CAB129-45 — Page 306

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THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT

Page 307 opted for the Cabinen April 1951 bow. Page 307 of 587

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The circulation of this paper has been strictly limited. It is issued

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243

TOP SECRET

C.P. (51) 113

18th April, 1951

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Copy, No.

31

CABINET

ECONOMIC REPORT

NOTE BY THE CHANCELLOR OF THE EXCHEQUER

I circulate herewith a note on the more important statistics relating to the economic situation which have become available since the last Economic Report (C.P. (51) 54).

Treasury Chambers, S.W. 1,

18th April, 1951.

BEST ECONOMIC REPORT

H. G.

I.-Man-Power

:

During the first two months of this year the working population increased by 36,000, and there was a fall of 40,000 in the numbers unemployed, making an addition of 76,000 to the occupied population. The strength of the Armed Forces increased by 41,000 and the number in civil employment by 35,000.

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2. There were 29,000 more in metals; engineering and vehicles industries (which have expanded by 117,000 since June last year) and 12,000 more in coal- mining. Employment in distribution declined seasonally by 17,000.

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3. The number of persons registered as unemployed in Great Britain declined from 333,600 at 15th January to 274,900 at 12th March. This fall was greater than the usual seasonal decline over this part of the year.

Registered Unemployment in Great Britain

Mid-January Mid-February

Mid-March...

1949

·375-7

360·3

340:4

(Thousands)

1950

1951:

372-35

333 6.

372-8

302:0

347.3

274:9

4. The employment and unemployment figures are being watched closely for signs of shortages of workers to carry out defence orders and for possible unem ployment and short-time working through loss of production due to shortages of raw materials. The high demand for labour led not only to a fall in unemployment, but also to some difficulties in meeting demands for skilled workers in engineering and in other industries. Here and there shortages of raw materials have occasioned some, but as yet very little, unemployment and short-time workingo quein bond

5. Unemployment in Development Areas has fallen. At 15th January there were 122,400 persons registered as unemployed in these Areas, and at 12th March the number was 105,000 At 13th March, 1950, the figure was 138,900. Over the past year the rate of improvement has been rather greater in the South Wales and the Merseyside Areas than in the other two large Areas North-Eastern and Scottish.

:

II.Production

6. The index of industrial production (1946=100) was 141 in January 1951 compared with 141 in December 1950 and 135 in January 1950 On the basis of the information so far received, the index for February 1991 is expected to be 146-147 against 140 In February 1950. The tate of increase for the first two months7

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Pofothe year fogompared with the corresponding period last year was about 5 per cent., but it is too early to set this against the forecast of a 4 per cent. increase for the year 1951 given in the Economic Survey.

7. There were two factors which curtailed output in January and February this year. The severe weather in the first weeks of 1951 reduced building work and, secondly, there has been more sickness among workers. The figures of the Ministry of National Insurance show that the total number of insured persons absent from work owing to sickness was 1·4 million on 16th January, 1951—nearly 50 per cent. higher than a year ago.

Coal

8.

In the first 15 weeks of this year the output of deep-mined coal was 62.7 million tons against 59.9 million tons in the first 15 weeks of 1950. Both periods include the Easter holidays.

9. Deliveries of opencast coal in the first 15 weeks of 1951 were 2.76 million tons against 3.40 million tons a year ago. Output this year has been particularly affected by bad weather conditions.

10. Arrivals of imported coal to 7th April this year total 812,400 tons.

11. The number of wage-earners on the colliery books recovered from 688,000 to 702,000 in the first quarter of the year and is now back again to the total that it was a year ago. Absenteeism, particularly voluntary absenteeism, has been some- what higher than last year, but output per manshift is still increasing and was higher than in the first quarter of 1950.

12. In order to meet the increased demand for coal at home, exports and bunkers have been reduced and were 3.0 million tons less than in the first three months of last year; inland consumption of coal was 1-5 million tons higher. Increased output and the restrictions on exports have reduced the drain on stocks, but at the beginning of April distributed stocks were still about 800,000 tons less than at the same time last year.

