It probably won’t shock anyone any longer that industrial production is lower. It probably won’t shock anyone that capacity utilization is lower either. But the already-negative trend is only made worse when both were even worse than expected.
For January, Industrial Production was -1.8% and Capacity Utilization was 72.0%. Consensus estimates were -1.7% and 72.3% respectively.
This capacity use figure is really scary. This is the worse since 1983 it seems. So factories are being closed. But the ones being kept open are running at multi-decade lows. Generally speaking, the capacity loads need to be north of 80% for the economy to be considered as a baseline. It looks like total industrial production is down 10% over the last year.
You can guess where the largest drop in manufacturing was last month: motor vehicles and parts fell 23.4%.
America lost much of its factory work in recent decades. And now with white collar jobs being slashed and diced and with traditional services being slashed and diced, you have to wonder what the prospects for the good ol’ US of A are…. The stimulus package has been signed, but it is going to be a while before much of it kicks in.
Jon C. Ogg
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