Industrial output plunges/second big drop in two months

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http://news.yahoo.com/s/ap/20080515/ap_on_bi_go_ec_fi/economy

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WASHINGTON - The nation's industrial output plunged in April, reflecting big cutbacks in autos and other manufacturing industries.

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The Federal Reserve reported Thursday that industrial production dropped 0.7 percent last month, more than double the decline that economists had expected.

Manufacturing output fell by 0.8 percent with half of that weakness coming from large cutbacks in auto production which has been beset by falling demand for new cars and also problems related to a strike at a parts supplier for General Motors.

The drop in overall production matched a 0.7 percent decline in February and followed a weak 0.2 percent increase in March. The nation's industrial sector has been feeling the impact of the slowdown in the rest of the economy. A bright spot for manufacturing has been continued strong overseas demand, helped by a weak dollar which has boosted the competitiveness of U.S. products in foreign markets.

Output in the mining sector declined by 0.8 percent while output at the nation's utilities edged up by 0.3 percent last month.

The drop in overall production pushed the industrial operating rate to its lowest point in more than two years. The nation's factories, mines and utilities operated at 79.7 percent of capacity last month, the first time the operating rate has been below 80 percent since October 2005 when it stood at 79.8 percent because of disruptions from the Gulf Coast hurricanes.

In other economic news, the Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last
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