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Economy in Brief

U.S. Industrial Production Continues to Strengthen
by Tom Moeller  November 16, 2017

The Federal Reserve indicated that industrial production rose 0.9% (2.8% y/y) during October following a 0.4% September rise, revised from 0.3%. It was the strongest increase in six months and surpassed expectations for a 0.5% gain in the Action Economics Forecast Survey. Factory output surged 1.3% (1.9% y/y) following a 0.4% increase, initially estimated as 0.1%. It also was the firmest gain in six months.

A 1.3% increase (3.3% y/y) in materials production led the gain in overall output as it followed zero change in September. Production of consumer products increased 0.9% (1.8% y/y), adding to its 0.5% increase. Motor vehicle & parts production improved 1.0% (-1.6% y/y) following a 1.7% gain. Computers, audio & video product output fell 1.6% (+4.5% y/y) after a 6.0% increase. Appliance, furniture & carpeting production rose 0.5% (-1.0% y/y) on the heels a 0.6% rise. Clothing output gained 1.3% (-9.2% y/y) after two months of decline. Chemical production strengthened 1.0% (1.7% y/y), up for the sixth consecutive month. Business equipment production rose 0.5% (4.1% y/y) following a 1.6% jump. The increase was led by a 0.8% rise (3.3% y/y) in information processing & related equipment output. Production of energy materials declined 0.4% (+4.3% y/y) following a 0.9% gain.

In the special aggregate groupings, selected high-technology product output jumped 1.2% (4.1% y/y), about the same as in September. Computer & peripheral production strengthened 3.7% (20.4% y/y), and semiconductor and related component production gained 1.0% (1.5% y/y). Factory sector production, excluding the auto & high-tech sectors, increased 1.3% (2.8% y/y) following a 0.2% rise.

Capacity utilization rose to 77.0% from 76.4%, its highest level since April 2015. Factory sector utilization strengthened to 76.4%, its highest point since May 2008. Total factory sector capacity rose 0.7% y/y.

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.

Low Inflation and the Symmetry of the 2 Percent Target from the Federal Reserve Bank of Chicago is available here.

Industrial Production (SA, % Change) Oct Sep Aug Oct Y/Y 2016 2015 2014
Total Output 0.9 0.4 -0.5 2.8 -1.2 -0.7 3.1
Manufacturing 1.3 0.4 -0.2 1.9 -0.0 0.1 1.2
    Consumer Goods 0.9 0.5 0.0 1.8 0.6 2.3 0.8
    Business Equipment 0.5 1.5 0.0 4.1 -1.8 -0.9 1.9
    Construction Supplies 0.4 1.7 -0.8 3.2 1.3 0.5 3.4
  Materials 1.3 0.0 -0.8 3.3 -2.3 -1.4 5.1
Utilities 2.0 -1.0 -1.3 0.1 -0.3 -0.7 1.4
Mining -1.3 1.5 -1.2 3.8 -9.1 -4.3 10.7
Capacity Utilization (%) 77.0 76.4 76.1 75.7 75.7 76.8 78.6
 Manufacturing 76.4 75.5 75.2 75.0 75.1 75.5 75.4
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