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Steel

13. The rate of output of steel ingots and castings so far this year has been about the same as, or slightly lower than, in the first quarter of 1950; total output for the first three months was lower because the Easter holidays occurred in March this year. Stocks of pig iron and scrap have been falling steadily and, as sufficient supplies of steel-making materials may be difficult to obtain, output for the year 1951 is expected to be below the 16:3 million tons produced in 1950.

14. The output of pig iron in the first quarter of 1951 was 184,400 tons a week-about the same rate as that in the first quarter of 1950.

Textiles

15. Output of cotton, spun rayon and mixture yarns in January was slightly lower than in January 1950 largely owing to a fall in the number of operatives at work. There was, however, a considerable improvement in February and output in the three weeks before Easter was at a rate nearly 6 per cent. above the corres- ponding period last year.

16. Output of rayon yarn and staple fibre was 28.5 million lb. in February against 31.9 million lb. in January and 28 5 million lb. a year ago. The fall in February was partly due to fewer working days, but the future level of output is very dependent on securing supplies of sulphur.

17. Raw wool consumption in January 1951 at 43 million lb. was 3 million lb. less than in January 1950—a continuation of the decline which began in the autumn. This reduction was offset by greater use of shoddy and other substitute materials, so that output of woven wool fabrics was at about the same rate as in the previous year.dl

Motor Vehicles

:

18. Production of passenger cars and chassis averaged 10,198 a week in January and February, of which 7,543 were for export; the weekly average pro- duction in the corresponding period last year was 10,044, of which 8,060 were for export. The decline in the numbers for export may be partly due to lack of shipping space. In the two months, an average of only 7,200 vehicles a week was actually shipped for export.

*19) Production of commercial vehicles in January, and February averaged Page 308eek against 4,997 a week in the same period lase get of Broduction for export so far this year has averaged 3,691 a week against 3,156 a week a year ago.

Deliveries of commercial vehicles for the Armed Forces are increasing on the first two months of 1951, 646 were supplied, compared with 1,663 in the whole year 1950. Merchant Shipbuilding me ndt med deinfici

20. The amount of merchant shipbuilding work done in the first three months of 1951 was about the same as in the corresponding months of last year, although completions were less. The tonnage of merchant ships completed in the first three months of s year was 286,000 gross tons compared with 344,000 'gross tons in the same period a year ago.

21. The tonnage of merchant shipping under construction at the end of March was 1,880,000 tons. The tonnage of vessels undergoing repair and conversion was 2,119,000 tons at the end of December and rose to 2,417,000 tons at the end of March.

Building

22. The number of permanent houses completed in Great Britain during January was 13,150, compared with 15,950 in December and 14,356 in January 1950. Unusually bad weather conditions and the influenza epidemic accounted for the fall in output. There was a slight improvement in February when 13,984 permanent houses were completed against 14,069 a year ago.

23. Increased output of building bricks, together with the reduced level of building activity, caused stocks of building bricks to increase from 166 million at the end of 1950 to 207 million at the end of February; in February 1950 stocks were 186 million.

III.-Stocks

24. The index of the volume of stocks of food and feeding-stuffs, raw materials, tobacco and petroleum products (December 1949= 100) has fallen from 98 in January 1950 to 86 in December 1950 and 83 in January 1951. This index does not cover Government-held stocks under the stockpiling programme.

Stocks.-Index of Volume

December 1949=100

244

1950 January

April

July

October

December...

1951 January

Àll

stocks

Food

Raw materials

Petroleum products

(a)

í

98

97

98

99

93

93

91

103

92

93

91

107

88

82

89

101

86

79

85

103

83

74

83

101

(a) Including tobacco.

25. Although the relatively high level of imports of certain raw materials during January resulted in an increase in the stocks of textile materials, woodpulp and fertilisers, there was a continued decline in the stocks of steel-making materials, non-ferrous metals (allowing for the transfer of a certain quantity of tin to the strategic stockpile), rubber and timber..

26. The effect of the shortages of raw materials on the level of industrial pro- duction so far has been most marked in the case of sulphuric acid production and newsprint consumption.

