US industrial output unexpectedly falls leading to calls for more QE
US INDUSTRIAL output shrank last month for the first time in more than a year, in a sign the economy is in a slow growth rut that appears certain to lead to more monetary stimulus from the Federal Reserve.
Another report yesterday showed homebuilder sentiment rose this month but remained at depressed levels, fortifying views that the US central bank would pump more money into the economy at its 2 November meeting.
“The industrial production report illustrates, if anything, economic growth is still slowing rather than beginning to pick up again, which is yet another reason for the Fed to unleash QE2,” said Paul Ashworth, a senior US economist at Capital Economics.
Industrial production fell 0.2 per cent, the first decline since June 2009, the Fed said. Economists had expected September’s industrial production to rise 0.2 per cent, the same as in August.
Separately, the National Association of Home Builders/Wells Fargo Housing Market Index rose three points to 16 in October, beating economists’ expectations for a one-point rise to 14. A reading below 50 indicates that more builders view sales conditions as poor than good. The index has not been above 50 since April 2006.