With a decrease in output from the manufacturing sector more than offsetting increased output from the mining and utilities sectors, industrial production showed a moderate decrease in the month of November.
A report released by the Federal Reserve on Monday showed that industrial production fell 0.6 percent in November following a revised 1.5 percent increase in October. With the decrease, industrial production was down 5.5 percent compared to the same month last year.
Nonetheless, the monthly decrease in production was somewhat smaller than the 0.8 percent drop anticipated by economists.
The drop in industrial production came as manufacturing production fell 1.4 percent despite the resumption of activity in the commercial aircraft industry after the resolution of a strike at Boeing (BA) early in the month.
At the same time, mining output increased by 2.5 percent due largely to a continued post-hurricane recovery in crude oil and natural gas operations in the Gulf of Mexico. Output from the utilities sector increased by 1.6 percent.
The Fed added that the capacity utilization rate edged down to 75.4 percent in November from 76.0 percent in October. Economists had expected the capacity utilization rate to slip to 75.6 percent compared to the 76.4 percent originally reported for the previous month.
While capacity utilization in the manufacturing sector fell to 72.3 percent in November from 73.4 percent in October, capacity utilization in the mining sector rose to 90.9 percent from 88.7 percent and capacity utilization in the utilities sector rose to 84.3 percent from 83.1 percent.
Prior to the release of the report, Wachovia Securities said it is of the view that the outlook for industrial production is worrisome, as slower global growth may limit improvement in the second half of 2008 and early 2009.
In other economic news, the Federal Reserve Bank of New York said that conditions for New York manufacturers deteriorated significantly in the month of December, although the index of activity in the sector showed a smaller than expected decrease.
The report showed that the general business conditions index fell to a negative 25.8 in December from a negative 25.4 in November, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to fall to a reading of negative 27.0.
While they improved slightly compared to the previous month, the new orders and shipments indexes remained near their record lows.
The New York Fed noted that the outlook for the sector remains subdued, with the capital spending and technology spending indexes remaining well below zero.
Nonetheless, the future general business conditions index improved slightly from the previous month, rising to 19.5 in December from 13.0 in November.
Later this week, the Philadelphia Federal Reserve is scheduled to release its regional manufacturing report, with the index of activity in the sector expected to edge down to a negative 40.0 in December from a negative 39.3 in November.
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