U.S. Economy: Production Falls as Companies Cut Stockpiles (Joe Richter)

  By Joe Richter

  Feb. 15 (Bloomberg) -- Industrial production in the United States fell last month by the most in more than a year as companies delayed new orders while working off stockpiles of autos and building materials.

  Production at factories, mines and utilities dropped 0.5 percent after a 0.5 percent December increase, the Federal Reserve said today. The report also showed a decline in the plant-use rate to the lowest in almost a year, which may help contain inflation.

  The figures are consistent with Fed Chairman Ben S. Bernanke's prediction yesterday that excess inventories, especially at auto dealers, may limit manufacturing early this year. Production may subsequently pick up, economists said. A separate report from the New York Fed showed manufacturing in the state expanded more than forecast this month.

  ``A lot of producers are biting the bullet and clearing out inventories now rather than waiting for a surge in demand,'' said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts. ``We should see companies start to get a better handle on inventories this month and next, which will help production. That's consistent with what the Empire report is showing.''

  Economists had forecast no change in January production, and traders pushed bonds higher. The yield on the benchmark 10- year note declined 4 basis points to 4.69 percent at 9:57 a.m.

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