Industrial Output Fell Less Than Expected in Nov.

Industrial output fell in November as weakness in autos, other industries depressed activity

Industrial output fell slightly less than expected in November as manufacturers continued to suffer from weakness in autos and many other areas that is not expected to ease anytime soon.

The Federal Reserve reported Monday that industrial activity dropped by 0.6 percent in November. Economists expected a decline of 0.8 percent.

The manufacturing sector is suffering like the rest of the economy from the deepening recession, which has cut consumer demand for many products.

"Manufacturing production tanked in November and the data were even worse than they look," said Joel Naroff, chief economist at Naroff Economic Advisors. "The only industry that posted a gain was aircraft and that was only because Boeing started back up after the strike."

The 0.6 percent drop in November followed a revised 1.5 percent increase in October. However, that gain occurred after a 4.1 percent plunge in September, which represented the biggest one-month drop since a 5 percent decline in February 1946.

For November, manufacturing output was down 1.4 percent, reflecting a 2.8 percent decline in production at auto plants, the third drop in the past four months. Production fell by a huge 11 percent in August and 3.6 percent in October.

Detroit automakers last week got turned down in a bid for a bailout package from Congress when Senate Republicans insisted the auto unions agree to wage cuts. General Motors Corp., Chrysler LLC and Ford Motor Co. all are seeking assistance, but the prospects at GM are considered the most dire.

After a weekend trip to Iraq and Afghanistan, President George W. Bush told reporters on Air Force One on Monday that the administration would provide short-term government assistance, saying "an abrupt bankruptcy for autos would be devastating for the economy."

For November, output at aerospace factories, the category that includes airplane manufacturer Boeing Co., jumped by 12.8 percent after three straight months of declines.

A strike halted production at Boeing's commercial airplane factories for eight weeks before the Machinists union accepted a four-year contract and began returning to work on Nov. 2. The strike cut Boeing's revenues by more than $100 million a day and forced subcontractors worldwide to lay off workers.

Output at the nation's mines, a category that includes oil and gas production, increased by 2.5 percent in November following an even bigger 7.2 percent rise in October. The October gain followed a 9.5 percent plunge in September as production along the Gulf Coast was disrupted by the September hurricanes.

Production at the nation's utilities rose by 1.6 percent in November following a 0.7 percent increase in October.

The Fed said the rebound following the end of the Boeing strike and the hurricanes added almost 1 percentage point to industrial production in November.

[Why ForexGen]


1. Lowest spreads in the market with 0-1 pip spread in 10 pairs, no commissions, no swaps and instant account Activation.
2. Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
3. ForexGen offers Forex trading in the major currency pairs and crosses.
4. Low capital start, with $250 as a minimum account size.
5. Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
6. [ForexGen] offers a free trial Forex [demo account] that allows you to test your skills and practice without risking real money.