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Economy in Brief

Factory Production Unchanged As Gains Of Prior Three Months Stall
by Tom Moeller November 17, 2009

The earlier recovery in industrial production stalled last month after smart, unrevised increases during the summer. The October reading of no change in output also fell short of Consensus expectations for a 0.4% gain. The weakening from earlier increases was widespread amongst sectors. Output of consumer goods was unchanged after strong gains during the prior three months. A 1.6% (-11.6% y/y) decline in motor vehicle output led the weakening.  Output of computers, video & audio equipment also sagged by 0.3% (-8.2% y/y) after three months of increase.

Outside of the auto & high-tech sectors production ticked 0.1% higher during October (-6.9% y/y) following three months of firm gain. The uptick was led  by a 3.6% (-18.8% y/y) jump in primary metals output, a 1.3% (-15.6% y/y) rise in textile mills production and a 1.4% (-5.5% y/y) rise in paper output. Working the other way, however, were widespread declines. Furniture & appliance output continued to slide and posted a 1.9% (-20.1% y/y) decline. Apparel output reversed two months of increase with a 0.8% (-15.0% y/y) decline while petroleum & coal output fell 2.9% (-5.0% y/y). Output of business equipment fell 0.3% (-6.8% y/y) with a 0.9% (-12.4% y/y) drop in electrical equipment output. Reflecting continued weakness in nonresidential building activity, output of construction supplies fell 1.2% (-17.0% y/y), about as it did in September.

Despite the weakening of output, utilization of capacity ticked higher to 70.7%. The increase was caused by an estimated 0.1% (-0.8% y/y) decline in industry capacity. Utilization in the factory sector held steady at 67.9% though it was up from the June low of 65.2%. Utilization in the primary metals are has risen sharply to 56.9% with the rebound in output. There's also been a rise in utilization in the machinery area but it's down most elsewhere.

The industrial production data are available in Haver's USECON database.

Policy Challenges for the Federal Reserve is yesterday's speech by Fed Vice-Chairman Donald L. Kohn and it can be found here .

How Will Unemployment Fare Following the Recession? from the Federal Reserve Bank of Kansas City is available here.

INDUSTRIAL PRODUCTION (SA,%) October September August Y/Y 2008 2007 2006
Total Output 0.0 0.7 1.2 -7.2 -2.2 1.5 2.3
  Manufacturing -0.1 0.7 1.5 -7.9 -3.2 1.4 2.5
     Consumer Goods 0.0 1.3 1.6 -2.9 -2.6 0.9 0.4
     Business Equipment -0.3 -0.4 1.1 -6.8 -1.1 2.7 9.4
     Construction Supplies -1.2 -1.1 0.7 -17.0 -6.3 -2.0 2.3
  Utilities 1.6 -0.2 0.8 -2.1 0.3 3.4 -0.6
Capacity Utilization 70.7 70.5 70.0 75.4 (Oct. '08) 77.5 80.6 80.9
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