U.S. industrial production fell more than expected in April, reflecting a broad decline in factory output and a weather-related decrease in demand for utilities, the government reported Wednesday. The Federal Reserve (Fed) said output at U.S. factories, utilities, and mines fell 0.5 percent last month after a 0.3 percent gain in March. The April decline was the biggest since last August. Factory production, the biggest component of industrial production, fell 0.4 percent, compared with a forecast for a slight rise. The decline was broad-based, with production of durable goods—expensive manufactured items expected to last at least three years—down 0.6 percent, partly due to a 1.3 percent drop in vehicles and vehicle parts. The decline is likely temporary, however, because automakers are reporting stronger sales. Utility production plunged 3.7 percent, as power output returned to more normal levels after an unusually cold March. Industry capacity utilization, a measure of how fully firms are deploying their resources, fell to 77.8 percent, from 78.3 percent in March, reducing it to 2.4 percentage points below its long-term average. Factory output may be declining because businesses are concerned about the impact of steep government spending cuts on economic growth. Many companies also may be worried that their sales could slow this year because of higher Social Security pension taxes, which have reduced disposable income for most Americans. Further, U.S. exports to Europe are likely to remain weak.
