U.S. industry sags again

Press, 17 April 1982, Page 8

U.S. industry sags again

NZPA-Reuter Washington The output of United States industry fell for the seventh time in eight months during March, the Government said yesterday, indicating that the recession has not yet run its course. Industrial production fell 0.8 per cent after a temporary weather-related spurt in February and has now fallen 8.3 per cent from the prerecession peak last July, the Federal Reserve Board said.

During February production rose 1.2 per cent, but economists said that gain reflected a rebound from artificially low January levels, when unusually severe winter weather forced many plants and businesses to close their doors.

Output fell 3.3 per cent during the first quarter of this year, the board, which is America's central bank, said, suggesting Commerce Department data to be released next week will show a sharp decline in the American gross national product during the three months ended in March.

During the fourth quarter of last year, inflation-ad-justed G.N.P. fell at a 4.5 per cent annual rate, and an internal Commerce Department estimate obtained by the press last month shows an • identical decline in the January an March, period.. Reagan Administration economists believe the recession is near its bottom and

signs of recovery should be evident in the next month or two.

But the Treasury Secretary (Mr Donald Regan) who recently predicted that the economy would come “roaring back" this spring, appeared to revise that yesterday, He said in a 'television interview he was confident of an upswing by summer if forecast Federal Budget deficits can be reduced in current negotiations between the Administration and Congress. • Mr Regan also agreed with other financial officials that recovery might prove shortlived if interest rates do not fall from current levels, with prime rates at 16.5 per cent. “High interest rates have brought this economy to its knees, it’s dead in the water,” he said. "To get it going, we have to let business know we are cutting deficits. That will be the signal business wants."

Most sectors of the economy'reported lower production in March, but car output rose for the second month after falling to a 23-year low in January. The rise reflected efforts to rebuild depleted inventories, but car sales are still in a slump.

Production of defence and space equipment which has risen steadily throughout the recession, climbed 0.7 per cent last month and was up 7.6 per cent from a year earlier.