Industrial Production: Decline Consistent with Recession

Industrial production fell 2.8 percent in September driven by weakness in manufacturing ex-auto and mining (reflecting hurricane impact). Over the last three months, production is down 5.8 percent and is consistent with a recession. Capacity utilization levels continue to decline, suggesting continued weak profits.

Production Weakness Consistent with Recession

• Industrial production, and manufacturing production in particular, have declined over the last three months and are consistent with recession.
• Underlying these losses have been declines in the business equipment and materials sectors. Computer and electronics production continues positive but at a slower pace.

Capacity Utilization: A Weaker Profits Signal

• Historically, lower capacity utilization rates have been consistent with weaker corporate profits. Over the last six months we have seen utilization declines in manufacturing and mining. Finished goods utilization has dropped sharply over the last six months. Only computer utilization rates remain steady.

Wachovia Corporation
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