parts of the country. The lumber price index, which had reached an all-time high of 303.2 (1926=100) at the end of 1947, advanced steadily to 319.5 by the end of August 1948, a 5.4 percent rise. Supply was limited by strikes and floods in the West and Northwest which hampered production of Douglas fir, redwood, and western pine in the first half of the year. Transportation difficulties caused by shortages of boxcars also interfered. A gradual decrease of 2 to 10 percent for the lower grades of southern pine and hardwoods brought a small drop in the combined price index by the end of the year. Prices of paint and paint materials as a group moved narrowly during the year. Average wholesale prices in December 1948 were 6 percent below the postwar peak reached in March 1947.

Textile Products. Cotton fabric prices declined steadily during the year as accumulated domestic demands were met, export orders declined, and raw cotton prices dropped sharply. Even Government purchases for military purposes did not strengthen prices of cotton goods materially, and strong consumer resistance was experienced. At the end of 1948, many manufacturers of cotton apparel opened their 1949 spring lines at sharp reductions from their 1948 quotations-retailers had frequently anticipated these reductions and lowered their selling prices before the year's end.

Raw wool and most woolen and worsted goods showed great price strength in 1948 as world production was low and demand high. By the end of the year, however, consumer resistance at the retail level was very strong, and both manufacturers and retailers were attempting to hold or to reduce prices for woolen apparel. The artificial fibers generally moved somewhat higher over the year.

the year because of the prevailing uncertainty regarding imports of hides from Argentina, and the fear of retailers that shoe sales would drop below those in recent years. The highest factory prices for shoes were recorded in February 1948, averaging 34 percent above the final OPA ceiling price level. The first significant break in factory prices of shoes since 1939 began in March. Rising costs caused some moderate price advances in the third quarter, but a few shoe companies made small price concessions to distributors in the fourth quarter in spite of relatively high material and labor costs.

Chemicals and Allied Products. Average primary market prices of chemicals and allied products advanced to a postwar high in April 1948 and then turned downward as oil and fat prices declined. The net change in this group over the year was a decrease of 3 percent.

Prices of drugs and pharmaceutical materials made a very small but gradual decline throughout the year; quotations in December were 2 percent below the January average.

Chemical prices fluctuated within a narrow range, but in October the combined index rose to its highest level since 1920, at 127.5 percent of the 1926 average. Substantial increases were reported for coal-tar chemicals, which, with the exception of creosote oil, remained in short supply throughout the year. The coal strike in the spring, coupled with the diversified demand for coal-tar products and the practice in some sections of burning coal tar instead of high-priced fuel oil, created a shortage which still exists. The market for heavy chemicals was consistently strong, but some weakness occurred in fine chemicals when competition developed in the alcohols, following substantial imports of Cuban alcohol. The metal-based chemicals were affected by the general upward swing in prices for the primary metals; lead arsenate increased nearly 40 percent during the year.

Quotations for fertilizer materials were fairly stable in 1948 but reached their highest levels since 1921. Average prices in 1948 were 10 percent above 1947. The price momentum, however, was substantially lower in 1948; in the 12 months ending with December the gain was 5 percent compared with 20 percent in the year ending December 1947. The supply of fertilizer materials

was inadequate for the heavy domestic and foreign demand; nitrogenous materials were particularly short. Except for seasonal discounts in potash and some weakness in cottonseed meal and fish scrap, prices of most fertilizer materials moved consistently higher.

In the fats and oils subgroup, quotations were highest in January. In February, prices dropped 15 percent following the sharp market break in agricultural commodities during that month. The oil market fluctuated through June; in July and August prices dropped substantially and reached their lowest level in August-24 percent below the January average. In the fall, quotations again moved violently, ending the year 1 percent below August and 25 percent below January. Wide fluctuations were characteristic in copra, coconut and soybean oils, and tallow.

Fuels.-The index for the fuel and lighting materials group at wholesale continued upward in 1948 to levels exceeded only during the violent fluctuations of 1920. The rate of increase, however, substantially slowed. The group index went up 10 percent from December 1947 to December 1948 compared with 29 percent the year before.

For petroleum and products the index increased 9 percent in 1948 to the highest level since World War I. Most of the increases occurred in the prices of refined products from December 1947 to January 1948, following the general increase in crude prices late in 1947. During the second half of 1948, large stocks of petroleum products and lower exports than had been expected resulted in a number of price decreases, especially for heavy fuel oil and certain waxes and lubricating oils. An increase of 35 cents per barrel in the posted price of crude, announced by an independent company on September 28, did not spread throughout the industry and was canceled by the year's end.

