Expansion Ahead?

Rising steadily last week were most of the economy's key indicators, among them corporate earnings and steel (see below). One of the few major indicators that failed to show a significant surge was corporate spending for new plant and equipment. But signs cropped up that a turnabout is on the way.

A new survey of corporate appropriations by the National Industrial Conference Board points to "a sustained rise" in outlays. The board's Chief Economist Martin R. Gainsbrugh told the Congressional Joint Economic Committee that the upswing will be "well timed" for the long-term recovery, show its greatest momentum in the second half of 1959.

A signal of the upturn came from the long-ailing machine-tool industry. It reported that new orders in December soared 62% over the year-ago level. One of the biggest manufacturers, Cleveland's Warner & Swasey Co., said its new orders are running 150% above the first-half 1958 clip. The construction contractors who build the industrial plants also noted a brisk rise in requests for cost estimates on new jobs.

There was many another sign of steady recovery. The number of workers drawing unemployment compensation dropped, as did new claims for jobless pay. Department store sales ran 5% above the year-ago level. January auto production, geared closely to sales, moved 11% higher than last year's rate (see chart). American Motors was selling three times as many Ramblers as it did in January 1958. Studebaker-Packard was also outselling last year 3 to 1, due almost entirely to its fast-moving little Lark. The company had already outproduced its 1958 total of 49,770 and made a $3,700,000 operating profit in 1958's fourth quarter, its first profit in five years. Chevrolet output, still rising, inched ahead of Ford production for the first time, 522,000 to 511,000. But Ford, with sales 40% ahead of the year-ago rate, claimed it still led in sales. The only glum news came from Buick, which got off to a fast start and has already produced far more cars in the first four months of the 1959 model year than it did a year ago. Buick cut weekly production from 8,500 to 7,400 cars, laid off 2,000 Buick workers because field stocks are "sufficient for the current market."

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