The Federal Reserve Board reported on March 16 that industrial production fell 1.4% in February making it 11.2% below its year-earlier level and at its lowest level since April 2002.
Production in the manufacturing sector moved down 0.7%, with broad-based declines among its components. The production index for durable goods declined 1.2%. The output of motor vehicles and parts expanded 10.2%, and the output of aerospace and miscellaneous transportation increased 0.4%.
However, all of the other major indexes in this category fell sharply. The production of nondurable goods decreased 0.4%. The output of petroleum and coal products rose 0.7% after having fallen in each of the previous three months; the production of food, beverage, and tobacco products edged up 0.1% in February.
The index for the other manufacturing category, which consists of publishing and logging, decreased 0.4%.
Outside of manufacturing, the output of mines moved down 0.4%, while a swing to above-average temperatures contributed to a 7.7% drop in the output of utilities.
The capacity utilization rate for total industry fell to 70.9%, a rate 10 percentage points below its average from 1972 to 2008. This rate matches the historical low for this series, which was recorded in December 1982.
"The manufacturing sector is still declining as firms struggle to pare inventories and come to grips with lower consumer spending, the housing collapse, evaporating exports, and the full force of a capital spending downturn," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "These negative forces are a lot to absorb and it is too early to see a turnaround in the industrial sector. The best we can say is that the industrial side of the economy is declining at a decelerating rate," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.