Industrial Production Down For 12th Straight Month
October 16, 2001
Industrial production fell for the 12th consecutive month in September, marking the first time there has been an entire year of declines since the mid 1940s.
The Federal Reserve reports output at the nation’s factories, utilities and mines fell by 1% last month, the worst showing since June, and follows a 0.7% drop in August.
Operating capacity in the industrial sector also fell to its lowest level since 1983, sinking to 75.5%.
In September, factory output fell by 1.1% following a 0.9% drop in August. Production of cars and parts fell 3.6% while consumer goods production fell 3.2%.
The reason for the drop, says Newport Economist Jim Haughey, is that so many factors during the month simple went wrong.
“Domestic final consumption demand fell slightly with the new uncertainty in the economy,” says Haughey. “Export demand fell and the import share rose with an expensive dollar. The terrorist attacks have temporarily boosted the dollar even more. Business inventories fell - probably about 0.3 to 0.5% - reducing the need for new production. Distraction and the transportation problem in the second week of September interrupted scattered factories on the supply side.”
Haughey preducts, “October is likely to have less distraction and disruption, but all of the other negative factors remain. They will disappear gradually over the late fall and winter. Nonetheless, production will be on a downward trend for about four or five more months.”
Before the Sept. 11 attacks, many analysts were hopeful the industrial portion of the American economy was starting to come out of a year-long slowdown, but now many of those hope have been dashed. However, there are hopes of an economic recovery in the first half of next year.