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Mar-17-2008US Economy: Factory Production Contracts More Than Forecast(topic overview)
CONTENTS:
SOURCES
The Federal Reserve reported on Monday that the industrial output at the nation's factories, mines and utilities sharply declined by 0.5 percent. "It's hard to avoid the conclusion that the U.S. economy is in a recession and now you have the problems in financial markets that the Fed also has to address," Brian Bethune, a financial economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm, told Bloomberg. "At this point, getting interest rates down as quickly as possible is an antidote for both problems," he said. [1] The Federal Reserve said Monday that output at the nation's factories, mines and utilities dropped by 0.5 percent in February, the biggest decline since a 0.6 percent fall last October. It was a far weaker reading than the slight increase of 0.1 percent that many analysts had been expecting. It served to underscore the severity of the current economic slowdown. The Federal Reserve moved aggressively over the weekend to keep a crisis in financial markets from spreading and Fed officials are expected to follow with another sizable cut in interest rates for consumers at their regular meeting on Tuesday. Many economists believe the moves have not come in time to keep the country out of a recession although analysts said they should limit the severity of the downturn.[2]
Production at factories, mines and utilities fell 0.5 percent last month, the first decrease in four months, the Federal Reserve said today. A report from the New York Fed showed its manufacturing index dropped to a record low in March.[3]
WASHINGTON (Thomson Financial) - Output U.S. factories, mines and utilities declined in February at the sharpest pace since October as capacity utilization fell to its lowest level in more than two years, the Federal Reserve said today. Output in February fell 0.5 pct, steeper than the 0.1 pct fall expected, while factories were using 80.9 pct of their capacity, down from 81.5 pct in January.[4] FXstreet.com (Barcelona) - Industrial production has decreased in the United States in February in a larger than expected extent, weighed by a decline in the output of utilities, capacity utilization has dropped aswell, according to data released by the Federal Reserve. In February, industrial production has declined 0.5%, instead of the 0.1% decline advanced by the analysts, this decline has been, partly, due to the 3.7% drop in the output of utilities.[5] Much of the decrease in February resulted from a weather-related drop of 3.7% in the output of utilities, according the Federal Reserve. Total industrial production was 1% above its year-earlier level.[6]
WASHINGTON (Reuters) - Industrial production dropped at the sharpest rate in four months during February and the nation's mines, factories and utilities ran at their slowest rate in more than two years, the Federal Reserve said on Monday.[7]
According to the Federal Reserve, U.S. industrial production fell 0.5 percent in February after having increased 0.1 percent in January.[8] The report showed that industrial production fell 0.5 percent in February following an unrevised 0.1 percent increase in January.[9]
The 0.5 percent drop in industrial production followed tiny increases of 0.1 percent in January and 0.2 percent in December and a more sizable gain of 0.4 percent in November which had followed the big 0.6 percent plunge in October.[2]
For February, the weakness came from a 0.2 percent drop in manufacturing output, the biggest component of industrial production, and a sharp 3.7 percent fall in output at utilities, which was attributed to warmer-than-normal weather in February.[2] The Fed said a weather-related drop of 3.7 percent in the output of utilities was mostly responsible for the drop in industrial production.[8] The Fed said much of the unexpectedly steep fall in overall February production stemmed from a weather-related drop in utilities output, which plunged 3.7 percent after rising 2.2 percent in January.[7]
The bigger than expected drop in production was largely due to a 3.7 percent drop in the output of utilities, which fell sharply after rising 2.2 percent in the previous month.[9]
Total industrial output fell 0.5 percent in February -- much steeper than Wall Street economists' forecasts for a 0.1 percent decline -- after rising a slim 0.1 percent in January. It was the biggest drop in monthly output since a 0.6 percent tumble last October.[7] Economists had forecast a 0.1 percent decline in industrial production after an originally reported 0.1 percent increase the prior month, according to the median estimate of 59 economists in a Bloomberg News survey.[3]
Economists had forecasted a slight decline in industrial production and capacity utilization figures for February, calling for a 0.1% decline in production and a drop in capacity utilization to 81.3% from January's 81.5%. Among production of durable consumer goods, the production index for automotive products moved down 1.3% to a level roughly even with its year-ago level, the report noted.[10] Economists expected industrial production to fall 0.1% in February, with a capacity utilization rate of 81.3% for the month.[11]
The decrease exceeded the estimates of economists, who had expected the capacity utilization rate to edge down to 81.3 percent. With the decrease, the capacity utilization rate fell to its lowest level since November 2005.[9] The country's capacity utilization rate for all industries in February fell 0.6 percent to 80.9 percent, the lowest rate since November 2005.[8]
