Bad Industrial Production News
From Marketwatch:
Industrial production falls sharply in Jan. - MarketWatch : By Greg Robb & Rex Nutting, MarketWatch: U.S. industrial production fell in January by the largest amount since Hurricane Katrina devastated the Gulf Coast in September 2005, the Federal Reserve reported Thursday. Industrial output of the nation's factories, mines and utilities fell 0.5% in January, the fourth decline in the past five months. Automakers and other producers are slashing production to bring down their inventories of unsold goods. The decline in factory output was even steeper, with production down 0.7%. Production of motor vehicles and parts fell 6%. Vehicle assemblies fell to their lowest level in nearly a decade. The decline in factory output was broad based. Factory output excluding vehicles fell 0.4%.
The report was "dismal," wrote Stephen Stanley, chief economist for RBS Greenwich Capital, although he judged that the January downturn was a "temporary weather-related bump in the road," not a fundamental shift in the economy. "The sector is in recession," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, noting that output fell 1.7% annualized in the fourth quarter and is heading for a decline in this quarter as well.
The weak report "not only eliminates any chances for Fed hikes but opens the way for rate cuts as early as May," wrote Ashraf Laidi, chief currency analyst for CMC Markets, in an email to clients. Capacity utilization fell to 81.2% in January from 81.8% in December. This is the lowest level since last February. The Fed had been worrying about high rates of capacity utilization feeding into inflation.
