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Economy in Brief

U.S. Industrial Production Plummets in October
by Sandy Batten  November 15, 2019

Industrial production fell a more-than-expected 0.8% m/m (-1.1% y/y) in October on top of a slightly upwardly revised 0.3% m/m decline in September. This was the third monthly decline in the past four months and the weakest monthly change recorded in this economic expansion as escalated trade tensions and slower economic growth abroad continue to take their toll on the U.S. industrial sector. A 0.5% m/m decline had been expected by the Action Economics Forecast Survey. Factory sector output declined 0.6% (-1.5% y/y), also the third monthly decline in the past four months.

Output of motor vehicles and parts collapsed 7.1% m/m (-11.9% y/y) in October, reflecting in large part the strike at General Motors. This strike is now over and motor vehicle output is set to rebound in November. Still, total production in October was weak outside of the auto sector with total industry output excluding motor vehicles and parts falling 0.5% m/m (-0.6% y/y) in October though manufacturing output excluding motor vehicles slipped only 0.1% m/m in October, the same decline as in September. Production apart from manufacturing was also weak in October with mining output down 0.7% m/m (+2.7% y/y) on top of a 0.8% m/m decline in September. Utilities output decreased 2.6% m/m (-4.1% y/y) after a 1.9% m/m rise in October.

Output of final products decreased 0.8% m/m (-1.9% y/y) on top of a 0.3% m/m drop in September. Consumer goods production fell 0.8% m/m (-2.2% y/y). Business equipment output declined 0.6% m/m (-2.5% y/y). Construction supplies production fell 0.4% m/m (+1.1% y/y). Materials production fell 1.0% (-0.6% y/y) with production of both energy and nonenergy materials dropping 1.0% m/m.

In the special aggregate groupings, production of computers, communications equipment and semiconductors rose 0.1% m/m (+5.6% y/y). Computers and peripheral output edged up 0.1% m/m while communications equipment fell 0.4% m/m. Factory output excluding high-tech and motor vehicles fell 0.1% (-0.8% y/y).

The total industry capacity utilization rate fell to 76.7% in October, its lowest reading since September 2017, from 77.5% in September. It has generally declined from its recent high of 79.6% reached last November. The factory sector utilization rate also declined in October, to 74.7% from 75.2%. The October reading was also the lowest since September 2017.

Industrial production and capacity data are included in Haver's USECON database. Additional detail on production and capacity can be found in the IP database. The expectations figures come from the AS1REPNA database.

Industrial Production (SA, % Change) Oct Sep Aug Oct Y/Y 2018 2017 2016
Total Output -0.8 -0.3 0.7 -1.1 3.9 2.3 -2.0
Manufacturing -0.6 -0.5 0.6 -1.5 2.3 2.0 -0.8
    Consumer Goods -0.8 -0.1 -0.2 -2.2 2.1 0.5 0.6
    Business Equipment -0.6 -1.1 1.0 -2.5 3.2 3.6 -5.3
    Construction Supplies -0.4 -0.2 1.0 1.1 2.8 3.5 0.9
  Materials -1.0 -0.4 1.4 -0.6 5.9 2.7 -3.0
Utilities -2.6 1.9 -0.6 -4.1 4.4 -0.8 -0.4
Mining -0.7 -0.8 2.6 2.7 12.4 7.4 -9.9
Capacity Utilization (%) 76.7 77.5 77.9 79.3 78.7 76.5 75.0
  Manufacturing 74.7 75.2 75.7 76.8 76.6 75.1 74.2
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