Construction

During the first half of 1941 a parallel growth of inventories and shipments is revealed by the figure. Expanding output called for larger stocks in this period as in previous years. By the middle of the year, however, the emphasis in over-all inventory policy had shifted from the maintenance of previously established stock-shipment patterns to protective buying on a large scale. Though further advance in production had now become dependent upon the relatively slow expansion and conversion of facilities, inventories piled up at an accelerated rate. Moreover, the scope of the movement gradually broadened until it embraced almost the entire producing economy. Durable goods industries continued to pace the rise with record accumulations of more than 700 million dollars in the final quarter and only slightly less in the third quarter of the year. Particularly large increases were recorded for those industries engaged in producing for the war effort. Thus, the index for transportation equipment closed the year at 662 compared with 428 in June and 278 at the beginning of the year. Similarly, the index for electrical machinery reached 238 at the year end—up nearly 100 points from the previous year. The Department's index of the value of inventories held by all durable goods industries rose from 130 to 176 during the year. The second half year also witnessed a tremendous advance in the value of stocks held by producers of nondurables. Large increases in foods, textiles, chemicals, and other nondurables were recorded as it became apparent that shortages were spreading to areas previously affected but little and that the upward pressure on prices was becoming more intense. Altogether, the value of inventories held by producers of nondurables rose more than 800 million dollars during the final quarter of 1941. For the year as a whole the index for nondurables advanced from 111 to 144 [average month, 1939 = 100]. Widespread protective buying coupled with slower advances in manufacturing production have thus strengthened the over-all inventory position of manufacturers. Wide variation exists among different industries, however. For example, the iron and steel and their products group increased shipments during 1941 with little change in inventories. Other industries, unable to expand shipments, continued to increase stocks. Large advances in the shipments of war industries kept their rapidly growing inventories closely in line with previously established patterns. But in the aggregate, the level of stocks with reference to shipments is now considerably higher than in the pattern exhibited prior to June. Retail and wholesale inventories were discussed in some detail in the January issue of the Survey. Since then, the year-end census of independent retail stores conducted by the Department of Commerce has shown that total stocks reported by more than 8,000 stores in 34 States were 21 percent higher on December 31, 1941, than they were one year ago. Increases ranged from 8 percent in drug stores to 30 percent in the furniture, household, and radio group. Dealers in commodities for which demand has been particularly heavy such as hardware stores, and lumber and building materials made much less than average additions to stocks.