27. Production of sulphuric acid remained at a very high level throughout 1950, averaging 150,000 tons a months. In January 1951 production fell to 136,000 tons and in February to 119,000 tons. Stocks of sulphur (for acid) at the end of January were 64 9 thousand tons against 71:6 thousand tons a year earlier.

28. Despite the reduction in the consumption of newsprint imposed from July last year, stocks of newsprint are tending to fall and, apart from a short period in 1948, stocks at the end of January this year at 96,000 tons were the lowest since the end of the war.

IV.-Internal Financial Situation

29. The most striking feature of the current situation is the continued rapid rise in import prices. With the prospect of a continuing high level of United State's demand in general, and for commodities in particular, this trend must be a cause of grave aggie99 ORecent wage advances give rise to some feargof an increase, though less serious, in internal costs. The trend of employment and unemployment shows a high demand for labour, concentrated particularly in certain areas and

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30. Unemployment and Unfilled Vacancies. Unemployment in Great Britain fell to 275,000 on 12th March, 72,000 less than in March 1950 and to only 13 per cent. of total employees. It fell in all regions and in the Midlands it is now at the very low level of 0.4 per cent. of total employees.

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31. The level of unfilled vacancies is now higher than it was a year ago 423,000 on 14th March compared with 373,000 in March 1950-in spite of the fact that employers are no longer compelled to notify their vacancies to the Employ- ment Exchanges.

32. Orders on Hand.-New orders are still being placed on the engineering industry at a rate considerably in excess of current output. Aircraft contracts placed in February were well above the 1950 average. Heavy pressure on steel-makers' order books continued; measures to deal with the general steel supply situation have recently been before the Production Committee and are now being worked out in detail. Non-ferrous metal supplies continue to cause anxiety.

33. Import prices. The rise in import prices continued during the first two months of the year and the index was 125 (1950=100) in February. This is an increase of 10 per cent. since December. Raw material prices have risen 20 per cent. since December.

34. Wholesale prices. Wholesale prices have also continued to rise. The Board of Trade Index (1938 = 100) was 309 in March, an increase of about 7 per cent. since December. The continued rise in prices of industrial materials and manu- factures was offset to some extent by a slight fall in certain food prices.

35. Retail prices. The Interim Index of Retail Prices (June 1947-100) rose from 116 in December to 118 in February. Prices of food, clothing, fuel and house- hold goods all rose during the two months. A further rise in the index must be expected as a result of the decisions to raise food prices and there will be a further rise in prices of clothing and household goods.

36. Export prices.-Export prices advanced from 106 to 109 (1950 = 100) between December and February, a rise of 3 per cent.

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37. Wage rates and earnings. The index of wage rates (June 1947 = 100) rose by one point in each of the months January, February and March and now stands at 117. In the last six months the index has risen seven points; the previous increase of seven points was spread over the twenty-one months December 1947 to September 1950.

38. During January and February increases in weekly wages amounting to over £1 million to 4 million people became effective.

39. The results of the Ministry of Labour earnings enquiry for October 1950 are now available, and they show that earnings during 1950 were rising somewhat faster than wage rates. This was due to a number of factors including a rise in the number of hours worked per week.

Earnings and hours worked in manufacturing(.')

Men (aged 21 and over)

Women (aged 18 and over) :.

Weekly earnings

Weekly earnings

Per cent. increase

Hourly earnings

Hours

over worked

Per cent. increase

over

Hourly earnings

Hours worked

1938

1938

s. d.

pence s. d:

1938-October.

-69 0

'47:7

17.4. 32 6:

43.5

pence 9:0

1948 October 137 11

100

46.7

35.4

74 6

129

41.6

21.5.

1949 April... 139 11

103

46.6

36.0

77 2

137

41.8

22.2

October 142 8

107

46.8

36.6

78 9

142

41.7

22.7

1950 April... 145 9

114

47.0.

37.2

80 6

148

41.9

23.1

October 1505

118

47·6

37.9

82 7

154

42.0

23.6