1. May 15, 2001
Economy
Output at U.S. Businesses Falls
For the Seventh Month in a
Row See the full text of the
Federal Reserve's report
A WSJ.COM News Roundup on April industrial
production.
WASHINGTON -- The manufacturing
slump continued last month as output at See analysis from
factories, utilities and mines fell for the Briefing.com on the
seventh straight month and capacity industrial-production
utilization dropped to its lowest level since report.
1991.
See the full text of the
Still, as Federal Reserve policy makers Commerce Department's
prepared for Tuesday's meeting to decide report on March
whether interest rates should be cut for the inventories.
fifth time this year, there were also new
positive signs for the economy: The nation's See analysis from
businesses continued to draw down stocks of Briefing.com on the
excess goods in March in response to the inventory report.
slowing economy.
Industrial production fell 0.3% in April, the Fed said Monday. The
decline in output was more than the 0.2% drop forecast by economists
surveyed by Thomson Global Markets and followed a revised 0.1%
decline in March, initially reported as a 0.4% increase.
Capacity utilization also fell in April, to 78.5% from a revised 78.9%
in March. Economists anticipated the figure -- a measure of what
portion of capability is being used -- would be 79.1% last month.
Inventories Shrink Faster Than Expected
The Commerce Department reported that business inventories fell
0.3% in March to a seasonally adjusted level of $1.213 trillion.
Economists expected inventory levels, a measure of the stocks of
unsold goods held by businesses, to fall 0.2%.
March's decrease followed a revised 0.4% drop in February. The
February decline was originally estimated at 0.2%, and was the first

2. fall in overall business inventories in over two years.
By cutting production and laying off workers, businesses have been
trying to unload excess goods that piled up as economic growth slowed
dramatically at the end of last year. Last month, nonfarm payrolls
plunged 223,000, raising the unemployment rate to 4.5% from 4.3%.
March inventories fell even as businesses saw sales decrease 0.3% to
$888.3 billion, following a 0.4% fall in February. The inventory-to-
sales ratio was 1.37 in March, unchanged from February. The ratio
measures how many months it would take for a firm to exhaust its
current inventory, and indicates how well firms are matching supply
with demand.
Wholesale inventories rose 0.1% in March after sliding 0.2% in the
previous month. Sales fell 1.3%, more sharply than the 0.6% decrease
posted in February.
Retail inventories dropped 0.3% in March. Sales, however, declined
0.4%. Within the sector, stocks of durable goods declined 1%, while
those of nondurable goods increased 0.5%.
Automobile dealers' inventories dropped 1.3% following a 1.8%
decline in February. Auto makers have struggled to slash inventories as
the economic slowdown has kept consumers away from showrooms.
Many auto makers temporarily closed plants and cut back on shifts to
trim production and deplete stockpiles. They also have offered
incentives and cheap financing to attract buyers.