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Economic Watch: Factory Output, Consumer Sentiment Decline

U.S. industrial production fell 0.3% in April for its fifth consecutive monthly loss, according to a Federal Reserve report issued Friday.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
May 17, 2015
Economic Watch: Factory Output, Consumer Sentiment Decline

 

3 min to read


U.S. industrial production fell 0.3% in April for its fifth consecutive monthly loss, according to a Federal Reserve report issued Friday.

The manufacturing output component was unchanged in April after recording an upwardly revised gain of 0.3% in March.

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The index for mining moved down 0.8%, its fourth consecutive monthly decrease. A sharp drop in oil and gas well drilling has more than accounted for the overall decline in mining this year, according to the Fed.

The output of utilities fell 1.3% in April.

On a more encouraging note, at 105.2% of its 2007 average, total industrial production in April was 1.9% above its year-earlier level.

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Capacity utilization for the industrial sector dropped 0.4 of a percentage point in April to 78.2%, a rate that is 1.9 percentage points below its 1972 through 2014 average.

“From the Fed's perspective, economic reality is once again maintaining a wide spread from the Federal Reserve Open Market Committee's more optimistic forecast for accelerated growth,” said Lindsey Piegza, chief economist at the investment banking firm Sterne Agee. “Keep in mind, after a slow start out of the gate, the economy must now reach and sustain a plus 3% growth rate from here on out to meet even the Fed's new, lowered bar of expectations.”

The Fed has been considering raising interest rates from near-zero for some time, but has indicated it needs to see stronger performance in the American economy before it moves forward with such a plan, especially with an earlier report showing the U.S. economy expanded at an annual rate of just 0.2% in the first quarter of 2015.

Meantime, a separate report, also released Friday, showed a sharp drop in consumer confidence. Numbers from the University of Michigan Survey of Consumers declined from April by 7.6%, with the Consumer Sentiment index reading 88.6.

It also revealed consumers’ feelings on current economic conditions as well as their expectations for the future were down from April, as well.

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In contrast, all three indicators were up sharply from the same time in 2014.

According to survey Chief Economist Richard Curtin, consumers have become increasingly convinced that there would be no quick and robust rebound following the dismal first quarter performance.

“The decline was widespread among all age and income subgroups as well as across all regions of the country," Curtin said. "In contrast to last year's rapid second quarter revival, this year the economy faces reduced production and employment from lower oil prices, falling exports, and rising imports from a stronger dollar.

"Although this was not the first time in recent years consumers have abandoned expectations for a faster recovery, the data nonetheless suggest that consumers have remained optimistic about their future personal finances and have maintained their buying plans at reasonably high levels."

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