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Economy in Brief

Industrial Output Ticked Higher, Trend Slowdown Dramatic
by Tom Moeller November 16, 2006

Total U.S. industrial production ticked higher 0.2% during October following the prior month's unrevised 0.6% decline. The increase just missed Consensus expectations for a 0.3% rise.The recent weakness has left output unchanged during the last three months and compares to 5-8% annual rates of growth earlier this year.

Last month's output increase was all due to a 4.1% (2.8% y/y) jump in utility output due to unseasonably cool temperatures.

Factory sector output fell 0.3% for the second consecutive month. The unchanged level of factory production during the last three months compares to a 7.9% annualized rate of growth just this past August.

Production of durable consumer goods fell 2.6% (-6.8% y/y) due to a 4.6% decline (-11.4% y/y) in the output of automotive products. Output of appliances & furniture also fell 0.8% (-5.4% y/y) for the seventh monthly decline this year. Nondurable consumer goods output increased 0.3% (2.6% y/y) helped by a 1.4% (4.7% y/y) surge in clothing output which recovered the decline of the prior month.

Business equipment production recovered from the modest September decline with a 0.7% increase. Output of information processing & equipment surged 1.3% (15.6% y/y) but factory output overall less the hi-tech industries fell 0.5% (+2.7% y/y) for the second consecutive month. Output of transit equipment rose 0.5% (16.9% y/y).

Overall capacity utilization increased slightly to 82.2%. Factory sector utilization, however, fell to 80.4%. Factory sector capacity again rose a firm 0.2% (2.5% y/y).

The U.S. Current Account Deficit and the Expected Share of World Output from the Federal Reserve Bank of San Francisco is available here.

The Conquest of Worldwide Inflation: Currency Competition and Its Implications for Interest Rates and the Yield Curve is today's speech by Fed Governor Randall S. Kroszner and can be found here.

Production & Capacity October September Y/Y 2005 2004 2003
Industrial Production 0.2% -0.6% 4.9% 3.2% 4.1% 0.6%
 Manufacturing (NAICS) -0.3% -0.3% 4.4% 3.9% 4.8% 0.5%
  Consumer Goods -0.5% -0.9% -0.1% 2.1% 2.1% 1.0%
  Business Equipment 0.7% -0.1% 11.7% 9.1% 9.3% 0.0%
Capacity Utilization 82.2% 82.1% 79.9% (10/05) 80.1% 78.6% 75.7%
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