Evening star., 1939-05-21
Business Week Index
Expected 10 Start
Steady Climb
Magazine Believes Low
Point Was Reached
In Current Period
Special Dispatch to The Star.

Special Dispatch 10 The Star.
NEW YORK, May Robustness
Weeks index Of business ac-
tivity covers the actual op-
erations Of last week and is, there
fore, the last to reflect the imme-
diate effects Of the bituminous coal
strike. 1t is down over a point
to 9O.5, the lowest figure since mid
September of last year, and it has
now registered a decline since the
beginning of 1889 Of no less than
48 per cent of the total gain made
in the revival of the last half of
1898. The 1899 recession may be
said to have assumed really signifi-
cant proportions.
The course Of this index over
the next few weeks will be the re-
sultant Of continued downward
pressure by several Of its COM
ponents. balanced against the inev-
liable strong recovery in carloadings
due to the conclusion Of the coal
strike. This recovery is sure to be
great enough to do more than offset
the downward pressure elsewhere
At least moderate rise in the gen.
eral index may, therefore, be awaited
with some confidence.
Regarded rs Low Point.
If. after coal shortages have
been filled up. the index breaks
again to or below the 80 level. it
will have to be taken as a sign
that the situation is more serious
than can be believed or justified
today. 1t will mean that the sum-
mer recovery which, before the coal
strike and the March-May Euro
pean crisis. had been counted on to
regain the year-end peak in busi-
ness or even make a new peak, but
which now cannot be looked for
to regain much more than two
thirds of the 1899 loss. will have
to be abandoned altogether. The
position taken here is that such
pessimistic outlook is not justified
by the facts known today, and that
this weeks index, at 905. will prob
ably mark the low point of the
recession
The principal factors on which
the prospects of a summer revival
can be based are the flow of pri-
vate and public spending and the
healthy position of manufacturing
and distributing business. The first
months of the current year have
been banner period for mail order
houses, while department store sales
the most inclusive single index
in the field-have held through
April at approximately their No
vember-December level. 1t is pos
sible that May will see the begin.
ming OF decline-certainly the re-
suits for the first week were un-
satisfactory-but this remains q
conjecture only.
Heavy Spending Due.
Public spending is likely to be
carried on this summer at a rate
which is as satisfactory from the
point of view of immediate trade
in the year 1889 as it is grave from
the point of view Of healthy finan-
cial position for the future.
Public works and private residen-
tial building stimulated by the Fed
eral Governments liberal credit
terms still promise q reasonable i'm
provement in all supplying and al
lied industries this summer. As for
the latest figures, heavy contracts
awarded have been going down for
the last two weeks, but contemplated
construction has risen.
The generally healthy position of
business today is recognized by near
ly all observers. Inventories-with
few exceptions, of course-are
we'll Debated, as are commodity
prices despite their steady rise from
the middle of April to the middle
of May. Whether this rise is a
forecaster of business revival, as
has often proved the case in the
past, and especially one year ago, or
whether this weeks reaction will
put an end to this particular hope,
remains to be seen. On the whole,
business has been buying so care
fully that any definite improve
ment In psychology could easily re-
suit In . rapid upturn In buying
and activity.