Show of Strength

U.S. industrial production, which had slipped slightly for three months, has turned up again, the Federal Reserve Board reported last week. Its index moved up one point in May, and now stands at no (on a 1957 base-of 100). The new figures were a firm show of strength by the U.S. economy, since the rise took place despite heavy cutbacks in steel production that dropped the index figures for iron and steel 25% below January. Steel's drop was more than offset by gains in almost every other category in the index, including durable goods, which have been lagging a long time. Last week steel also was coming back, if only slightly--to 62.3% of capacity.

Personal income increased in May by $1.6 billion to an annual rate of $399.4 billion. Largely because of steel's troubles, wages and salaries in the primary-metals industries dropped by about $500 million in May, but gains in other fields supplied plenty of consumer purchasing power. Department store sales in the last week reported were 2% above -last year, and autos continued their sales upsurge (see above). For all manufacturing, wages and salaries rose $400 million in May to a rate of $89 billion.

The most disappointing characteristic of the economy was the lack of a strong spring housing upturn. But such weak spots have failed to check the slow general expansion of the economy. Commented Dr. Marcus Nadler, consulting economist of the Hanover Bank of Manhattan:

"The forces indicating a further expansion are more numerous than those pointing to a contraction."

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