Wednesday, April 18, 2007

Industrial Production

It's a day late, but here's the newest data on the amount produced by US industry, as reported by CNN/Money:
WASHINGTON (Reuters) -- U.S. industrial production unexpectedly fell 0.2 percent in March as utility output retreated sharply from robust February gains fueled by cold weather, a Federal Reserve report showed Tuesday.

The Federal Reserve said utility output fell 7 percent in March after a 7.6 percent gain in February, more than offsetting a strong 0.7 percent March gain in manufacturing output. Analysts had expected a modest industrial production gain of 0.1 percent after February output expanded a downwardly adjusted 0.8 percent.

The capacity use rate of factories, mines and utilities eased to 81.4 percent, from a downwardly revised 81.6 percent in February, a figure previously estimated at 82 percent. Analysts polled by Reuters had predicted the overall capacity use rate would edge lower to 81.9 percent in March.
This was a mixed report, with some good news and some not-so-good news. Unfortunately, it does nothing to soothe my worries about the warning signs that these measures of economic activity have generally been flashing over the past six months or so. The following picture shows recent trends in overall industrial production, and in capacity utilization in manufacturing.

After a short-lived burst of production during the second half of 2006, industrial activity in the US has become quite sluggish. It's worth noting that even when industrial activity has done well in recent years (generally growing at a 3-4% per year), it has paled in comparison to what we had grown accustomed to during the 1990s, when growth rates of production were generally in the range of 4%-8% per year.

Here's to hoping for a summer upturn in these indexes...

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