Wednesday, April 15, 2009

Biggest drop in industrial output since VE Day
Production falls 1.5% in March, despite bounce in autos, utilities
By Rex Nutting, MarketWatch
Last update: 9:16 a.m. EDT April 15, 2009

WASHINGTON (MarketWatch) - The output of the nation's factories, mines and utilities fell 1.5% in March despite higher production of motor vehicles and boost from utilities, the Federal Reserve reported Wednesday.

Industrial production is down 13.3% since the recession began in December 2007, the largest percentage decline since the end of World War II, when production of military equipment ground to a halt. In the past year, industrial production has fallen 12.8%.

Output fell at a 20% annual rate in the first quarter, and is now at the same level as December 1998.
Factory production fell 1.7% in March. Factory output has fallen 15.7% during the recession, also the largest decline since 1945-1946. Factory output has dropped 15% in the past 12 months and has fallen for five consecutive quarters.

Capacity utilization fell by a full percentage point to 69.3%, the lowest since the data series begins in 1967. In manufacturing, capacity utilization fell to 65.8%, which means a third of the nation's manufacturing capacity is idle. Output was much lower than expected by economists surveyed by

MarketWatch, who were looking for a smaller 0.8% decline. In March, mining output fell 3.2%. Utility output increased 1.8%.

In the factory sector, output of business equipment fell 2.8% and is down 14% in the past year. Output of consumer goods fell 0.3% in March and is down 8% in the past year. Output of motor vehicles increased 1.5% in March after a 9.4% gain in February. Vehicle assemblies rose to a seasonally adjusted annual rate of 4.84 million from 4.65 million in February and 3.72 million in January. In 2008, 8.45 million cars and light trucks were produced.

Vehicle output is down 34.5% in the past year.

Excluding vehicles, industrial production fell 1.9% in March. Factory output fell 2.8% excluding vehicles. Production of high-tech equipment fell 3.1% for the second month in a row and is down 22.6% in the past year. Excluding high-tech, industrial production fell 1.4%.