With its 12th straight month of decline in September, the US manufacturing sector has now suffered the longest spell of falling industrial output since the last year of the second World War. Production at factories, utilities and mines fell 1 per cent last month, the Federal Reserve said in a report yesterday, and capacity utilisation fell to 75.5 per cent, its lowest level since June 1983.
The figures show the manufacturing sector remains mired in the recession that plagued it long before last month's terrorist attacks. For the July-September period, industrial output declined at an annual rate of 6.2 per cent, following a 4.4 per cent rate of decline in the second quarter and a 6.8 per cent decrease in the first quarter.
Economists had predicted that output would be seriously affected by the September 11th attacks, which caused the grounding of all commercial aircraft for almost a week and a slowdown of deliveries at US borders.
"Clearly, the immediate impact of the events of September 11th was negative - from disrupted sales, air travel, and production, not to mention the effect on the attitudes and expectations of consumers and businesses," Fed vice-chairman Mr Roger Ferguson said in a New York speech yesterday.
He confessed that the nation's central bank could not forecast when the situation would improve. "Spending appears to be recovering from the initial cutback, but of course it is too early to assess how great the influence will be in the medium term," he said.
"The longer-term prospects for the US economy remain sound, just as they were before September 11th. If the extent of the economic damage inflicted by the attacks is unknown at this point, so too is the length of time before aggregate economic growth picks up.
"Many private-sector economists are forecasting a brief decline in economic activity during the second half of this year, followed by a recovery early next year. Whether this outlook becomes reality depends importantly on the aforementioned household and business confidence."
Meanwhile, Wall Street suffered a minor attack of nerves yesterday after a new anthrax scare in the London Stock Exchange. The Dow Jones Industrial Average, which rose sharply in the morning on reassuring earnings reports from Dow components Johnson & Johnson and United Technologies and two major banks, slipped back at midday.
America's biggest online brokers Charles Schwab shocked investors with news that it suffered a 91 per cent drop in third-quarter net income. Online trading, already in steep decline because of the bear market, dried up in the wake of the attacks.
Schwab reported net income of $13 million (€14.3 million), or a penny a diluted share, compared with $142 million, or 10 cents a share, a year earlier.
