U.S. Industrial Production Drops More Than Expected In April

Washington, D.C. (AHN) - U.S. industrial production dropped more than projected in April led by the slowdown in the consumer spending, according to a report released by the Federal Reserve on Thursday.

Industrial output of the nation's factories, mines and utilities dropped 0.7 percent for the month of April, similar to the biggest drop since the one following Hurricane Katrina.

The industrial production declined more than anticipated by the economists at 0.3 percent surveyed by Briefing.com.

"Manufacturing is now showing clear evidence of weakening," Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who accurately projected the drop, told Bloomberg.

"We will see a continued slowdown in the economy, but no collapse. The industrial sector isn't going to escape the slowdown."

The production of factories moved down by 0.8 percent, the largest decline since September 2005. The output of industries have increased by 0.2 percent over the period of one year, but has climbed down by 1.2 percent from the start of this year.

The report also said capacity utilization, measuring proportion of plants in use, declined to 79.7 percent, was at its lowest level since the hurricanes, compared to 80.4 percent reported for the prior month.

The rate of capacity utiliation is 1.3 percent down by the the 1972-2007 moving average. And capacity utilization in manufacturing slipped to 77.5 percent, the lowest since November 2004.

The production of utility rose by 0.3 percent, following its rise of 0.7 percent in March. While, the mining output, including oil drilling, declined by 0.8 percent, after a 1 percent gain, the report showed.

Manufacturing production, excluding motor vehicles and parts, dropped by 0.4 percent, after the measure increased by 0.3 percent in March.

"It is pretty clear that autos were the culprit, but once you pull autos out there is still a lot of weakness," Robert Brusca, the chief economist at Fact and Opinion Economics, told CNN Money.

Output of motor vehicles and parts dropped by as much as 8.2 percent in April and extending its year-to-year decline by 16.8 percent since 2007. Light trucks and autos assemblies decreased by 12 percent to an annualized rate of 8.10 million, according to the report.