Anthracite prices reached new all-time high levels for the third consecutive year, and the bituminous-coal yearly average also represented a new peak. Much of the advance occurred from June to August as a result of wage and freight rate increases. During the latter part of 1948, large stocks of bituminous coal depressed prices. Trade sources indicated price reductions for lower grades and widespread closing of small mines not adequately equipped for cleaning and preparing

their output. A substantial decline in exports contributed toward weakening of the coal market.

With strong industrial and domestic demand, the index of coke prices increased 19 percent in 1948 to an all-time high annual average.

Rubber. Following a first-quarter decline of 5 percent as factory buying remained slow and major tire producers adjusted their inventories, the index of crude rubber rose 17.3 percent to the year's high in July. Rubber consumption remained high throughout 1948 even though the backlog of demand caused by the war was satisfied in most lines by the end of 1947.

Average prices of automobile tires and tubes to dealers remained at the December 1947 level (63 percent of the 1926 average) through the first 6 months of 1948. The price of tires sold to automobile manufacturers had been raised by about 5 percent by major producers in January. Early in the third quarter, prices to dealers moved up nearly 5 percent to offset rising costs of labor, materials, and transportation, and remained at this level throughout the year.

V. Labor Force, Employment, and Unemployment

TOTAL LABOR FORCE AND EMPLOYMENT both gained in 1948 over the preceding year and unemployment was near the minimum to be expected in a peacetime economy. These conditions made the year successful from the point of view of general job stability. However, evidences appeared of slackening labor demand in particular industries and areas during the closing months of 1948.

Labor Force Trends

Compared with a "normal" increase of about 700,000 workers, the total labor force actually rose by more than 1.1 million in 1948 to an average of 62.7 million workers-higher than ever before in peacetime and only about 3 million below the wartime record of 1944. The additional inflow of workers consisted largely of adult women, who were mainly beyond the ages when responsibility for care of young children is a major factor. Avail

ability of job opportunities and pressure of rising living costs were probably the chief reasons that many older women were attracted into the labor force during the past year.

An additional factor in the labor-force growth was the reentry into gainful employment of thousands of veterans as they completed courses in schools and colleges. After a rapid increase in the first two postwar years, school enrollments of ex-servicemen under the GI bill of rights turned downward in 1948. Ex-servicemen attending school and outside of the labor force dropped by over 100,000 between the fall of 1947 and the fall of 1948, to less than 900,000 according to Census Bureau estimates.

However, agricultural employment continued to edge downward. The 1948 average of 8 million agricultural workers contrasted with about 8%1⁄2 million in 1945 and the prewar level of 9% million in 1940. Available jobs in urban industry and increasing mechanization of agriculture have combined to stimulate a continued movement of population into urban centers. Moreover, it has been possible in recent years for a growing number of farm residents to obtain nonfarm employment. Expansion of employment opportunities in trade, services, construction, and other decentralized industries adjacent to farm areas have contributed to such opportunities.

After declining to a postwar low of about 1.4 million men early in the year, the armed forces expanded moderately as a result of a series of measures enacted in the spring. The Selective Service Act of 1948, and related appropriations measures, had authorized attainment of a net strength of about 1,950,000 men during the fiscal year 1948-49-or 500,000 more than the actual strength at the beginning of the fiscal year. Between June and December 1948, voluntary enlistments and the draft (which began in October 1948) had already brought a net addition of about 200,000 men to the armed forces. Owing to the exemption of students generally from the draft, at least until the end of the academic year, the new recruits were drawn almost entirely from the civilian labor force. These withdrawals had not, at the year's end, noticeably affected the civilian labor market, because the men taken into the armed forces were very largely the younger, less experienced workers.

Changes in Unemployment. Despite the expansion in the working population, unemployment of about 2 million persons in 1948 was slightly lower on an annual average basis than in the two preceding years. Based upon the civilian labor force, the average rate of unemployment of 3.4 percent in 1948 compared with 3.6 percent in 1947 and 3.9 percent in 1946. Although the 1948 rate of unemployment was still considerably higher than in the extremely tight wartime labor market, it compared favorably with previous peacetime rates. For example, an average of 8 million workers-or about one-seventh of the labor force-were unemployed in 1940.

The low rate of unemployment in 1948 was made possible by the generally strong labor demand and also by the labor-market situation which was more stable than at any time since the war ended. Frequent interruptions in the flow of materials arising out of reconversion difficulties, industrywide stoppages, and other problems of readjustment to a peacetime economy, which were characteristic of the earlier postwar period, had greatly subsided by 1948.

