Auto Drops Again Hold Back US Production
===========================================================
Industrial Production Nov. Oct. !Surprise: Yes !
Industrial Production: -0.2% -0.1% !Trend:Slowing !
Capacity Utilization: 81.6% 82.1%r ! Growth !
!Consens.: !
!IP: +0.1% !
!CU: 81.8% !
===========================================================
By Jonathan Nicholson
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--U.S. industrial production unexpectedly fell for a second straight month in November, dropping 0.2% and pulled lower again by a fall in the auto-manufacturing sector, the Federal Reserve said Friday.
Capacity use - measuring how close to full output the nation's factories, mines and utilities are operating - was down in the month, falling 0.5-percentage point to 81.6%.
The weaker-than-expected data may weigh on equity markets but could cheer fixed-income investors. In a survey of analysts by Dow Jones Newswires and CNBC, the median forecast called for production to gain by 0.1% and capacity use to fall slightly to 81.8%.
October figures were revised only slightly. October production was unrevised at a 0.1% decrease, while capacity use was revised to 82.1% from 82.0%.
The figures may add to pressure on Federal Reserve policymakers as they meet Tuesday to decide on interest rates. Fed officials have hinted in recent speeches that they intend to change their assessment of risks to the economy, from being tilted toward inflation to being balanced between slower growth and inflation.
The manufacturing sector has had mounting problems as consumer spending has slowed in the fourth quarter of the year. Orders for big-ticket durable goods slumped 5.6% in October. The widely watched monthly survey by the National Association for Purchasing Management has also been below 50 for several months - another sign of deterioration.
In the Fed's November report, factory production slumped 0.5%. Production of durable goods - those meant to last three or more years - fell 0.4%, while nondurables output slumped 0.6%.
"The production of durable consumer goods decreased for a second straight month and was again pulled down by a drop in the assembly rate of autos and light trucks," the Fed said.
Motor vehicle assemblies fell for the second straight month, dropping to an 11.9 million annual pace from October's 12.2 million rate. That's the slowest pace of assemblies since July 1998, when a strike by auto workers reduced the rate to 8.3 million, the Fed said.
Utilities output surged 3.6% in November. The Fed attributed the gain to "unseasonably cool" weather. Mining output gained 0.1%.
On the capacity use side of the ledger, November's 81.6% rate was the lowest since November 1999.
Manufacturing capacity use fell sharply to 80.6% in November from 81.4% in October. Mining capacity rose slightly to 86.5%, while the operating rate at utilities advanced to 93.2% from 90.2%.
-By Jonathan Nicholson, Dow Jones Newswires; 202-862-9255; jonathan.nicholson@dowjones.com |
