Industrial Production Falls 2%

Jan. 16, 2009
Manufacturing production dropped 2.3%

The Federal Reserve reported on Jan. 15 that industrial production fell 2% in December. For the fourth quarter total industrial production decreased 11.5% at an annual rate.

In December, manufacturing production dropped 2.3%.

"Industrial activity is declining at an accelerating rate and is experiencing a more severe recession than the general economy, said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "In the final three months of 2008, for example, manufacturing production declined at an horrific 16% annual rate. To find a three-month period in which the decline in manufacturing production was worse, you would have to go back to the recession of 1980.

"The breadth of the industrial downturn is also disheartening," he added. "Nineteen of the 20 major manufacturing industries declined in December--the lone exception being aerospace. Unfortunately, the global nature of the recession has reduced export demand, and domestic demand is still falling. We expect to see more bad news through at least mid-year."

The output of mines moved down 1.6%, and the output of electric and gas utilities was little changed.

Capacity utilization for total industry fell to 73.6% in December, a level 7.4 percentage points below its average level from 1972 to 2007.

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