STATE OF BUSINESS: Signs of Steam

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The new employment tally last week produced a pleasant surprise. Though the flood of graduates swept unemployment to a 17-year high of 5,437,000 last month, the total was far below the 6,000,000 once forecast for June. It dropped to 6.8% of the labor force, from 7.2% in May and 7.5% in April. The number of jobholders actually increased by 920,000 for the month, came close to 65 million. More important, factory employment rose by 156,000. This was a solid sign that the long-depressed manufacturing sector of the economy was steaming up.

There was plenty of other evidence of industrial expansion. One of the best indicators—the average workweek of factory production workers—rose .6 hours in June to 39.2 hours. The Labor Department noted that in the past two months almost a full hour has been added to the factory workweek, more than half of it in overtime. The history of past recessions shows that an upturn in the workweek heralds a steady upturn in employment within a few months. The logic: when manufacturers boost production, they first put workers on longer hours, later hire new workers.

Commerce Secretary Sinclair Weeks predicted last week that unemployment will decline in July. One reason: more jobs will be created because more new businesses are being opened—a sign of general confidence in the economy's immediate future. Dun & Bradstreet reported that the number of new business incorporations rose 5% from April to May to a total 11,943. The number of business failures dropped from 1,341 in May to 1,260 in June. There was one disappointing figure: bigger businesses were failing. Liabilities of the failures rose 9% in June to $61.4 million.

One element in the signs of improvement was the fact that defense contracts are going out faster from Washington. To Boeing winged a $320,600,000 order for B-52G long-range bombers. Smaller but significant awards went to Curtiss-Wright, General Motors, Collins Radio, Hughes Aircraft, General Electric, Douglas, Northrop, Bendix, Texas Instruments and Lear. Missilemen also took a major step forward. General Dynamics' Convair Division dedicated its new $40 million Atlas plant at San Diego, showed off the Atlas assembly line for the first time. Result: stocks of the defense contractors climbed, helped to lead Dow-Jones industrials to the year's peak of 482.85.