Worse, But

The recession is getting worse, judged by some of the short-term statistics that came out last week. But there were also signs that it was close to the bottom.

Industrial production in January fell 1% from December, for the sixth drop in as many months. Personal income in January dipped for the third successive month, to slightly less than 1% below October's peak. Sales and new orders of manufacturers of durable goods dropped in January 2% below December's volume. Department store sales last week were 3% below the year-ago level. So far this year, they lag 4% behind the 1960 pace.

But looking ahead, the National Association of Purchasing Agents, whose members were among the first to predict the downturn last spring, found cause for cheer. The association now ventured a bullish prediction: "A business recovery should begin within a few months, and the current recession should prove to be relatively short and mild." What gave the association heart was the reports from some of its members that they had got their inventories in line with sales. Some have started buying again; 24% of the agents reported that they had placed new orders last month, the best such figure since last August.

A survey of 160 top manufacturing firms by the National Industrial Conference Board showed that eight out of ten expected employment in their companies to remain at its present level or to increase during the rest of 1961. There were also signs that in autos and steel, two of the hardest-hit industries, the worst of the layoffs were over.

The steel industry edged up production to 1,524,000 tons (52% of capacity), highest since last October. After widespread shutdowns to try and trim down inventories, General Motors, Ford and Chrysler recalled thousands of workers for a net employment gain of 49,500. The automen scheduled increased production, hovering around the lowest for the month since 1952, even though sales for the first ten days of February were only 118,686 cars, a whopping 29.5% below the year-ago level. Some dealers blamed the bad weather for the sales slump. Ward's reports took a peek at preliminary figures for the February 11-20 period and noted "signs of a sales pickup." The stock market was the most hopeful of all. It rose steadily all week, gained twelve points in the Dow-Jones index to close at 651.67, only a fraction below its 1961 high.

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