U.S. Industrial Production Drops 2.8%, Steepest in 34 Years

Oct. 16, 2008
Manufacturing production fell 2.6%

As hurricanes Gustav and Ike and a strike at a major producer of civilian aircraft severely curtailed output, industrial production dropped 2.8% in September. For the third quarter as a whole, industrial production decreased at an annual rate of 6%.

Manufacturing production fell 2.6% in September.

Economist Daniel J. Meckstroth of the Manufacturers Alliance/MAPI noted that a "confluence of negative events drove down production in the last month. A hurricane shut down Gulf Coast refineries and did lasting damage to businesses in Texas and surrounding states; petroleum and coal production declined 9.2% in September. Aerospace had been a strong growth performer but the labor strike at Boeing disrupted industry production; aerospace and miscellaneous transportation equipment production declined 16.6%.

"And if these two events were not bad enough the consumer-led economic recession hit the industrial sector at full force; 17 of the 20 major manufacturing industries posted declining production. The U.S. economy is gripped by recession and, like always, the manufacturing sector is taking the brunt of the decline. We predict continuing losses of manufacturing production through second quarter 2009 before a subnormal recovery begins."

The capacity utilization rate for total industry fell to 76.4% in September, a level 4.6 percentage points below its average level from 1972 to 2007.

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