The Economic Situation, Second Quarter, 1926

June 30, 1926

Report Outline
Special Focus

Activity in industry and trade declined somewhat in the early months of the second quarter from the high levels that were maintained in the first quarter of the year and in the autumn of 1925, but the volume of business in general continued larger than in the corresponding period of last year. Manufacturing production averaged about 3 per cent larger in April and May than in the corresponding months of last year. Output of automobiles, iron and steel, and construction of new buildings continued larger than in the spring of 1925 and volume of merchandise passing through the channels of wholesale and retail trade, although somewhat retarded by unseasonable weather in the early spring, was larger than a year ago.

More Favorable Outlook

Observations in the first quarter of the year of the rapid decline in the stock market, continuation of the decline of wholesale commodity prices, and a volume of imports considerably larger than exports gave rise to a feeling of uncertainty as to the outlook for business during the remaining months of the year. Trends of these movements, however, were generally reversed in the second quarter, and with the volume of business sustained at levels above those of last year, the outlook for business in general was more favorable than in the first quarter of the year. Activity in several industries, however, continued less than a year ago.

Wholesale prices of commodities, after declining almost continually in the autumn of 1925 and in the first three months of this year, reached a low point in April; in May they advanced for the first time since last August. In February and March the prices of stocks in the New York market declined rapidly from the high levels reached in January and the early weeks of February; late in March and in the first weeks of April low points were reached. In May prices of stocks increased slightly, continued to advance in June and in the third week of June reached the highest level since early in March. Value of merchandise imports-which increased rapidly in the first quarter and greatly exceeded that of exports, resulting in an unfavorable trade balance-declined in April to a level only slightly higher than exports. In May, however, exports exceeded imports for the first time this year.

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