The capacity utilization rate for total industry in February fell 0.6 percentage point, to 80.9%, the lowest rate since November 2005.[6]
Capacity utilization, which measures the proportion of plants in use, fell to 80.9 percent, the lowest since November 2005, from 81.5 percent a month earlier.[12]
The amount of capacity in use fell to 80.9 percent, the lowest since November 2005, from 81.5 percent in January, the Fed's production report showed.[3] Manufacturing, which accounts for about four-fifths of the industrial production report, fell 0.2 percent last month after no change in January.[12] In the manufacturing sector, output decreased 0.2 percent in February, and declines were fairly widespread across industries. Total industrial production was 1.0 percent above its level of a year ago.[8]
"A 0.5% decline in industrial production and 0.2% decline in manufacturing production show that the industrial sector remains in recession," said Daniel Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "The February decline was widely spread among industries.[6]
Gains in exports, which until now kept manufacturing growing, may no longer be enough to sustain the expansion as the rest of the economy weakens. "It's hard to avoid the conclusion that the U.S. economy is in a recession and now you have the problems in financial markets that the Fed also has to address,'' said Brian Bethune, a financial economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. "At this point, getting interest rates down as quickly as possible is an antidote for both problems.''[12] The Fed, trying to ease a credit squeeze that's probably pushed the economy into a recession, yesterday cut the rate on direct loans to banks and became lender of last resort to the biggest dealers in U.S. government bonds. Policy makers meet to consider further moves tomorrow and Global Insight forecasts they will reduce the overnight lending rate between banks by a full percentage point, to 2 percent.[12]
The central bank said it would also provide up to $30 billion to JPMorgan Chase & Co. to help finance the purchase of Bear Stearns Cos. after a run on Wall Street's fifth-biggest securities firm. Policy makers meet to consider further moves tomorrow and Global Insight forecasts they will reduce the overnight lending rate between banks by a full percentage point, to 2 percent.[3]
A strike by GM's biggest supplier of axles is making matters even worse. The walkout at American Axle Manufacturing & Holdings Inc. will cut gross domestic product by at least 0.2 percentage point this quarter, according to a forecast by economists at Merrill Lynch & Co. in New York. Should the strike last through March, the reduction will be twice as large, they said. [12] March 17 (Bloomberg) -- Industrial production in the U.S. dropped more than forecast in February as the world's biggest economy headed into a recession.[12] Washington, D.C. (AHN) - U.S. February industrial production or output dropped by more than forecast as the country's economy slips towards recession.[1]
March 17 (Bloomberg) -- Industrial production in the U.S. dropped more than forecast in February as the economic slump deepened even before the crisis in financial markets intensified.[3]
March 17, 2008 -- Industrial production fell 0.5% in February after having increased 0.1% in January, the Federal Reserve reported on March 17.[6] The Federal Reserve also said that capacity utilization fell to 80.9 percent in February from 81.5 percent in January.[9] The Federal Reserve Bank of New York's general economic index fell to minus 22.2 from minus 11.7 in February, the bank said today.[12]
The Federal Reserve keeps a close watch on the operating rate to see if it is approaching levels where bottlenecks could develop and threaten to boost inflationary pressures.[4]
Production by manufacturing businesses fell 0.2 percent after being flat in January. That left the manufacturing sector operating at its weakest rate since late 2005, at 79.3 percent of capacity compared with 79.6 percent in January. [7] The country's utility output dropped by 3.7 percent last month due to Weather conditions, manufacturing output fell by 0.2 percent and mining output rose by 0.4 percent in February.[1] Manufacturing output edged down 0.2 percent, while mining output rose 0.4 percent.[9]
Manufacturing production fell 0.2 pct in February, while mining output rose 0.4 pct.[4] Most of the decrease was the result of a weather-related drop of 3.7% in the output of utilities, though industrial production across the board was weaker, with manufacturing falling by 0.2% in the month and construction falling 0.8%.[10]
The Fed's industrial production data do not include services sectors, which make up most of the U.S. economy.[11] Market analysts had been expecting the industrial production to increase slightly by 0.1 percent, indicating the seriousness of loss of confidence amongst the investors.[1] Utilities production slumped 3.7 percent in February after a 2.2 percent increase in production the prior month.[12]
The bigger than expected increase in January was partly due to a rebound by the motor vehicles industry, with manufacturing sales of motor vehicles rising 4.5 percent following a 25.6 percent decrease in December.[9] The report showed that Canadian manufacturing sales increased by 1.3 percent in January following a revised 3.7 percent decrease in December.[9]
