Evening star., 1939-05-28
Business Week Index
Scores Rise From
Year, S Low
Auto Gains and Cool
Resumption Boosts
Average Sharply ,,
Special Dispatch to The Star.


NEW YORK, May 27.-A discus
sion of the business situation as it
stands at the present time should
begin with mention of the first re-
covery in the Business Week index
Of general activity. The current
index. covering actual operations
for last week, Is up to 92S, a gain
OF % points from the 1899 low
point registered for the previous
period.
Part Of this rise. which is the
largest made In single week since
six months before, was due to the
automobile component, but most
Of 1t was the result of the resumption
Of coal mining on Monday, May IS.
If the recovery forces now at work
are able to catch hold as expected,
last weeks 90.6 figure should remain
the bottom for the 1899 recession.
Speculative markets this week
offered some confirmation of this
Stocks on good
volume advanced to the best levels
since the lows of April 8, while the
spot commodity price index again
moved higher, as grains, cotton,
rubber and other staples were
More Coal Gains Due.
A number Of coal mines-quite
apart from the. continued dispute
in Harlan County-were slow in re-
opening because OF delays in reach
ing detailed agreements with the
union, and therefore the current
weeks mininm operations ought to
show another substantial gain over
last weeks. The rate OF steel &C.
tivity is also up In the current
period, and by no less than 3
points, the best gain since last
November. Both OF these factors
will help boost the general index
for the week. and next Saturdays
Business Week index should, there
fore, show a still more comfortable
margin above the 9O.6 low point
than does the current figure. The
real test will come thereafter. when
the immediate influence of the re-
opening of the coal mines wears
OF.
The rise In steel operations is
thought by observers to reflect the
large volume Of orders placed earlier
this month when price-cutting was
Some recovery was due
in any case, however, since actual
consumption Of steel by the indus
tries which use 1t has been running
at or near IS per cent of capacity,
in contrast to the recent IS per cent
rate of activity.
To the extent that new cut-price
orders were placed-and the exact
amount OF such orders is a matter
Of some doubt as yet-the principal
producers are, as usual, the prin-
cipal beneficiaries. If automobile
buyers get their share. it will prob
ably be in the form of better, or at
least changed, 1910 models rather
than in that of price cuts, although
some talk of price cuts on the new
models Is being heard.
Auto Output Jumps.
Last weeks automobile production
rose sharply, apparently in response
to what were considered by the in
dustry to be satisfactory retail sales
in the first 10 days of May. This
weeks output is expected to be very
little lower. but with next weeks
holiday period the tapering OF to
the midsummer closing for model
change should be fully under way.
There is more reason to worry rs
regards the effects on the general
business index in the action of
the cotton textile mills, whose cur
tailment-which had been deferred
far beyond the expectations Of the
trade-is now under way. 1t is ex-
pected to spread to many more
mills during the next few weeks,
and will thus furnish factor coun-
teracting any summer revival in
business which might be originated
elsewhere.
Such revival could come from
either the field of consumers goods
or that of heavy industry. In the
former, the continued level of retail
sales in most lines Is furnishing a
good deal of hope. Department
stores, whose sales were reported two
weeks ago to have dropped to 3 per
cent below the year before, showed
last week gain of no less than %
per cent over the previous year.
This Jump was largely due to the
shift in Mothers Day between 1898
MAY 81 and 1899 MAY IA. The
general level Of sales, over a longer
period than two weeks, Is entirely
satisfactory, and one can expect
the influence of sustained consumer
buying to be felt ultimately in the
productive lines.
In the heavy goods lines, in addi-
tion to the rising steel activity. the
influence of building can still be
counted on. The first half of May
showed a substantial rise in con-
tracts awarded for residential pur-
poses, Offset by a decline in the
non-residential variety, but 1t Is
fully recognized that single two
weeks period gives results too
erratic to rely on with confidence.
Over longer term the progress Of
contracts awarded is up to ex-
pectations.
s e Announres