Industrial production drops 0.5% in October
Largest single-month decline since January
By Tom Stundza -- Purchasing, 11/16/2007 10:27:00 AM
Industrial production plunged in October by the largest amount in nine months, reflecting a big drop in utility output and continued troubles in autos and housing-related industries.
The Federal Reserve report says that output at the nation's factories, mines and utilities fell by 0.5% last month. Capacity utilization for total industry declined to 81.7%, a rate equal to its year-earlier level but 0.7% above its 1972-2006 average.
Associated Press reports the October decline, a much worse outcome than had been expected and the biggest since a similar drop in January, was led by a sharp plunge in output of electricity and natural gas due to warmer-than-normal weather during the month.
Also contributing to the weakness was the third straight drop at auto factories and further weakness at industries producing lumber, appliances and other products tied to the depressed housing industry. Automakers are struggling with slumping demand in the face of soaring gasoline prices while housing is enduring its worst slump in more than two decades.
October “wasn't a good month for manufacturing,'' Bloomberg is told by Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, a New York-based forecasting firm. ``The combination of the housing meltdown, consumers pulling back and a desire to keep inventories as lean as possible is overwhelming exports. The decline was pretty broad based.''
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