FEBRUARY 1964. survey of CURRENT BUSINESS U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS FEBRUARY 1964 VOL. 44, NO. 2 U.S. Department of Commerce Luther H. Hodges Secretary Office of Business Economics George Jaszi Director * * * Contents Louis J. Paradiso Associate Director Murray F. Foss Editor PAGE K. Celeste Stokes Billy Jo Bur THE BUSINESS SITUATION Statistics Editor Graphics STAFF CONTWBUTORS Summary ..... ...........•.•...........•................... 1 TO THIS ISSUE Steel Production, Inventories, and Consumption ........•... 3 Business Situation: Francis L. Hirt Strong Automobile Market Continues ..•...........•.••.... 5 Lawrence Bridge Alan Odendahl ARTICLE Article: Government Programs for Fiscall964 and 1965 ...........•• 7 Charles W. Walton NATIONAL INCOME AND PRODUCT TABLES ........••...••• 13 * * * CURRENT BUSINESS STATISTICS Subscription prices, including weekly st General ••••••.••••• ,............ 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By the Office of Business Economics Situation EcoNOMIC activity continued to Federal purchases increased on a current Employment up, weekly hours down move ahead in the opening weeks of dollar basis, the rise in Federal outlays Employment in nonfarm establish­ the new year. The various broad was small. ments declined somewhat less than measures of business conditions in seasonally in January. The rise of January~prrsonal income, rmploy­ about 100,000 on a seasonally adjusted RETAIL BUYING IN EARLY 1964 ment, industrial production and retail basis was approximately equal to the Close to High End-of-1963 ~ate sales~wen' either about as high as or average monthly rise that took place higher than they were at the end of Billion, $ -(ratio •col<~) , 24 over the past year. Except for mining, 1963. Even though the economy is SALES OF RETAIL STORES which dipped slightly, and construc­ about to enter its fourth year of tion which was off sharply (70,000), all sustained recovery and most business of the major industry divisions in­ measures are at peak rates, growth has 20 creased a little more than seasonally. not bet'n fast enough to reduce tht> Unusually bad weather around the persistent high rate of uncmploynwnt. middle of the month adversely affected 1,8 It is against this baekground that thr• the survey results, particularly em­ Federal income tax cut, the first major ployment in outdoor activities. change in t(•n years, has been enacted. 16 Gains in seasonally adjusted manu­ Fourth quarter GNP I facturing employment were small but Nondurables fairly widespread. Employment in pri­ Fourth quart(•r GNP figures appear i mary metals industries was up for the in the tablPs on pages 13-16 of this second month in a row and transporta­ issue. Total output for the quarter, tion equipment rose again, almost back at a seasonally adjusted annual rak to the high levels of last October. On of $600 billion, was up $11% billion, the the other hand, average weekly hours largPst quarterly rise of the yt>ar of work in manufacturing fell by more whether measured in current or con­ than the usual amount; declines were stant dollars. The increase in personal consumption expenditures was par­ fairly general, steel and transportation ticularly strong, mainly because of equipment being important exceptions. automobile purchases. Fixed invest­ The unemployment rate was little ment continued to move higher, with changed over the month at 5.6 percent advances in the major types of private of the labor force, about the same as it construction and in producers' durable has been for about the past 2 years. equipment. Two elrments that had dampened the rise in production in Personal income the third quarter of 1963~Iwt exports Total personal income rose in January and the change in business inventories~ by $2.7 billion at a seasonally adjusted both made good-sized contributions rate to $4 78.7 billion. Several special to higher output in the closing quarter. developments during the month affected While both State and local outlays and the change from December. The pay- 1 2 SCHYEY OF CURRENT HUSIXESS Table I.-Inventory-Sales Hati•>s in appli,mce sales are also improved. some backing: up of nondurable good; l\Ianufaeturing and Trade X onclurnhle gnods snles are showing inn•ntoriPs m the fe,,- month,.; pnor t< i\T am; [,;c-IC\Ianu[,Jc-1 !{(•tail \l\It>rcllant more strength than they did m t.he Decem her-a deYelopment that wm tunng tunng uadt• I wholr­ and tmdel I ~aler" fe,,- months hc•fore Decen~ber. probably related to the fact that non­ l durable goods sales at retail m thE bu.:en tories not high December Sept ember-November period werE 1956 ______________ I 1. 55 1. 74 1. 4.) 1. 20 The new yenr IS starting with m­ somewh1tt sluggish. The sharp picku:r: 1957 ______________ 1. 66 1. 90 1. 47 1. 28 ,·entories m a comparatively good in retail sales in December in soft good~ 1958__ __ ---------- 1. 53 1. 74 1. 37 1.18 condition relative to the current volume stores seems to have worked off part oJ 1959 ____ ---------- 1. 53 1. 70 1. 43 1. 19 of output or sales. Stock-sales ratios the earlier accumulation. !960 ______________ 1.60 1. 79 1. 49 1. 27 for manufacturing and trade at the 1961__ ____________ 1. 51 1. 69 1. 39 1.17 end of 1963 were a bit lower than they Rise in capital outlays 1962 ____ ---------- 1.54 1. 75 1.3~ 1.19 had been at the end of recent years. Output of capital goods appears to bE 1963 P ____________ 1. 49 1.68 1. 36 1.16 (See table 1.) In view of the fact that movmg higher. The Federal ReservE the upturn is now 3 years old, and pre­ v Preliminary. Board index of production of busines~ Source: U.S. Department of Commerce, Bureau of the vious upturns of this duration h1we been equipment rose agam m January, ex­ Census. marked by increases in inventories rela­ tending the rise that started last spring. tive to sales, the current level of these The last OBE-SEC survey of invest­ ment of an accelerated life insurance ratios must be judged favorable. ment intentions, published m Decem­ dividend to holders of GI insurance­ The nse in im·entory accumulation ber, indicated that businessmen were the fourth in the past 3 years-added in the fourth quarter contributed to the scheduling a modest increase in outlay~ $2.1 billion to the total on an annual increase in GNP for the first time since in the first half of 1964. basis. The second step of a federal the opemng quarter of 1963. On a The prospective nse m business government pay increase added $0.4 book ntlue basis manufacturing and capital expenditure is being reflected in billion to Government payrolls, which trade im·entories rose more m the the nsmg trend m new orders for ma­ fourth quarter than in any other quar­ in aggregate rose by $0.6 billion.