More Arms in the FRB Index

The Federal Reserve Board last week revised the best-known U.S. business barometer, its own monthly Index of Industrial Production. Its ingredients were reshuffled in order to give more weight to armament production. Result: a slightly higher level of indicated production, averaging three points a month since the beginning of 1941.

Greatest innovation was the inclusion of production data (in terms of man-hours) in U.S.-owned arsenals, quartermaster depots, shipyards. Government production has never before been included in a business index. Because of the amazing increase in electric steel output (1929: 1,066,000 tons; estimate 1941: 3,000,000) and its importance to defense, it too was added to the Index for the first time. Because labor productivity in aircraft plants has increased, the weight of this ingredient (expressed in man-hours) was increased.

And since there are no seasonal ups & downs when an industry works at wartime capacity, seasonal variations have been discontinued in the figures on 26 industries (machinery, locomotives, rayon, etc.).

In the last month for which FRB has issued a figure--July--it happened that new & old Indexes are identical: 161% of the 1935-39 base.

This file is automatically generated by a robot program, so reader's discretion is required.