Industrial Production plunged 0.7% in April, more than doubling the 0.3% contraction predicted by economists. Orders dropped as consumers cut back on big ticket items like cars and appliances in the face of deepening economic uncertainty. Capacity utilization also fell more than expected (79.7% vs. 80.2%), reaching its lowest level since September of 2005. Bloomberg:
A deepening housing slump, restrictions on credit and soaring food and fuel prices have caused consumers and businesses to rein in purchases of expensive items like cars and machinery. Only growing demand from overseas has prevented American factories from declining even more.
“Manufacturing is now showing clear evidence of weakening,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who accurately projected the drop. “We will see a continued slowdown in the economy, but no collapse. The industrial sector isn’t going to escape the slowdown.”
Industrial production for March was revised down to a 0.2 per cent increase from 0.3 per cent. April output was forecast to drop 0.3 per cent, according to the median estimate of 76 economists surveyed by Bloomberg News. Projections ranged from a drop of 0.8 per cent to a gain of 0.7 per cent.