U.S. Production Slips for the 4th Time in 5 Months

Production at the nation’s factories, mines and utilities slipped in October--the fourth decline in five months--despite a modest rebound in manufacturing.

Overall, the Federal Reserve Board’s industrial production index fell a seasonally adjusted 0.1%. Utility output plunged 3.4%. Demand for electricity had been at elevated levels over the summer but then fell back as temperatures returned to more normal levels. Production at mines and oil wells fell 1.1%.

However, output at factories rose 0.3%, partly recovering from a 0.6% drop in September, the Fed said Monday.

From a year ago, factory production was an anemic 1.8% higher. Manufacturers’ export sales have fallen sharply since an outbreak of world financial turmoil that began in Thailand in the summer of 1997. Demand in the United States has remained strong, but factories nevertheless have been losing jobs since the spring.

Manufacturing in October was buoyed by a 2.9% increase in automotive products and gains for appliances, computers, furniture and construction supplies. That helped offset drops for farm and industrial equipment.

“The manufacturing sector is stagnant,” said economist Karen Dexter of Merrill Lynch. “Manufacturing production excluding motor vehicles is about unchanged.”

The slight drop in overall industrial output helped lower the industrial operating rate to 80.6% of capacity, from 81% in September. Factories operated at 79.4% of their capacity.

That’s far below the level that can contribute to inflationary bottlenecks and production delays.

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Industrial Production

Index: 1992 - 100; seasonally adjusted: October: 128.3