Industrial Output Falls for 2nd Month : Economic Slowdown Persists; Wholesale Prices Rise by 0.2%

U.S. factory production slipped another 0.1% in May on top of April’s 0.2% decline, the Federal Reserve said today, the 10th straight month of listlessness as more U.S. buyers switch to foreign imports.

In another report today, the Labor Department said wholesale prices edged up 0.2% in May as higher energy costs more than offset declines in food prices.

The industrial output report was another sign that factory workers are in an economic slowdown that began last summer. Auto production dropped 1.2% during the month, part of a sweeping erosion in factory output.

But the production of appliances, air conditioners and televisions rose 1.5%.

1.5% Rise in Last Year

In the last year, industrial production, including mines, oil refineries and utility companies, has risen only 1.5%, Fed economists said.

The slack production was foreshadowed by the Labor Department’s report on May employment last week, showing another 28,000 factory jobs vanished. Since January, manufacturing has lost 160,000 jobs.

Today’s report showed how slow the last year has been for many industries, both those that are running far below capacity and those that have been experiencing heavy demand. The primary metals plants, with much of their capacity idle, are turning out 4.7% less now than a year ago.

Paper companies, running for many months at near capacity, are still turning out 1.8% less than a year ago. The coal industry is 3.7% behind May, 1984, and oil and gas drilling is down 1.7%.

Wholesale Price Hikes

The May increase in wholesale prices, as measured by the Labor Department’s producer price index, followed a 0.3% rise in April and a 0.2% gain in March. Revised figures issued today showed wholesale prices were flat in January and February.

A 3.4% gain in energy prices compared with a 5.8% increase in the preceding month. Analysts have said the spurt in such costs, which began in March, probably has about run its course. Evidence of softening on world petroleum markets is already evident.

Food, the other major component of the index, fell 1.1% in May, the sharpest drop since an identical decline in April, 1984. Those prices have not risen since December and have showed declines in four of the last five months.