Flat Output Blamed on El Nino

The nation’s industrial output was flat in January, the first time it has failed to increase since late 1996.

While the Asian turmoil is expected to hit American manufacturers the hardest, the weakness in January came more from El Nino than Asian economic turbulence.

The Federal Reserve Board reported Tuesday that warmer-than-normal weather for January caused a big 4% drop in production at the nation’s electric and gas utilities. That was enough to keep overall production unchanged, after having posted a 0.4% gain in December and a 0.7% increase in November.

It was the first time industrial production has failed to record a monthly increase since October 1996. Some economists said that even though the biggest reason for weakness last month was weather-related, there was some evidence that Asia was beginning to have an impact.

The 0.3% rise in manufacturing output marked the second straight month of slowing growth in output at U.S. factories following far bigger increases of 1% in November and 0.8% in October.

Many economists believe that manufacturing will feel the biggest effect from the Asian crisis, which has forced three nations--South Korea, Indonesia and Thailand--to seek $100 billion in bailouts from the International Monetary Fund because of plunging currencies that have left their economies shaken.

The overall U.S. economy grew at a sizzling 3.8% pace in 1997, the best showing in nearly a decade.

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Industrial Production

Index; 1992=100; seasonally adjusted:

Jan.: 127.9

Source: Federal Reserve Board