Factory Output, Inventories Drop

U.S. industrial output declined for a seventh straight month in April as the nation’s manufacturers continued to struggle, but a drop in inventories of unsold goods in March may point to better times ahead, government figures showed.

The Federal Reserve said industrial output slumped 0.3% in April, after a revised 0.1% decline in March. Capacity utilization, which measures how close to full capacity the nation’s factories, mines and utilities are operating, fell to 78.5%, its lowest level in 10 years.

In a separate report, the Commerce Department said business inventories fell 0.3% in March. The drop followed a 0.4% decline in February, marking the first time since 1992 that inventories have fallen for two consecutive months.

The production report showed some signs the worst may be over for the nation’s factories, said Gordon Richards, economist with the National Assn. of Manufacturers in Washington.

Also, while overall business inventories declined by 0.3% in March, factories reduced stocks of unsold goods by a sharper 0.6%, after a 0.4% drop in February.