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Economy in Brief

U.S. Industrial Production Gains Weaken
by Tom Moeller  November 16, 2018

Industrial production rose 0.1% (4.1% y/y) during October following a 0.2% September improvement, revised from 0.3%. The 0.8% gain in August output was revised from 0.4%. October's rise was the smallest since a decline in May. A 0.2% improvement had been expected in the Action Economics Survey. Manufacturing activity increased 0.3% (2.7% y/y) during October, the same as in September which was revised from 0.2%. Utilities output fell 0.5% (+1.7% y/y) after a 0.1% easing while mining production fell 0.3% (+13.2% y/y) following a 0.1% slip.

The rise in manufacturing output was held back by a 2.8% decline  (+2.1% y/y) in motor vehicles and parts output which followed two months of firm growth. Furniture & related product production gained 0.7% (1.8% y/y) and recouped the prior month's decline. Computer, video and audio product production held steady (-0.7% y/y) after declining for two months.

Production of nondurable goods improved 0.2% (1.8% y/y) as paper output rebounded 0.9% (1.4% y/y) following two months of decline. Chemical production improved 0.3% (2.7% y/y) after falling 0.4%. Offsetting these gains, petroleum & coal product output worked 1.1% lower after two months of moderate increase, and was unchanged y/y. Apparel production fell 1.9% (-4.4% y/y), the fifth sharp decline in the last six months.

Business equipment production strengthened 0.8% (4.1% y/y) for the second consecutive month. Industrial & other equipment production jumped 1.7% (4.5% y/y) following a 0.5% rise. Information processing equipment production improved 0.6% (4.5% y/y) following no change during September. Transit equipment output fell 0.9% (3.0% y/y) after two months of strong increase.

Finally, construction supplies output rebounded 0.6% (2.9% y/y) and recovered the prior month's decline. Production of materials eased 0.1% (+6.1% y/y) as energy materials output fell 0.5% (+10.2% y/y).

In the special aggregate groupings, production of high technology products held steady (5.9% y/y) for the second consecutive month. Semiconductor & electronic component production fell 0.8% (-0.7 y/y). Computer & peripheral production rebounded 2.8% (6.8% y/y) following three months of sharp decline. Factory sector production excluding the motor vehicle and high tech sectors improved 0.5% (2.7% y/y). That followed 0.2% increases in three of the prior four months.

Capacity utilization eased to 78.4% but remained up from a 75.0% low touched in November 2016. Factory sector utilization inched up to 76.2%, but mining sector utilization eased to 92.7%. Capacity in the manufacturing sector increased 1.2% y/y after last year's 1.0% rise.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) Oct Sep Aug Oct Y/Y 2017 2016 2015
Total Output 0.1 0.2 0.8 4.1 1.6 -2.0 -1.0
Manufacturing 0.3 0.3 0.4 2.7 1.2 -0.8 -0.6
    Consumer Goods 0.2 0.4 0.4 1.8 0.0 0.7 1.5
    Business Equipment 0.8 0.8 1.6 4.1 3.2 -5.3 -2.0
    Construction Supplies 0.6 -0.6 0.4 2.9 2.5 0.9 0.6
  Materials -0.1 -0.1 1.2 6.1 2.0 -3.0 -1.5
Utilities -0.5 -0.1 1.1 1.7 -1.3 -0.4 -0.8
Mining -0.3 -0.1 2.4 13.2 6.4 -9.7 -3.4
Capacity Utilization (%) 78.4 78.5 78.5 76.8 76.1 75.4 77.3
 Manufacturing 76.2 76.1 75.9 75.2 74.8 74.6 75.8
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