Newspaper article THE JOURNAL RECORD

Industry Output Declines for Third Straight Month

Newspaper article THE JOURNAL RECORD

Industry Output Declines for Third Straight Month

Article excerpt

WASHINGTON (AP) _ The nation's industrial output fell in May for the third straight month _ the first time that has happened since the last recession in 1991.

Despite the gloomy figures, analysts said they doubt the economy is headed into a serious downturn and predicted it will improve later this year.

The Federal Reserve said Thursday that a steep drop in auto production caused its closely watched gauge of industrial output to fall 0.2 percent last month.

In a sign of easing inflation pressures, the Fed also reported that more slack was apparent for the fourth consecutive month at the nation's factories, mines and utilities.

Also, a business survey by the Federal Reserve in Philadelphia suggested the slowdown is continuing. Manufacturers in the region reported declines in new orders, shipments and employment in June and said they expect only modest improvements over the next six months.

"If you believe the figures, things are just getting worse and worse," said economist Michael Evans, who heads his own forecasting firm in Boca Raton, Fla. "I don't know whether to believe that or not."

Evans said most signs point to a flat economy in the second quarter, which ends in two weeks. But he predicted a modest rebound after that as a large stockpile of business inventories dwindles.

The economy's dramatic slowdown since the booming growth that closed out last year improves chances the Federal Reserve will cut interest rates this summer, analysts said. But most predicted it would not occur before the end of August.

"There is plenty of evidence that the economy is weak enough to need a boost from an easier Fed," said Rosanne Cahn of CS First Boston Corp. in New York City.

The May drop in industrial output follows declines of 0.5 percent in April and 0.2 percent in March. Output was flat in February.

The last time it fell for at least three straight months was in March 1991. …

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