Component shortages, strikes, and special interruptions associated with new
model changeovers took a toll on light vehicle assemblies in recent months.
Ongoing difficulties at one large automaker may further constrain output in
the fourth quarter.
Supply considerations do not explain all of the slowdown since early 1994,
however. Total Iightvehicle production peaked in February, the same month
in which short-term interest rates began to rise and the S&P 500 reached a
peak. A sharp slowdown in mortgage refinancing and a flattening out in con-
sumer confidence have also let some of the steam out of growth in vehicle
demand. Even so, sales and production remain at high levels, and most indus-
try participants remain optimistic about their prospects for 1995.
Sources: The Midwest Manufacturing Index
(MMI) is a composite index of 15 industries,
based on monthly hours worked and kilowatt
hours. IP represents the Federal Reserve Board
industrial production index for the U.S. manu-
facturing sector. Autos and light trucks are
measured in annualized physical units, using
seasonal adjustments developed by the Board.
The purchasing managers’ survey data for the
Midwest are weighted averages of the seasonally
adjusted production components from the
Chicago, Detroit, and Milwaukee Purchasing
Managers’ Association surveys, with assistance
from Bishop Associates and Comerica.
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