Manufacturing slips in April, expansion trips
WASHINGTON - The slump in US manufacturing deepened while the economy skirted recession, reports yesterday showed.
Industrial production declined 0.7 percent in April, the Federal Reserve said in Washington, more than twice the drop forecast by economists. Separate figures from the New York and Philadelphia branches of the central bank indicated the slide may continue this month.
Only exports and consumer spending, the largest part of the economy, are keeping the six-year expansion alive as housing shows no sign of a rebound and factories retrench.
The 0.7 percent decrease in production at factories, mines, and utilities followed a revised 0.2 percent gain in March, the Federal Reserve said yesterday. Capacity utilization, which measures the proportion of plants in use, fell to 79.7 percent, the lowest level since September 2005.
Industrial production was forecast to drop 0.3 percent after a previously reported 0.3 percent gain, according to the median estimate of 76 economists surveyed by Bloomberg News.
A separate report showed the National Association of Home Builders/Wells Fargo index of homebuilder sentiment unexpectedly dropped this month to 19, signaling the housing slump will continue. The measure reached a record low of 18 in December. Readings under 50 mean most respondents view conditions as poor.
Additionally, the New York Fed reported manufacturing in the region shrank in May for the third time in four months, as a drop in orders caused businesses to pull back. Its Empire State index fell to minus 3.2, from 0.6 percent in April. Readings less than zero signal contraction.
The Philadelphia Fed's general economic index improved to minus 15.6, better than forecast, from minus 24.9 in April, the bank said yesterday. The index averaged 5.1 in 2007.
The industrial production report showed factory output, which accounts for about four-fifths of industrial production, slumped 0.8 percent, the most since September 2005.
Excluding autos and parts, factory output fell 0.4 percent last month, the Fed reported.
Production of consumer durable goods, including automobiles, furniture and electronics, fell 0.8 percent and output of computers and peripheral equipment increased 0.5 percent.
