Industrial Output Stumbles in March

Big industry stumbled in March as production fell by 0.5 percent, the worst showing in three months and another sign of the troubles plaguing the nation's manufacturers.

The drop marked the second straight month that output at the nation's factories, mines and utilities went down, the Federal Reserve reported Tuesday.

Revised figures showed that industrial output in February actually edged down by 0.1 percent, rather than an increase of the same size first estimated a month ago.

March's 0.5 percent drop -- the biggest decline since December -- represented a weaker showing than the 0.2 percent decrease analysts were forecasting.

The industrial sector has been the weakest link in the national economy's ability to fully recover from slow growth. Trying to cope with the lackluster demand from consumers and businesses, the manufacturing sector has slashed hundreds of thousands of jobs and is operating well below capacity.

Operating capacity for the industrial sector fell from 75.3 in February to 74.8 in March, the lowest reading since December 2001.

At factories, which account for the most industrial output tracked by the Fed, production went down by 0.2 percent in March, on top of a 0.3 percent decline in February.

Weakness was widespread, with output falling in March for automobiles, home electronics, appliances, furniture and carpeting, machinery, metals and wood products.

At gas and electric utilities last month production dropped by 4.1 percent, after a 1.3 percent increase in February, as warmer weather allowed people to cut back on utility usage.

Output at mines, meanwhile, rose by 0.6 percent in March, after a 0.4 percent gain.

Tuesday's report highlights one of the difficulties facing the industrial sector: trying to gauge customers' appetites during these muddled economic times.

Profit-pressed businesses and battered manufacturers have been reluctant to make big investments in capital projects or in hiring, a major factor restraining economic growth.

Since falling into recession in 2001, the economy has been struggling to get back on firmer footing. Instead, it has been suffering through a pattern of uneven economic growth, with a quarter of strength followed by a quarter of weakness.

That climate has made it difficult for companies to want to lock in big financial commitments.

Federal Reserve policy-makers in March decided to leave interest rates at a 41-year low of 1.25 percent, saying that such super-low rates should help energize the listless economy.

Some economists believe the Fed probably will keep rates at that level in the months ahead.

With the war in Iraq appearing to be winding down, economists' focus is back on trying to get a feel for the economy's true fundamentals. That picture has been blurred by the uncertainties of war.

Fed Chairman Alan Greenspan and his colleagues, however, have said they are hopeful that once the war is over, the economy will return to full health.

While businesses have been largely tightfisted in terms of spending and investment, consumers have been more energetic, lured by heavy discounting and free financing deals, especially on cars and other big-ticket goods.

Consumers, whose spending accounts for two-thirds of all economic activity in the United States, have been the main force keeping the economy going.