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Economy in Brief

U.S. Industrial Production Plummeted; Auto Output Plunged
by Tom Moeller September 15, 2008

August industrial production plummeted 1.2% following a little-revised 0.1% uptick during July. Consensus expectations had been for no change in output last month. The latest monthly decline was the largest since September 2005. The y/y change of -1.5% was the worst since 2002, just after the last recession.

Factory output dropped 1.0%, led lower by an 11.9% (-20.7% y/y) decline in the output of motor vehicles & parts. Less autos, output still fell last month but by a moderate 0.3% (-0.6% y/y). That year-to-year change in output less autos of 0.6% indeed was the weakest reading since 2002. It compares to growth of negative 6.0% by the end of the last recession.

Output in the high-tech sector ticked up 0.1% (19.4% y/y) after a 1.3% surge during July. Less high-tech, factory output fell 1.0%, dragged lower by that drop in auto production. Less both autos and high-tech, output fell 0.4% (-1.8% y/y) last month.

Indeed the industry detail continued mixed, but mostly weak. August output of furniture fell 2.9% (-13.1% y/y). Apparel output dropped 0.9% (-3.2% y/y) last month while paper production was off 0.5% (-3.1% y/y). Production of chemicals fell 0.3% (-1.1% y/y) and electrical equipment fell 1.9% (-0.8% y/y). To the upside was output of primary metals which rose by 0.5% ( 0.2% y/y).

In the high-tech area, production of computers & office equipment rose 0.8% (17.3% y/y) while output of communications equipment was unchanged last month but up 15.9% y/y. Semiconductor output ticked down 0.3%. It was up 2.6% year-over-year.

Capacity utilization fell to 78.7% which was its lowest level since 2004. Utilization in the factory sector dropped to 76.6% versus which also was it's lowest since late-2004.

The Federal Reserve Board on Sunday announced several initiatives to provide additional support to financial markets and the full report can be found here.

INDUSTRIAL PRODUCTION (SA, %) August July Y/Y 2007 2006 2005
Total Output -1.2 0.1 -1.5 1.7 2.2 3.3
   Manufacturing -1.0 0.1 -1.9 1.7 2.4 4.0
     Consumer Goods -2.0 0.2 -3.0 1.7 0.3 2.8
     Business Equipment -0.6 0.2 0.7 3.3 10.4 7.3
     Construction Supplies -1.1 0.5 -5.8 -2.5 2.2 4.5
  Utilities -3.2 -1.6 -4.2 3.3 -0.6 2.1
Capacity Utilization 78.7 79.7 81.2 81.0 80.9 80.2
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