In addition, discharged veterans had ceased to be a large factor in increasing the labor supply. The inflow of recently discharged veterans into the civilian labor force had become a mere trickle in 1948, in contrast with the large numbers released in 1945-46, and-to a lesser extent-in 1947. The lag between seeking work and finding work, experienced by many of these veterans, had been an important factor in the unemployment situation during the period of demobilization. Thus, the average unemployment rate of all male workers in 1946 was 4.4 percent, as compared with a female unemployment rate of only 2.8 percent. By 1948, the differential had reversed and the unemployment rate for men, at 3.3 percent, was slightly lower than for women, at 3.6 percent.

Marring the otherwise favorable employment situation, evidence of scattered weaknesses in the demand for labor occurred in the closing months of 1948. Unemployment-benefit claims in a number of areas rose measurably above the 1947 level, notably in New England and in the southern textile States. These changes which reflected some slackening of employment in the textile, shoe, and certain other consumer-goods industries, were not quite balanced by continued favorable employment trends in the industrial Midwest and other major industrial areas.

Nonagricultural Employment

After reconversion was completed early in 1946 and as purchasing power and accumulated backlogs of demand reached unprecedented levels, production and employment in nonagricultural industries began a general rise that continued through 1948. Nonfarm employment (excluding domestics and the self-employed) reached an alltime high of about 46.1 million in December 1948, some 5.7 million over the level immediately preceding VJ-day. However, the rate of increase

Employment in nearly all of the major industry divisions kept pace with the over-all rise. Manufacturing, mining, trade, service, and government accounted for about the same proportions of total employment in 1948 as in the previous year. (See accompanying table.) Boom levels of building activity, however, increased the share of construction employment from 4.4 percent in 1947 to 4.6 percent in 1948; an offsetting decline took place in transportation. The manufacturing industries continued to provide about 36 percent of all nonfarm jobs; trade and service offered about as many. Government (local, State, and Federal) employed 1 out of every 8 workers; mining, construction, and transportation and public utilities

Manufacturing Industries. Employment in manufacturing industries rose from the immediate postwar low to a peacetime peak of 16.7 million in the last half of 1948. Both the number employed on durables and nondurables rose about equally during the year; durable industries continued to account for just over half of all manufacturing jobs.

Average working hours, high during wartime, dropped sharply immediately after VJ-day. In mid-1946 they became stabilized at about 40 a week. In the durable-goods division, the average workweek has continued consistently somewhat above 40 hours, reflecting a substantial amount of overtime work. Some recent shortening of the workweek has appeared in the nondurables, primarily in the textile-apparel-leather group. As a result, the average has declined to about 39 hours for the soft-goods division as a whole.

In many industries, production at the end of the war was geared to a market in which there were accumulated shortages as well as continuing demand. Recently, the establishment of more normal supply-demand relationships has required production level adjustments in some industries, especially those producing nondurable goods already mentioned, and this in turn has affected employment levels. An interesting consequence of this readjustment has been the reappearance of prewar seasonal patterns in employment and production in some industries.

Seasonal employment changes were apparent in 1947 for textiles, apparel, shoes, radios, furniture, and rubber tires; employment and weekly hours declined during the spring and early summer months and sharp pick-up activity occurred in

the fall and winter. By the end of 1947, it wa evident that the radio manufacturing and rubber tire industries had readjusted to somewhat lowe levels of demand by reducing their employment The textile, shoe, and furniture industries, how ever, reached new peaks of employment in Feb ruary and March 1948. Seasonal decreases fol lowed which affected the shoe industry with particular severity. The expected fall uptur failed to materialize in these industries. Employ ment declines in cotton goods, woolen and worste textiles, and shoe manufacturing continued from the third into the fourth quarter of the year Accompanying reductions in the length of the workweek were even more marked. By the fourth quarter, the workweek in the textile and appare groups had dropped by 2 hours and in the leather group by 3 hours below those of the same period in 1947.

During the late fall and winter of 1948, there were increasingly frequent reports of lay-offs, parttime work, plant shut-downs, and price reductions in these industries. Although readjustments were taking place generally in these activities, the New England region was especially hard hit because of concentrated employment in textiles and shoes. Reduced textile exports, because of dollar shortages abroad, and development of consumer resist ance to high prices, aggravated the situation. In these industries, selling had shifted from an allocative to a competitive basis.

Postwar expansion and record output attained by consumer industries have filled, or are rapidly filling, the backlogs of consumer demand. Increased availability of houses, automobiles, and other durable goods, reduced the proportion of consumer income going into textiles, clothing, and other soft goods. As long as income levels remain high, however, additional readjustments may not be large, and production and employment in these industries may be stabilized at relatively high levels, though somewhat below recent peaks.

In contrast, the basic heavy industries, which were the underlying force in the high level of operation, continued strong throughout the year. Construction, steel, and automobile production, and the manufacture of many types of machinery utilized labor in unprecedented peacetime volume during 1948. Nevertheless, readjustments may be expected to continue to spread to other consumer- and to some producer-goods industries.