STATE OF BUSINESS: New Vigor

The U.S. economy was producing at an alltime high last week. Industrial production, which rebounded in December from the steel strike with the second biggest leap since World War II, was up to 165 on the Federal Reserve Board index. This month it should easily break through the record rate of 166, set last May and June. Reflecting the new vigor, railroad carloadings for the week of Jan. 9 were up 7.4% over last year, 22.5% over the preceding week; truckloadings were 8.6% above last year, 35% higher than the week before.

Counting heavily on sharing in the boom, the auto industry last week raised its output to the fastest pace since the record year of 1955. It expected to turn out 176,655 units for the week, 21% of them compact cars. New-car sales for the first ten days in January were up 9% over last year.

The speed of the overall business pickup could be gauged from the year-end figures released by the Government last week. Employment, which usually declines in December, rose slightly to a record 65,699,000 for the month. Unemployment, which usually rises seasonally, dropped by 100,000 to 3,577,000, the lowest level in five months and near the pre-steel-strike level of 4.9% of the working force. As consumers continued to step up spending, December retail sales hit $21.7 billion, bringing sales for all of 1959 to a record high of $215.6 billion, about 8% above 1958. Private housing starts picked up to a seasonally adjusted annual rate of 1,310,000 v. 1,210,000 for the month before. The jump raised starts for 1959 to 1,341,500, highest since the record 1950 volume of 1,352,200. Helping along both trends—and adding to the likelihood that the consumer will continue to buy heavily—was a rise in hourly factory earnings to $2.26, which hiked weekly factory earnings to $91.53.