Industrial Production Down 13%, Worst Since the End of WWII
Once again show me how the US media is going to get us from our current level of industrial production to recovery within the next 6 months. Text in bold is my emphasis. From Market Watch:
As businesses struggle to work down their inventories of unsold goods, the output of the nation's factories, mines and utilities fell 1.5% in March, retreating in spite of higher production of motor vehicles and a boost from utilities, the Federal Reserve reported Wednesday.
Industrial production is down 13.3% since the recession began in December 2007, the largest percentage decline since the end of World War II, when production of military equipment ground to a halt and production fell 35%.
In the past year, industrial production has fallen 12.8%. Output fell at a 20% annualized rate during the first quarter, and it's now at the same level as December 1998, the Fed's latest data showed.
Factory production dropped 1.7% in March. Factory output has fallen 15.7% during the recession, also the largest decline since 1945-1946.
Underscoring the trend in manufacturing, factory output has dropped 15% in the past 12 months and has fallen for five consecutive quarters.
"The huge declines in industrial production in the past two quarters reflect very aggressive cuts in inventories by businesses," wrote Nariman Behravesh, chief economist for IHS Global Insight. "We expect industrial production to contract 10.2% this year -- the biggest drop in the postwar period -- before bottoming in early 2010."
The pace of decline could be easing, though, judging from another economic indicator released Wednesay.
The Federal Reserve Bank of New York said its Empire State index improved markedly in April, to a reading of negative 14.7 from negative 38.2 in March. The reading under zero shows most manufacturers say business is still getting worse, but at a slower pace.
In the March industrial production report, the Fed said capacity utilization fell by a full percentage point, to 69.3%, the lowest since the data series began in 1967. In manufacturing, capacity utilization fell to 65.8%, which means a third of the nation's manufacturing capacity is idle, cutting into profits and reducing companies' pricing power.
"These results are additional signs of growing slack throughout the economy that are very deflationary," wrote Lori Helwing and David Rosenberg, economists for Bank of America's Merrill Lynch.
In a separate report, the Labor Department said consumer prices fell 0.1% in March after seasonal adjustments. Prices have dropped 0.4% in the past year, the first time since 1955 that prices have decreased on a year-over-year basis. The core CPI rose 0.2% in March.
Details of industrial production
Overall, industrial output for last month was much lower than expected by economists surveyed by MarketWatch, who had been looking for a smaller 0.8% decline.
In March, mining output fell 3.2%. Utility output increased 1.8%.
In the factory sector, output of business equipment fell 2.8% and is down 14% in the past year.
Output of consumer goods fell 0.3% in March and is down 8% in the past year.
Output of motor vehicles increased 1.5% in March after a 9.4% jump in February. Vehicle assemblies rose to a seasonally adjusted annual rate of 4.84 million, up from 4.65 million in February and 3.72 million in January.
By contrast, 8.45 million cars and light trucks were produced in 2008.
Vehicle output is down 34.5% in the past year.
Excluding vehicles, industrial production fell 1.9% in March. Factory output fell 2.8% excluding vehicles.
Production of high-technology equipment fell 3.1% for the second month in a row, putting the cumulative drop at 22.6% in the past year. Excluding high-tech, industrial production for March fell 1.4%.