- The Washington Times - Tuesday, March 17, 2009

The nation’s industrial output fell for the fourth straight month in February, with factories operating at their lowest level in six decades of record keeping. Analysts forecast more production cuts to come as companies are battered by recessions at home and abroad.

The Federal Reserve reported Monday that industrial output dropped by 1.4 percent last month, slightly larger than the 1.2 percent decline economists had expected.

The weakness included a 0.7 percent fall in manufacturing output, which pushed the operating rate at the nation’s factories down to 67.4 percent of capacity last month, the lowest level on records that go back to 1948.

The drop in manufacturing output occurred even though production at the nation’s auto plants actually rose sharply after four straight months of declines.

Private economists viewed the further plunge in industrial production as another sign of how weak the economy is right now. The recession that began in December 2007 is already the longest in a quarter-century, with the economy plunging at an annual rate of 6.2 percent in the fourth quarter. Many economists think the downturn in the current quarter could be just as severe.

They said manufacturers are being hammered by the deep U.S. recession and a spreading downturn overseas that has cut sharply into demand for U.S. exports in major overseas markets.

“The manufacturing sector is still declining as firms struggle to pare inventories and come to grips with lower consumer spending, the housing collapse, evaporating exports and the full force of a capital-spending downturn,” said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. “These negative forces are a lot to absorb, and it is too early to see a turnaround.”

Nariman Behravesh, chief economist at IHS Global Insight, said that one glimmer of hope could be seen in a slowdown in the rate of decline in manufacturing outside of autos. He said if this persists over the next few months, it could be an indication that manufacturing has at least hit a bottom and is not falling further.

The overall operating rate for manufacturing, mining and utilities fell to 70.9 percent of capacity in February, matching a record low set in December 1982, a month when the country was just beginning to pull out of the severe 1981-82 recession.

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