US Industrial Production Falls as Manufacturing Difficulties Continue

US Industrial production in May fell for the 16th time in 17 months at a 1.1% pace from April. Economists polled by Bloomberg had expected a smaller contraction of 0.8% following a drop of 0.7% in the previous month. Meanwhile, capacity utilization dropped to 68.3% from 69.0% to post a new record low on data ranging back to 1967. Looking deeper into the production release, the three markets that form the index all posted declines with the largest seen in mining. Partially responsible for the contraction is distress that faced American automakers as Chrysler entered Bankruptcy and General Motors prepared to follow suit. Motor vehicle assemblies fell sharply at 4.33 million on an annualized basis from 4.99 million in April. The motor vehicle sector of manufacturing showed significant weakness with the largest monthly loss of industry groups at 7.9% along with a 5.2% drop in automotive products. Most market groups also saw declines while several, including durable primary metal and defense, posted increases of nearly one percent.

[B]Capacity Utilization[/B]