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Economy in Brief

U.S. Industrial Production Strength is Driven by Utilities
by Tom Moeller  October 16, 2014

Industrial production jumped 1.0% during September (4.4% y/y) following a 0.2% August dip revised from -0.1%. The gain was driven by a 3.9% spike (0.9% y/y) in utility output which followed a 1.2% rise. Factory production rose 0.5% (3.7% y/y) and recovered its 0.5% August drop, last month reported as -0.4%. A 0.4% gain in total production was expected in the Action Economics Forecast Survey.

Production of furniture led last month's increase with a 2.4% rise (9.6% y/y) and apparel output gained 1.5% (-1.5% y/y). Chemical production improved 0.8% (3.6% y/y) while computer & electronics production rose 0.7% (4.4% y/y). Electrical equipment production ticked up just 0.1% (4.5% y/y). Offsetting these gains was a 1.4% drop (+5.7% y/y) in motor vehicle & parts production, machinery output fell 0.2% (+5.5% y/y) while petroleum output slipped 0.1% (+2.1% y/y).

Within the special aggregate series, high technology industries posted a 0.8% production gain (6.1% y/y). That was driven by a 1.1% rise (8.3% y/y) in semiconductors. Factory production excluding the high-tech sector rose 0.4% (3.5% y/y). Manufacturing production excluding both high-tech and autos gained 0.6% (3.5% y/y) after being unchanged in August.

The capacity utilization rate recovered to 79.3%, its highest level of the economic expansion, but it remained below the 80.5% high averaged in 2007. In the factory sector, the capacity utilization rate edged up to 77.3% but remained below the July high of 77.6%. Total industry capacity rose an improving 3.0% y/y while factory sector capacity increased 2.1%.

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.

The Federal Reserve and the Global Economy from Stanley Fischer, Vice Chairman of the Federal Reserve is available here.

Industrial Production (SA, % Change) Sep Aug Jul Sep Y/Y 2013 2012 2011
Total Output 1.0 -0.2 0.2 4.4 2.9 3.8 3.3
Manufacturing 0.5 -0.5 0.7 3.7 2.7 4.1 3.3
  Consumer Goods 0.5 -0.7 0.4 2.2 2.4 1.7 1.5
  Business Equipment 0.3 -0.2 1.2 4.6 3.6 7.5 5.6
  Construction Supplies 0.4 0.0 1.4 5.0 4.2 4.6 3.0
Materials 1.4 0.0 -0.1 5.8 3.2 4.5 4.7
Utilities 3.9 1.2 -3.0 0.9 2.1 -2.1 -0.2
Capacity Utilization (%) 79.3 78.7 79.1 77.8 78.0 77.3 76.3
 Manufacturing 77.3 77.1 77.6 76.2 76.1 75.5 73.9
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