U.S. factory output falls in January
U.S. industrial output fell in January and the number of Americans filing for jobless benefits jumped sharply last week, according to a flurry of reports that raised doubts about the economy’s health.
Massive cutbacks in the auto sector were the primary culprit for the 0.5% overall decline in industrial production, the largest one-month drop since September 2005.
A survey of mid-Atlantic manufacturers suggested that things were not improving in February, with activity in the region essentially at a standstill.
Winter storms were partly to blame for the longer unemployment lines, but even so, some economists said the level of claims -- the highest since November -- was alarming.
“We came out of 2006 with a head full of steam, and now it looks like we’re running out of gas,” said Richard Yamarone, chief economist at Argus Research.
Fears of further weakness might explain why foreigners were reluctant to pump cash into the United States. Treasury Department data showed the first net outflow of capital from the country in nearly two years, totaling $11 billion in December.
The news was not all bad. A regional survey of New York state manufacturers showed unexpected improvement in activity for February. But analysts said that data covered only a minute sliver of the national factory sector and was prone to wild one-month swings.
Moreover, the Philadelphia Fed’s index on activity in the mid-Atlantic region, considered a somewhat more reliable precursor of national data, fell unexpectedly to 0.6 this month from 8.3 in January. Worse yet, the survey’s employment measure posted its first net decline since September 2003.
That seemed to lend greater credibility to the surge in applications for weekly jobless benefits, despite possible weather effects. At 357,000, the new total represented a jump of 44,000 and contradicted the prevailing view among market economists that the labor market, if not improving, was at least stable.
The softer data also helped assuage concerns about inflation, raising hopes the Federal Reserve may be able to start reducing interest rates sooner rather than later.
Adding to the relief, U.S. import prices fell 1.2% in January as imported petroleum costs tumbled 7.3%.
Federal Reserve Chairman Ben S. Bernanke was noncommittal regarding the future path of monetary policy in his two-day testimony before Congress this week. His comments were just mixed enough to keep Wall Street guessing.
He had surprised the markets Wednesday by offering a sanguine view on inflation. But he balanced those comments Thursday, saying that growth could be “stronger than we think.”
