MercoPress. South Atlantic News Agency

US industrial production record down; inflation flat

The automobile industry, victim of the recession

United States industrial production posted the biggest monthly decline since 1974 while consumer prices were flat in September, according to reports Thursday. Adding to the gloom a factory index for the Philadelphia region hit an 18-year low this month.

Industrial production tumbled 2.8% in September reported the Federal Reserve with business equipment production dropping 7%, a sign that companies were retrenching as the credit crisis intensified. However falling energy costs helped keep the Consumer Price Index steady, Labour Department data showed. A separate Labour Department report on claims for jobless benefits indicated employers were trimming payrolls as profits shrink. The Philadelphia Federal Reserve Bank said its business activity index slumped in October to the lowest reading since October 1990. The survey's employment index was the lowest since December 2001 and the index of new orders hit the lowest since 1980. Economists said signs of moderating inflation and a soft job market give the Federal Reserve room to cut interest rates further to boost the flagging economy. The Federal Reserve report said Hurricanes Gustav and Ike, as well as a strike at aircraft maker Boeing, "severely curtailed" industrial production last month. On the inflation front, so-called core prices, which exclude volatile food and energy costs, were also milder than expected, gaining 0.1%. Energy costs declined 1.9% in September after a 3.1% drop the previous month. Energy services prices, which include costs for natural gas and electricity, tumbled by 3.2%, the biggest decline in the 61-year history of the data series. Homebuilder confidence slid this month to the lowest level since record-keeping began in 1985, a sign the crisis in credit markets may deepen the worst housing recession in a generation. The National Association of Home Builders/Wells Fargo index of builder sentiment decreased to 14, less than forecast, from 17 in September, the Washington-based association said today. The Labour Department said initial jobless claims fell last week as job losses related to the Gulf Coast hurricanes subsided, while total benefit rolls rose to the highest level in five years. But first-time applications dropped by 16,000 to 461,000 in the week that ended October 11. The US Commerce Department earlier this weed announced retail sales dropped in September by the most in three years.