Industrial Production Falls; Consumer Prices Unchanged

The nation's factories continued reducing their output in April, though at the slowest pace in six months, as the recession continued to deepen. A separate report found that consumer prices were unchanged last month.

Industrial production fell 0.5 percent, the Federal Reserve reported this morning, which was a smaller drop than the 0.7 percent that economists had forecast. The steepest declines were in business equipment, reflecting a corporate sector that is rapidly pulling back.

Industrial firms continued producing well below their potential, as capacity utilization fell to 69.1 pecent, a record low, from 69.4 percent.

Those numbers are consistent with a growing consensus that the pace of economic decline has abated, even as the economy continues to shrink and a deep recession remains underway.

It is, on balance "yet another report that fits within the picture of an economy contracting more slowly but still far from an actual recovery," said Paul Ashworth, an economist at Capital Economics, in a report.

Analysts think the number is likely to fall further in the months ahead, particularly as automakers begin a summer hiatus from production.

The consumer price index was flat in April, the Labor Department said this morning. Fuel and energy prices declined, with energy prices down 2.4 percent, but those price declines were counteracted by an 0.3 percent rise in all items other than food and energy.

The weak economy has kept a lid on prices in recent months, as companies have slashed prices or been unable to raise them, given cash-strapped consumers.