Industrial production in the U.S. fell in April at the slowest pace in six months, signaling manufacturing may be stabilizing. Output at factories, mines and utilities decreased 0.5 percent last month, less than forecast, after falling a revised 1.7 percent in March, according to a report from the Federal Reserve today in Washington. The amount of industrial capacity in use dropped to a record-low 69.1 percent. Companies may not cut back as deeply this quarter after paring inventories at the fastest pace on record in the first three months of the year, helping ease the economic slump. Still, rising confidence has yet to give way to sustained gains in spending, indicating a recovery will be slow to develop. “The fallout has been so severe that we should start to see some stabilization, and we could even see some rebound in the months to come,” said Eugenio Aleman, an economist at Wells Fargo & Co. in Minneapolis. Prospects for a second-half recovery “are there just because the fiscal package is going to have an impact.” Other reports today showed the cost of living in the U.S. was unchanged in April and manufacturing in the New York region this month contracted at the slowest pace since August. Treasury securities fell after the reports signaling the factory slump we abating. The yield on the 10-year note climbed to 3.12 percent at 9:40 a.m. in New York from 3.09 percent late yesterday. Stocks were little changed with the Standard and Poor’s 500 index up 0.2 percent at 891.35. Exceeds Forecast Economists forecast industrial production would fall 0.6 percent, according to the median of 66 projections in a Bloomberg News survey, after an initially reported 1.5 percent drop in March. Estimates ranged from a decline of 1.5 percent to an increase of 1 percent. Consumer prices was unchanged in April as decreases in food and energy costs offset increases in medical care, autos and a second straight jump in tobacco prices, according to figures from the Labor Department. Excluding food and fuel, costs climbed a greater-than-forecast 0.3 percent, almost half of which reflected an increase in excise taxes on cigarettes, according to Labor. The New York Fed’s Empire State index rose to minus 4.6, better than forecast, from minus 14.7 the prior month. Readings below zero signal manufacturing activity is shrinking. Computer Demand The decrease in industrial production was led by business equipment, such as computers, and construction supplies. Motor vehicle and parts production climbed 1.4 percent in April after increasing a 0.3 percent the prior month, today’s report showed. Those increases are unlikely to be sustained in coming months as sales fall and Chrysler LLC and General Motors Corp. shut plants to reduce inventories. Chrysler, whose U.S. sales tumbled 48 percent in April from the same month last year as bankruptcy neared, said last week it will offer rebates of as much as $6,000 to boost demand. The Auburn Hills, Michigan-based company on May 1 idled its 22 U.S. plants, which had about 26,800 hourly workers, and auto parts suppliers also are likely to cut jobs as they shut factories. General Motors Corp., facing a U.S.-imposed June 1 deadline to restructure or file for bankruptcy, said last week it plans to idle, partially or completely, as many as 23 stamping, engine and transmission plants through July. The temporary closings are in conjunction with GM’s plan, announced last month, to idle 13 assembly plants for as long as nine weeks in the same period. Autos Rose Excluding automobiles, factory output fell 0.4 percent, today’s Fed report showed. Utility production increased 0.4 percent. Mining output, which includes oil drilling, dropped 3.2 percent. Production of business equipment declined 0.6 percent. Computer output dropped 1.8 percent, signaling companies continue to cut investments in new equipment. Companies trimmed inventories in the first quarter at a $103.7 billion annual rate, the biggest drop since records began in 1947, according to figures from the Commerce Department last month. At the time, economists said the drop set the stage for an improvement in economic growth toward the end of the year. “We continue to expect economic activity to bottom out, then to turn up later this year,” Fed Chairman Ben S. Bernanke said May 5 in testimony to the congressional Joint Economic Committee. “Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters.” Intel Corp., the world’s largest chipmaker, is getting orders that are “a little better than expected” in the second quarter, Chief Executive Officer Paul Otellini said May 12. “A lot depends on June,” Otellini said at a meeting at the company’s Santa Clara, California, headquarters. “So far, so good.” Last month, the company said first-quarter profit fell 55 percent because of slowing computer demand and signaled sales won’t recover in the current period.

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