Finance

Finance

US industrial output falls in February

16 March 2009 16:09 (UTC +04:00)

Bakuâ€“ APA-Economics. The nation’s industrial output fell for the fourth straight month in February with the factory operating rate dropping to the lowest level in more than a half-century of record keeping, AP reported.
The Federal Reserve reported Monday that industrial output dropped by 1.4 percent last month, slightly worse than the 1.2 percent decline that economists had expected.
The weakness included a 0.7 percent fall in manufacturing output, which pushed the operating rate at the nation’s factories down to 67.4 percent of capacity last month, the lowest level on records that go back to 1948.
The drop in manufacturing output occurred even though production at the nation’s auto plants actually rose sharply after extended shutdowns in the previous month.
Output in the mining industry, a sector that includes oil and gas drilling, was off by 0.4 percent and utility plant production plunged by 7.7 percent, reflecting warmer-than-normal weather in February which cut into demand.
Production at auto plants and auto parts manufacturers rose 10.2 percent in February after four straight months of declines including a sharp 24.7 percent drop in January.
Even with the rebound, the auto industry remains under tremendous pressures given the fact that consumers, facing with the longest recession in a quarter-century, are not in a mood to make big-ticket purchases of autos or many other goods.
The overall operating rate for manufacturing, mining and utilities fell to 70.9 percent of capacity in February, matching a record low set in December 1982, a month when the country was just beginning to pull out of the severe 1981-82 recession.
U.S. factories are being battered not only by falling demand in the United States but also in key overseas markets as the recession that began in the U.S. spreads overseas.
The government reported Friday that the U.S. trade deficit narrowed to a six-year low of $36 billion in January, but that improvement came because imports fell by a larger amount than exports did. The January decline was the sixth straight month that exports, once one of the few bright spots in the economy, have fallen.
Economists predicted that the woes of exporters would add to the troubles of an economy that already plunged at an annual rate of 6.2 percent in the fourth quarter, the biggest drop in a quarter century. "Exports are a huge drag on manufacturing right now."
Many of the nation’s biggest companies, which do a large share of their business overseas, are struggling with the effects of the global drop in demand. More than 75 percent of the orders for commercial planes that Boeing Co. held last year came from outside North America, as did about 60 percent of Caterpillar Inc.’s sales of heavy machinery and engines.
Both companies are forecasting lower results this year and are slashing jobs. Boeing has said it plans to cut 10,000 jobs in its commercial and military divisions while Caterpillar said it will trim 22,000 positions.