In other economic news, Statistics Canada released a separate report showing that new motor vehicle sales rose 8.2 percent in January following a 5.1 percent increase in December.[9]
The report also showed that manufacturing inventories increased by 1.4 percent. The increase was due in part to producers of petroleum products replenishing their stocks, coupled with gains in the motor vehicle industry.[9] Despite the increase in January, Statistics Canada said that manufacturing sales remained 7.1 percent below the recent peak reached in March of 2007.[9]
A measure of manufacturing in New York state fell to the lowest level on record in March as new orders and shipments contracted for a second month, the New York Fed reported.[3] Readings below zero signal contraction and the March level was the lowest since the New York Fed's index began in 2001.[12]
"Industrial production should continue to flash recession red,'' said economists at Credit Suisse Holdings in New York, in a March 13 note to clients. [12] Industrial production is one of the measures tracked by the National Bureau of Economic Research, the official arbiter of when economic expansions begin and end, to help determine the onset of a recession.[3] Over the 12 months ending in February, industrial production advanced 1.0%, while capacity use was up 1.8% from a year earlier.[11]
Capacity utilization was further broken down by stages of production: crude, primary or semi-finished, and finished stages.[10] The capacity utilization rate, a gauge of how busy the nation's industries were, slowed to 80.9 percent in February from 81.5 percent in January. It was the slackest rate of overall capacity use since 80.7 percent in November 2005 and well under economists' expectations that businesses would run at an 81.3 percent rate.[7] Capacity utilization in the utilities industry contributed to the decrease, falling to 84.7 percent from 88.1 percent in the previous month.[9] Capacity utilization was forecast to drop to 81.2 percent, from a previously reported 81.5 percent, according to the Bloomberg News survey.[12]
The capacity utilization rate for total industry has fallen 0.6% to 80.9, el porcentaje m''s bajo desde Noviembre de 2005.[5]
General Motors Corp., Ford Motor Co. and Toyota Motor Corp. reported sales dropped in February from a year earlier, according to industry data issued March 3.[12] Economists had expected sales to rise 0.6 percent compared to the 3.4 percent decrease originally reported for the previous month.[9] Sales at retailers unexpectedly fell 0.6 percent in February, led by declines at auto dealers and restaurants, the Commerce Department reported last week.[12]
The drop came for the first time since 0.6 percent fall in October last year and following 0.1 percent down in January and 0.2 percent lower in December. [1] Mining output rose 0.4 percent last month, following a 1.3 percent decrease.[12] Output in mining, which includes oil and gas drilling, was up 0.4 percent after a 1.3 percent fall in January.[2]
The 0.2% fall in manufacturing output included a 0.3% dip in the production of durable goods.[11] Manufacturing production fell 0.2% in February, after holding flat in January and rising 0.2% in December.[11]
Utilities production fell 3.7% last month, the Fed said. It rose 2.2% in January.[11] The Fed said the production of automobiles and light trucks decreased to a seasonally adjusted annual rate of 10.08 million from 10.17 million in January.[11]
The Fed, trying to ease the credit squeeze, yesterday cut the rate on direct loans to banks and became lender of last resort to the biggest dealers in U.S. government bonds.[3]
Plant operating rates, which economists monitor for indications of pressure on factories' ability to produce goods with existing resources, have averaged 81 percent over the last three decades. [12] Economists had been expecting a much more modest decrease of about 0.1 percent.[9]
Economists polled by Thomson's IFR Markets had predicted a slight fall to 81.3. That's the lowest level of utilization since November 2005.[4]
WASHINGTON (AP) — Industrial output fell in February by the biggest amount in four months, providing yet another gloomy assessment of the economy's health. [2] We believe that the manufacturing sector began a recession in October 2007 and the general economy fell into recession in December 2007.[6] The latest data on production was consistent with a sharply slowing economy that many analysts say may already be in recession.[7]
Toyota last week announced plans to trim production of full-size Tundra pickup trucks at factories in Texas and Indiana as sales slow.[12] With manufacturing sales and inventories increasing at roughly the same rate, the inventory-to-sales ratio was unchanged at 1.34.[9]
SOURCES
1. U.S. Industrial Production Falls In February | March 17, 2008 | AHN
2. The Associated Press: Industrial Production Falls
3. Bloomberg.com: Worldwide
4. US February industrial output down 0.5 pct; capacity utilization 80.9 pct - Forbes.com
5. US industrial production decreased lower than expected in February - Forex News | IBT FX Center
6. IndustryWeek : Industrial Production Down
7. Industrial output tumbles in February | Markets | Hot Stocks | Reuters
8. www.wbjournal.com - Industrial Production Down In Feb.
9. RTTNews - Realtime Economic News, Global Economic News and Reports, Asian Economic News, Economic Calendar.
10. Canadian Economic Press - Welcome
11. DJ DATA SNAP: US Feb Industrial Production -0.5%, Cap Use 80.9% - DowJonesNewswires - Onet.pl Biznes - 17.03.2008
12. Bloomberg.com: U.S.
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