Industry operating rate at lowest level in 18 years

WASHINGTON -- The nation's first recession in a decade rippled further through the economy in November, pushing the operating rate in U.S. industry down to the lowest level in 18 years.

But on the positive side, the economic weakness kept the lid on inflation with the Consumer Price Index showing no change last month as another big drop in energy prices helped offset higher costs for new cars.

A third report showed that businesses worked down their backlog of unsold goods at a record rate in October, a development that analysts said should set the stage for an economic rebound early next year.

Taken together, analysts said they believed the various statistics depicted an economy that may be emerging from a recession that officially began last March but has been battering the nation's manufacturing industries for nearly a year before that.

The Federal Reserve reported that output at the country's factories, mines and utilities tumbled 0.3 percent last month, the 13th drop in the past 14 months. But the decrease last month was far smaller than the 0.9 percent plunge in October, reflecting a big jump in auto output.

"Manufacturing remains in recession, but you have to stop falling before you can begin rising and maybe the decline has started to decelerate," said Joel Naroff, head of a Pennsylvania consulting firm.

The string of declines in industry output pushed the operating rate at the nation's factories, mines and utilities down to 74.7 percent in November, the weakest pace since May 1983, when the country was climbing out of its worst recession since the Great Depression.

Worst may be over

A separate report showed that businesses were able to reduce their backlog of unsold inventories by a record 1.4 percent in October.

Economists said this sharp drop in inventories will help set the stage for a rebound in production and economic recovery in the moths ahead.

"I do think we are starting to see glimmers that the worst is behind us," said Bill Cheney, economist at John Hancock Financial Services in Boston.

The Labor Department reported that consumer prices were flat in November after having fallen by 0.3 percent in October, indicating that the recession is at least keeping inflation at bay.