The global downturn accelerates--US industrial production drops back to 2003 levels

摘要

The downturn in the US economy gathered speed in the fourth quarter of 2008 with GDP falling at an initially annualised rate of 3.8 percent and we expect aggressive stock reductions to lead to a further deceleration in activity in the current quarter. The combination of weakening external demand, falling consumer spending and declining corporate investment is having a severe impact on the economy's industrial sector. January's severe 10 percent year-on-year contraction in industrial output, which reversed the gains in production of the last 5 years, was led by a 23.4 percent month-on-month drop in vehicle production following extensive plant shutdowns. But while the auto sector will partially recover once plants reopen, other areas of manufacturing such as business equipment, which fell by 3.7 percent month-on-month in January, are likely to suffer further deterioration. Surveys of manufacturing activity confirm our view that there is worse to come. The US Philly Fed Index slumped to a 19-year low of-41.3 in February and the headline index of the Empire State manufacturing survey dropped to -34.65 from -22.2 in January.