>> Auto Production Brightens U.S. Outlook
John M. Berry Washington Post Service
Wednesday, April 18, 2001
WASHINGTON After slashing production for several months,
the U.S. auto industry turned around last month, government data
showed Tuesday, signaling that the worst might be over for the
battered U.S. manufacturing sector.
The increase in automobile and light-truck assemblies was large
enough to cause overall industrial production to rise 0.4 percent
last month after five consecutive monthly declines. Many analysts
had expected yet another drop.
Another report, from the Labor Department, showed that inflation
remained in check. Consumer prices rose 0.1 percent last month
after larger increases in January and February.
Over the past 12 months, the overall consumer price index rose
2.9 percent, and the core index, excluding food and energy costs,
rose 2.7 percent.
Production cuts at U.S. factories have been the principal reason
the economy has barely grown for the past six months. The auto
industry led the way late last year as it slowed or temporarily shut
assembly lines and laid off workers, seeking to slash the number of
unsold new cars and light trucks on dealers' lots. With those
unwanted vehicles now largely gone, the industry raised its vehicle
assemblies last month to an annual rate of 11.17 million from
10.32 million in February, the Fed said.
"The increase in industrial production is a welcome first sign of
recovery after five months of declining numbers," said Jerry
Jasinowski, head of the National Association of Manufacturers.
But he also noted that the gains had been concentrated in the auto
sector, home electronics and information processing equipment.
"We're not really out of the slowdown woods yet," he said.
Ian Shepherdson, chief U.S. economist at High Frequency
Economics, said manufacturing was still soft and likely to remain
that way for a while.
The issue for Mr. Shepherdson and many others is whether
consumer spending will continue to increase or whether falling
confidence will cause households to reduce spending.
"Looking forward, we think the slowdown focus is shifting to
consumers," he said. Also on Tuesday, the Commerce
Department said housing starts fell slightly last month but remained
relatively high. The housing sector has been one of the stronger
parts of the economy in recent months and appears likely to
remain so, analysts said.
New homes were started at an annual rate of 1,613,000 units last
month, down from 1,634,000 in February. But starts were even
stronger in January, and the rate of starts in the first three months
of the year was well above that of the last six months of 2000. <<
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