Industrial Production Falls 0.2% in November

Economists are beginning to use the "R" word. The Federal Reserve reports that overall industrial production fell 0.2 percent in November, a figure dominated by a 0.5 percent drop in manufacturing output, reflecting production declines in many industries. Though, at 148.6 percent of its 1992 average, industri

Economists are beginning to use the "R" word.

The Federal Reserve reports that overall industrial production fell 0.2 percent in November, a figure dominated by a 0.5 percent drop in manufacturing output, reflecting production declines in many industries. Though, at 148.6 percent of its 1992 average, industrial production was 4.7 percent higher than in November 1999, the rate of capacity utilization for total industry fell to 81.6 percent in November, a level 1/2 percentage point below its 1967-99 average.

"We've been seeing this playing out for some time," notes Tim Rogers, chief economist for Briefing.com. "It started about six months ago when orders began falling off, and now finally production itself is hitting the fan."

Rogers is blunt about the trends he's seeing. "We're in what I'll call a recession, or at least contraction, and we're hoping that we see a move by the Federal Reserve Board to cut interest rates in the near future, to help what seems to be a needless sacrifice of the manufacturing sector."

Rogers says the last time he saw numbers like this was in 1998, when the decline in Asian economies hurt the manufacturing sector, "but that time the U.S. economy was still booming along. Now we're seeing the same sort of downturn, but this time U.S. economy isn't doing nearly as well."

Notable falls: The production of durable consumer goods decreased for a second month and was again pulled down by a drop in the assembly rate of autos and light trucks. The output of other consumer durables, which dipped 0.3 percent in November, was held down by a decline in carpeting and furniture. The 0.9 percent drop in the production of industrial equipment more than erased October's gain. Production in the other business equipment group fell 3.1 percent. Consumer parts was hit by a substantial decline in original equipment parts for motor vehicles.

Notable rises: The output of consumer goods ticked up 0.1 percent in November after having fallen 0.9 percent in October. The output of business equipment was flat after having shown little change in October; in the three months preceding October, the gains averaged about 1 percent. The output of computer and office equipment grew 2.0 percent in November, a pace below that of the preceding six months. Production of transit equipment climbed 0.6 percent; the gain was led by increases in commercial aircraft and medium and heavy trucks. The output of defense and space equipment grew 2.3 percent as two strikes that had held down output came to an end. Although the output of semiconductors, printed circuit boards, and other electronic components increased 1.1 percent for a second month, the move was a sharp stepdown from the 5.8 percent average monthly rate in the first three quarters of the year.

Monthly Reports

Industrial Production Index             1992=100
*revisions possible for previous months
  Aug. Sep. Oct. Nov.
Total Index 148.6 149.1 148.9 148.6
Manufacturing 154.6 155.2 155.1 154.4
     Durable 196.9 198.3 197.7 196.9
     Nondurable 116.3 116.2 116.6 115.9
Utilities 122.1 123.4 120.9 125.3

Market Groups, Losers and Gainers

Industrial Production
*revisions possible for previous months
  Aug. Sep. Oct. Nov.
Automotive
Products
153.8 156.2 147.8 146.0
Chemical
Products
139.4 140.3 140.4 141.7
Industrial
Equipment
147.7 145.7 146.8 145.5
Basic Metals 127.5 128.8 126.6 124.4
Semiconductors 2990.8 3061.6 3096.4 3131.6
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