Evening star., 1939-07-10
Business Marks Time
As Holiday Starts
Summer LuII
Automobile Operations
To Be Major Factor
In Coming Weeks
Srecial Dispatch to The Star.

NEW YORK. July 10-Business
marked time this week as the Fourth
of July inaugurated the period of
summer slack, and the second half
of 1889 finds business in a pretty
tentative state-just about holding
its own. The pace of recovery has
slackened, as predicted.
The Business Week index dropped
off fifth of point, but still hovers
about the 100 line. From this level,
further advance will be more diff
cult, though probabilities favor an
early upswing, rather than a decline.
Big factor over the next few
weeks will be automobile operations.
Manufacturers have now started
stepping down production, prepara-
tory to tooling up on 1910 models.
The result will be an immediate
slackening in orders and some tenn
porary unemployment.
But this should be more than
made up in the early resumption of
full-Work schedules on the new lines.
This uncustomary timing may pro-
duce a deceptive statistical result, a
fact which the businessman might
well bear in mind. Automobile pro-
duction indexes may dip too sharply
In the next few weeks, and then
start rising too rapidly-because
OF the counterseasonal production
schedule occasioned by the early
automobile show.
Proves Convenient.
From a business standpoint, this
early automobile switchover is de-
cidedly convenient. Not only does it
push ahead the flow of business
which always fans out from an auto
mobile industry in full gear, but also
it will help to take up the more
than = seasonal summer slack in
building.
Residential construction, which
has been bellwether Of the 1889
rise in business, has started to slip
OF. There is a little congestion in
real estate markets in some spots,
Speculative builders, with unsold or
unrented homes on their hands,
have been holding back on new con-
struction.
Field reports, however, indicate
that this type of speculation has
been moderate anyhow and no seri-
Gus setback (such as occurred in
1897, when residential construction
Just dried up) is likely. A potential
residential building prop, moreover,
is the United States Housing Au-
thorlty's slum-clearance program.
which is trying hard to come up to
volume expectations.
Industrial Rate Lays.
Although residential activity has
more than met buyers demand, in
dustrlal construction has still a long
way to CO. European uncertainties
and unwillingness to embark on firm
financial commitments for a year
ahead because of domestic politics
nave been damming up much poten-
tlal new plant and equipment busi-
ness. This stalemate in industrial
construction can hardly continue
indefinitely. If business gives sipns
OF turning down this fall, there
will be an inclination to postpone
capital expenditures until I'VE see
what the election looks like and
what happens in Europe"
But If, as seems more likely, busi-
ness holds its own through the sum-
mer and into the fall and retail buy
Ing picks up (Which also seeing like.
ly)' increased inventories will be
necessary all along the line-back-
ing up from merchandising outlets
to wholesalers to manufacturers.
In that event, the need for new
machines and new plants might cas-
lily break through the current re-
sistance to longer-term commit
ments. New orders-when they hit
the books-have a way of making
political qualms seem vague and un-
important.