U.S. Manufacturing Output Rises as Impact From Hurricanes Fades

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U.S. factory production rose last month for the first time since June, a sign the industry is starting to regain its footing after the damage from hurricanes Harvey and Irma, Federal Reserve data showed Tuesday.

Highlights of Industrial Production (September)

  • Factory output increased 0.1% (est. 0.2% gain) after falling 0.2%
  • Total industrial production, which also includes mines and utilities, rose 0.3% (matching est.) after a revised 0.7% drop
  • Capacity utilization, measuring the amount of a plant that is in use, inched up to 76% (est. 76.2%) from 75.8%
  • Harvey, Irma combined effect trimmed industrial production growth by 0.25 percentage point, Fed said

Key Takeaways

The report showed broad-based gains in consumer durables and non-durables, as well as business equipment and construction.

For the third quarter, industrial production fell 1.5 percent at an annual rate, the Fed said. Without the impact of the hurricanes, the index would have climbed at least 0.5 percent, it said.

As volatility from the hurricanes dissipates, economists expect manufacturing will keep humming along as household demand, business investment and improving overseas markets help to lift production. History shows economic activity that’s initially subdued due to major storms tends to get a boost amid rebuilding in later months.

Recent data have indicated manufacturing is expanding steadily. The Institute for Supply Management’s manufacturing index, released Oct. 2, showed factories expanded in September at the fastest pace in 13 years. Supplier delivery times lengthened, and some ISM survey respondents reported getting new orders because of the hurricanes. 

Other Details

  • Utility output jumped 1.5 percent in September after falling 4.9 percent the prior month
  • Mining production rose 0.4 percent; oil and gas well drilling dropped 2.8 percent
  • September production of motor vehicles increased 0.1 percent; excluding autos and parts, manufacturing output also rose 0.1 percent after a decline of 0.5 percent
  • Production of consumer goods rose 0.5 percent, and output of business equipment increased 0.8 percent
  • Construction output climbed 1.9 percent, the first gain since April
  • July industrial production was revised down to a decrease of 0.1 percent from a previously reported increase of 0.4 percent
  • Due to hurricanes’ impact, “pulling together estimates of IP will present a number of challenges,” Fed said last week

— With assistance by Jordan Yadoo

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