U.S. Factory Output Surged in October on Hurricane Rebound

A surge in U.S. factory production last month matched the largest gain since 2010 as output at oil refineries and petrochemical plants returned to normal operations following Hurricane Harvey, Federal Reserve data showed Thursday.

Highlights of Industrial Production (October)

  • Factory output rose 1.3% (est. 0.6% gain), matching April’s advance that was the largest since May 2010
  • Manufacturing production in September was revised up to a 0.4% advance from 0.1%
  • Total industrial production, which also includes mines and utilities, increased 0.9% (est. 0.5% rise), the most since April, after a revised 0.4% gain
  • Capacity utilization, measuring the amount of a plant that is in use, climbed to 77% (est. 76.3%), the highest since April 2015, from 76.4%

Key Takeaways

Excluding the rebound effects from tropical weather and flooding in the Houston area that resulted in the shuttering of refineries, factory output rose 0.2 percent in October, the Fed said. Excluding hurricane effects, total industrial production climbed 0.3 percent.

Output of consumer goods, business equipment, construction and materials including chemicals all showed advances in October, pointing to a broad-based pickup.

Automobile production rose at a slower pace. Industry figures showed sales of cars and light trucks cooled in October from the fastest annualized rate since 2005.

Manufacturers are likely to keep benefiting from improving demand overseas, in addition to gains in business investment and consumer spending in the U.S.

The report is in sync with other recent figures. The Institute for Supply Management’s manufacturing index released Nov. 1 showed factory activity remained solid in October even as it eased from a 13-year high a month earlier.

Other Details

  • Utility output rose 2 percent after falling 1 percent the prior month
  • Production of motor vehicles increased 1 percent; excluding autos and parts, manufacturing output rose 1.3 percent
  • Mining production dropped 1.3 percent as Hurricane Nate caused a short-lived drop in oil extraction; with oil and gas well drilling declined 1.9 percent
  • Production of consumer goods rose 0.9 percent, and output of business equipment improved 0.5 percent; production of construction supplies increased 0.4 percent

— With assistance by Jordan Yadoo

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