Monday, 29 June 2009

Midwest Mfg Index Tumbles To 16-Yr Low On Severe Auto Slump

Midwest Mfg Index Tumbles To 16-Yr Low On Severe Auto Slump

By Howard Packowitz

Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--Burdened by the severely slumping auto sector, manufacturing activity in the midwestern U.S. during May fell to its lowest level in almost 16 years, according to data released Monday from the Federal Reserve Bank of Chicago.

The Midwest Manufacturing Index dropped 3.1% in May to a seasonally-adjusted 78.2, the lowest reading since September 1993.

The Chicago Fed also revised downward its April index to 80.7, from an original reading of 81.8.

Compared with year-ago levels, regional output plunged 24.4% in May versus a 15.2% year-over-year decline nationwide.

The May data also showed the region did not fare well versus the Federal Reserve Board's industrial production index, which was 1.0% lower in May.

The midwestern index revealed decreases in three of the four major indicators, with auto sector production showing the steepest decline on a monthly and annual basis.

Michigan, which is part of the five-state region, has been especially hard hit as the major auto makers based in that state struggle for survival.

Regional auto output dropped 10.7% in May on the heels of a 3.0% decline in April. It plunged 39.2% compared to May 2008. The latest auto sector reading of 44.7 was an 18-year bottom, according to Chicago Fed data.

"The troubles of the Detroit Three auto companies seem to be affecting midwestern production much more than that of other areas because of their operations' concentration in the Midwest," the Chicago Fed said in a release on Monday.

Nationwide, auto production fell 2.6% in May, compared to the previous month. For the year, auto output dropped 22%, the Chicago Fed reported.

The data are compiled by calculating the number of hours worked in the five-state region of Michigan, Illinois, Wisconsin, Iowa, and Indiana.

The June Midwest Manufacturing Index is scheduled to be released July 27.

-By Howard Packowitz, Dow Jones Newswires; 312-750-4132; howard.packowitz@dowjones.com

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(END) Dow Jones Newswires

June 29, 2009 12:05 ET (16:05 GMT)


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