Industrial Production Reading Better Than Expected

Washington, DC, July 15, 2009--The Federal Reserve reported Wednesday that production at America's factories, mines and utilities fell 0.4 percent last month as the recession crimped demand for a wide range of manufactured goods, including cars, machinery and household appliances.

The decline, however, was not as bad as May, which may show the economic conditions are moderating. Industrial activity posted a revised 1.2 percent drop then, which turned out to be slightly worse than first reported.

The contraction in industrial activity in June was less than the 0.6 percent decline that economists were projecting, although it marked the eighth month in a row of production cuts.

For the second quarter as a whole, industrial production fell at an annual rate of 11.6 percent, not as sharp as the 19.1 percent annualized decline experienced during the first three months of this year.

The recession has taken a bite out of demand in the U.S. for all kinds of manufactured goods, especially those related to housing, such as appliances, furniture and building materials. At the same time, factories are coping with less demand from foreign buyers coping with economic problems in their own countries.

Troubles in the auto sector probably factored into June's weakness.

Makers of cars and parts cut production 2.6 percent last month, following a deeper 8.2 percent cut in May.