Industrial production in U.S. falls by most in eight months

Utility Output

Utility output slumped 3.7% after a 6.4% jump the previous month that was the biggest in six years. Demand for electricity and natural gas returned to normal last month after gaining during the coolest March since 2002, according to the National Climatic Data Center.

Mining production, which includes oil drilling, increased 0.9%.

Greenbrier Cos., a Lake Oswego, Oregon-based rail-car maker, expects orders will grow as international trade improves, consumer demand picks up and the industry works off the excess supply built up in the past few years.

“We think there will be a modest amount of demand continuing in 2013,” Chief Executive Officer William Furman said in a May 8 presentation to investors. “We see substantial demand in 2014 and 2015 building up.”

Business Investment

Details of the industrial production data released today also showed broad-based weakness. Output of business equipment decreased 0.5% in April and consumer goods dropped 0.6%. Machinery production fell 0.4% after a 0.6% decline. Output of construction materials decreased 0.8% after slumping 1.5%.

The economy may cool to a 1.6% pace in the second quarter, after growing at a 2.5% rate in the first three months of 2013, according to a Bloomberg survey of economists from May 3 to May 8. The projected slowdown reflects the lagged effect from a two percentage-point rise in the payroll tax at the start of 2013 and $85 billion in automatic budget cuts that began on March 1.

Business inventories were little changed in March for a second month, as sales fell by the most in nine months, Commerce Department figures showed on May 13.

Bloomberg News

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