates, although other financ- Quarterly Totals Monthly ing terms have remained more liberal than in most of the Seasonally Adjusted, at Annual Rates past several years. Data: SEC, BDSA, BLS.a QBE Private construction, other than residential, has continued U.S. C epartment of Commerce, Office of Business Economics 59-9-1 to advance during the summer months on a seasonally ad- SURVEY OF CURRENT BUSINESS September 1959 justed basis, with gains in industrial and office buildings and and mining production, and freight transportation. In gen- warehouses and limited changes in other types of activity. eral, the pattern and the magnitude of changes in the various Public construction has declined slightly in recent months. segments so far in the current strike period are similar to Community service facilities have shown a continued ad- those which prevailed in both 1952 and 1956. vance, but the principal public building activities have been The effects are mirrored more directly in industrial em- curtailed. Highway construction has remained above a year ployment and output than in other measures of the economy. earlier. There has been little change in the past several In the basic steel industry the reductions in factory employ- months as contract awards have been slowed by delays in ment, wages, and production were large. The direct effects on financing. The Federal tax on motor fuel was raised 1 cent other industries, however, have been relatively moderate so per gallon to augment the receipts of the Highway Trust far and confined primarily to coal and iron ore production fund from which Federal financing for highways is provided. and freight transportation. Most other manufacturing in- dustries have been little if at all affected and have continued Inventory building slows to operate at or close to peak rates. In the important metal fabricating industry, activity ex- In contrast to sizable accumulations of inventories in the panded from June to July but some reduction, seasonally second quarter of this year, the July rate of increase was mod- adjusted, occurred in August. In 1956, output in this in- erate. The average monthly rise in book value of manufac- dustry during the strike month continued to move upward turing and trade stocks in the April-June period of $900 and in 1952 there was a sharp decline in the second month of million compares with $500 million rise in July, seasonally the strike. adjusted. As of mid-August, the total number of workers on strike Manufacturing accounted for the slowing down in the total or laid off as a result of the strike is estimated at about rise as continuing high inventory demand was partly offset 625,000. Of these, one-half million were workers in the basic by^ liquidation of steel stocks. With operations being main- steel industry. Additional employees, estimated at 125,000, tained at a high rate, stocks of purchased materials rose $100 were dropped from payrolls in metal fabricating, coal, iron million in July as compared to $500 million in June. ore, and the freight transport industries. Much of the re- duction in employment in the transportation equipment Changes in Selected Business Activity Measures group from July to August was due to model changeover lay- (Seasonally adjusted) offs in the auto industry. 1959 Percent Unit of measure change Lower steel output July- June July August » August Steel mill operations at present are at 12 percent of rated capacity. This is equivalent to a weekly output of 336,000 Employment, nonfarm Thousand 52 407 52 585 52 047 -1 0 M anuf acturing do 16, 527 16, 586 16, 051 -3.2 tons of crude steel and compares with a mill rate of 90 percent Primary metals ..