Output has first drop since 2009

WASHINGTON --- Sluggish spending by businesses and consumers is causing factories to cool their production after they helped lift the economy out of recession.


Companies have slowed their rebuilding of stockpiles and replacement of worn-out equipment. Consumers are cautiously spending at a time of 9.6 percent unemployment and slow job growth. That combination led to the first decline in output at the nation's mines, factories and utilities since the recession ended in June 2009.

Factory output, the largest element of industrial production, fell 0.2 percent in September, the Federal Reserve said Monday.

In the year after the recession ended, manufacturing surged ahead at an 8.8 percent annual rate. That was the strongest year-over-year gain since the 1983-84 economic recovery, but the growth has been more or less flat over the past two months.

Without consumer demand to take up the slack, industry can't maintain its strong growth.

"Those things have naturally run their course, and we're left with a very weak economy," said Paul Ashworth, the senior U.S. economist at Capital Economics. "There's no restocking going on any more, and consumption remains weak."

It's typical for a manufacturing boom to fade at this point in an economic recovery. During the recoveries in the early 1980s, 1991 and 2001, industrial production rose rapidly for six months then fell for several months. However, economists remain concerned that the sluggish economy could keep demand low, preventing manufacturers from returning to growth.