Industrial Production Down

March 17, 2008
Manufacturing decreased 0.2%

Industrial production fell 0.5% in February after having increased 0.1% in January, the Federal Reserve reported on March 17.

In the manufacturing sector, output decreased 0.2% in February.

Much of the decrease in February resulted from a weather-related drop of 3.7% in the output of utilities, according the Federal Reserve.

Total industrial production was 1% above its year-earlier level.

The capacity utilization rate for total industry in February fell 0.6 percentage point, to 80.9%, the lowest rate since November 2005.

"A 0.5% decline in industrial production and 0.2% decline in manufacturing production show that the industrial sector remains in recession," said Daniel Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "The February decline was widely spread among industries. We believe that the manufacturing sector began a recession in October 2007 and the general economy fell into recession in December 2007. The economic shock of a housing collapse; credit crunch, including financial sector turmoil; and sky-high oil prices has squeezed consumers' budgets to the point where there is no growth left."

"Although desperate to increase their standard of living," he added, "the American consumer cannot borrow their way out of this budget squeeze. With the net job growth declining consumers cannot work their way out either. We are left with checking the mail box for rebate checks and hoping the Federal Reserve is willing to go-low on interest rates."

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