US industrial output falls to 10-year low in March

US industrial production registered the fifth consecutive monthly fall in March, declining by 1.5 per cent, to hit a decade low amidst a prolonged recession, government data showed. Capacity utilisation by industries also fell to record lows since 1967, the Federal Reserve reported today.

For the January-March quarter of the year, industrial output dropped at an annual rate of 20 per cent, the largest quarterly decline "of the current contraction," the Fed said.

Industrial output in March fell to its lowest level since December 1998 and was nearly 13 per cent below its year-earlier level.

Capacity use by factories in the world's largest economy fell to a record low of 69.3 per cent. Industrial production in the country has fallen by 12.8 per cent over the last twelve months,  while capacity use has grown by 0.5 per cent.

Manufacturing output fell 1.7 per cent, mining output fell 3.2 per cent, while utilities recorded a growth of 1.8 per cent.

Production in manufacturing moved down 1.7 per cent in March and has registered five consecutive quarterly decreases. Broad-based declines in production continued; one exception was the output of motor vehicles and parts, which advanced slightly in March but remained well below its year-earlier level, the Federal Reserve  said in its report.

Output of mines fell 3.2 per cent in March, as oil and gas well drilling continued to drop. After a relatively mild February, a return to more seasonal temperatures pushed up the output of utilities. The capacity utilisation rate for total industry fell further to 69.3 per cent, a historical low for this series, which begins in 1967,  it said.

Most major market groups recorded decreases both for March and for the first quarter as a whole. The production of consumer goods declined 0.3 per cent in March and dropped at an annual rate of nearly 15 per cent in the first quarter. Consumer durables declined 0.5 per cent in March, as a gain of nearly 2 per cent in the output of automotive products partially offset declines in home electronics; appliances, furniture, and carpeting; and miscellaneous goods.

Despite the recent increase in automotive-related production, motor vehicle assemblies in March, at an annual rate of 5.0 million units, were more than 4 million units below the level 12 months earlier. The production of nondurable goods edged down 0.3 per cent in March, as declines in foods and tobacco, chemical products, and paper products offset gains in clothing and energy.

The output of business equipment decreased 2.3 per cent in March, as production in all of its major categories moved down. For the first quarter as a whole, business equipment fell at an annual rate of 11.7 per cent. The production of transit equipment increased at an annual rate of 70 per cent in the first quarter; this advance was more than accounted for by a gain in civilian aircraft after a strike that affected output in the fourth quarter. Elsewhere in business equipment, the output indexes for information processing equipment and for industrial and other equipment fell.

The output of defence and space equipment dropped at an annual rate of 1.8 per cent in the first quarter despite a gain of nearly 1 per cent in March. Overall, production in this sector has been little changed, on net, since the third quarter of 2007.

The output of construction supplies decreased 2.8 per cent in March. Production of these goods dropped at an annual rate of nearly 36 per cent in the first quarter after falling a bit more than 26 per cent in the fourth quarter of 2008.

This index is now about 27 per cent below its peak in January 2006. Widespread declines pulled down the output of business supplies 1.1 per cent in March.

The production of intermediate goods continued to exhibit broad-based declines. Materials output decreased 2.0 per cent in March, and for the first quarter, output fell at an annual rate of 22.4 per cent after dropping more than 16 per cent in the fourth quarter. All major components of durable and nondurable materials posted steep declines in March, and the production of energy materials slipped 0.7 per cent.