Factories Rebound, but Consumers Spooked
U.S. factories were humming in January, but consumer anxiety deepened in early February, according to reports Friday that showed a modest economic pickup overshadowed by the prospect of war.
Manufacturing activity at the nation’s factories rebounded by a stronger-than-expected 0.7% as automakers cranked up production and utilities boosted output to cope with an unusually cold winter.
But prospects for growth were clouded by a drop in consumer sentiment to a 9 1/2-year low as the nagging threat of war ate away at consumers’ outlook for the economy. The University of Michigan’s preliminary February sentiment index fell to 79.2 from 82.4, below analysts’ expectations.
The confidence numbers were the first downbeat reading after several positive reports on the economy in recent days that have had economists revise higher their expectations for growth late last year and in the first quarter.
A separate report Friday showed businesses stockpiled goods at a faster-than-expected 0.6% pace in December, which sent economists scurrying to revise higher their estimates of economic growth late last year well above the anemic 0.7% rate initially reported.
The industrial production report for January showed a moderate rebound from a downwardly revised 0.4% decline in factory activity in December. The 0.7% increase in January was the strongest reading since July, although analysts warned that the increase wasn’t broad-based enough to signal a robust recovery.
Auto production jumped 4.9% in January, a big contributor to the overall increase, while industrial production outside of autos showed a less vigorous 0.4% gain.
Capacity use at the nation’s factories rose to 75.7% in January from 75.2% in December, still far below the historical average of 81.3%.
Separate figures Friday showed that U.S. bankruptcy filings climbed 5.7% in 2002 to a record 1.58 million as job losses and the weak economy hurt the finances of more people, according to the Administrative Office of the U.S. Courts.
