Glimmer of Dawn?

After months of dark economic news. U.S. businessmen last week hopefully thought that they saw glimmers of the dawn. There was some danger of mistaking a normal seasonal pickup for the end of the recession, but there was enough heartening economic news to give reason for hope.

Significant Difference. For the second straight week, department store sales climbed; across the nation, they rose 26% over a year ago, when 1960's heavy blizzards helped to cut sales. Freight car loadings, an indicator of general economic activity, rose 7% above the preceding week, and the Association of American Railroads saw the beginning of a gradual upturn. A new survey of businessmen's plans for plant and equipment spending showed that in the year's second half they intend to reverse the gradual decline in spending. For the year as a whole, they will cut their expenditures only a moderate 3%. If business picks up, even that small cut could quickly vanish. As it is, manufacturers surveyed by the Commerce Department and the Securities and Exchange Commission predicted that their 1961 sales would rise 3%.

Economists closely watched the January inventory figures, thought they saw more good news in them. Total business inventories in January were trimmed by $400 million, about the same as December; but there was a significant difference.

The major part of January's trimming--$300 million--took place in retail inventories, while the factory inventory reduction of $100 million was smaller than the rate of previous months. While factory inventories have been declining, retail stocks have tended to remain high. This led economists to fear that pile-up of goods at the retail counter because of poor sales might hold off new ordering by retailers. January's figures showed that the factory inventory decline is finally slowing, and that goods are moving off the retailers' shelves.

The Key: Autos. The key to whether an upturn comes in the next month or two is still the auto industry. "If autos don't do it in March and April." says Louis Paradiso. chief statistician of the Commerce Department, "then April won't be the turning point they are all talking about." Despite a hefty sales spurt in late February, production cutbacks and heavy layoffs are still hitting Detroit hard.

This week General Motors will lay off 48,000 workers for one week, Chrysler 14,000, Studebaker-Packard 3,500, Ford 3.300--a total of 68,800. The permanent auto work force has decreased 47,300 under the average for last year, and the drop would be greater if the auto companies did not shut down their plants for one-week periods every three or four weeks.

Automen nonetheless hoped for an upturn. Edward N. Cole, general manager of G.M.'s Chevrolet division, reported a rise in Chevrolet car and truck sales, noted that the improvement in trucks was "particularly significant as an indication of general economic improvement in the months ahead, because it shows underlying confidence by the business community." But Detroit would not really know whether a strong spring surge is coming until it had a few weeks of good weather to bring out potential customers.

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