Industrial production in U.S. decreases 0.4% on Sandy effect

Vehicle Production

Today’s figures showed motor vehicle and parts output decreased 0.1 percent after a 1.8 percent drop a month earlier. Auto manufacturing has been a bright spot in the industry, with cars and light trucks selling at a 14.22 million annual rate in October after climbing to 14.88 million in September, the strongest since March 2008, according to Ward’s Automotive Group.

Output of business equipment decreased 1.2 percent, the biggest drop since May 2009, after a 0.4 percent gain in September. Consumer goods production fell 0.9 percent last month, led by non-durable products such as food, paper and clothing.

Capacity utilization, which measures the extent to which plants are achieving their full potential output, decreased to 77.8 percent in October from 78.2 percent.

Capital Spending

Companies such as W.W. Grainger Inc., a Lake Forest, Illinois-based supplier of tools and equipment, are finding more restraint in corporate investment as the U.S. gets closer to the so-called fiscal cliff. Without resolution from lawmakers before year-end, taxes will increase and spending cuts will occur in 2013, threatening the economy with a recession.

“The volume on the fiscal cliff has absolutely notched up over the last several months,” James T. Ryan, president and chief executive officer at W.W. Grainger, said on a Nov. 14 conference call with analysts. “We’re not seeing anyone that’s stepping out and taking big chances with large projects or capital investments.”

Bloomberg News

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