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,’’ Paul Ashworth, senior US 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 than fell for several months.
Economists said they expect factory growth to bounce back modestly because the weaker US dollar is making American goods less costly to overseas buyers.
For the July to September quarter, industrial production grew 4.8 percent. That is slower than the 7 percent gains in each of the first two quarter of this year. Last month, production of construction and consumer goods dropped as high unemployment made Americans reluctant to spend. Lower production of automotive products, appliances, and energy offset a small gain in business equipment production. Production of machinery and electrical equipment also fell.
American factories were operating at 74.7 percent of capacity in September, down 0.1 percentage point from August. That was the first drop since June 2009, when the deepest recession since the Great Depression ended.
Production by mines grew 0.7 percent. Utility output fell 1.9 percent as mild weather doused demand for energy, analysts said.
Economists remain concerned that the sluggish economy could keep demand low, preventing manufacturers from returning to growth.
