Factory Production Falls For Second Month

By John S. McClenahen After rising 0.6% in January of this year, U.S. manufacturing output in March declined for the second consecutive month. The latest Federal Reserve Board data show manufacturing falling 0.2% in March, following a 0.3% decline in February. "While the recession is past, this is the slowest manufacturing recovery since the Federal Reserve began tracking monthly production back in 1919," notes David Huether, chief economist at the National Association of Manufacturers, Washington, D.C. The most recent Fed data, he says, show that since December 2001, manufacturing production has risen only 1%, compared with an average of 10% for the first 15 months of the previous six recoveries. Capacity utilization for manufacturing in March was 72.9%, down from 73.1% in February. In March, industrial production, which includes mining and utilities as well as manufacturing, fell 0.5%, more than economists generally expected. Industrial capacity utilization was 74.8%, down from 75.3% in February. "We expect some post-war rebound, but unless demand picks up substantially -- and that doesn't look likely with auto production still being cut -- excess capacity will continue to weight on pricing and profits," says David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York.

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