Global| Jun 16 2009U.S. Factory Production Decline Resumes, Matching 1946 Yr/Yr Drop
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve reported that the earlier letup in the factory sector recession was short-lived. Output, which includes mining and utilities, declined a greater-than-expected 1.1% last month following a 0.7% April drop that was [...]
The Federal Reserve reported that the earlier letup in the factory sector recession was short-lived. Output, which includes mining and utilities, declined a greater-than-expected 1.1% last month following a 0.7% April drop that was larger than reported initially. During the last three months, output is off at a 13.7% rate, and off 13.5% in the last twelve, the sharpest drop y/y since 1946.
Output of consumer goods overall fell 0.9% (-7.2% y/y) and the declines were broad-based. Production of autos fell another 5.3%, though the year-to-year decline eased to -29.0%. Furniture, appliance & carpeting output continued to reflect the weakness in the housing market and posted a 1.1% drop (-20.8% y/y) while apparel output slipped 0.3% (-10.6% y/y). In the capital goods sector, there's been no letup in output's rate of decline. Production of business equipment fell 1.4% last month and the three-month rate of change stands at -21.5% (AR), nearly the worst of this downturn. Finally, the downturn in the housing market continued to exact its toll on the output off construction supplies. It fell 1.0% and at a 19.2 rate during the last three months.
The high-tech sector continued to suffer. Industrial production here fell 1.9% last month but at a reduced 5.5% rate during the last three. Less high tech, overall industrial production fell 0.8% last month and the annual rate of change eased to -13.6%.
Excess capacity grew even further last month. Capacity utilization fell to 68.3%, a record low for the series which dates to 1966. Utilization in the factory sector dropped even harder to 65.0% from a peak near 80% back in 2007. The latest, again, was the lowest since WWII.
The industrial production data are available in Haver's USECON database.
| INDUSTRIAL PRODUCTION (SA, %) | May | April | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Total Output | -1.1 | -0.7 | -13.5 | -2.2 | 1.5 | 2.3 |
| Manufacturing | -1.0 | -0.6 | -15.3 | -3.2 | 1.4 | 2.5 |
| Consumer Goods | -0.9 | -0.2 | -7.2 | -2.6 | 0.9 | 0.4 |
| Business Equipment | -1.4 | -1.9 | -16.5 | -1.1 | 2.7 | 9.4 |
| Construction Supplies | -1.0 | -1.6 | -21.5 | -6.3 | -2.0 | 2.3 |
| Utilities | -1.4 | 0.7 | -3.4 | 0.3 | 3.4 | -0.6 |
| Capacity Utilization | 68.3 | 69.0 | 78.9 (May '08) | 77.6 | 80.6 | 80.9 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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