U.S. Industrial Output Declines Due To Sandy

Hurricane Sandy added to last month's weakness in industrial output. Industrial production fell 0.4% during October following a 0.2% September increase, last month reported as 0.4%. A 0.2% increase had been expected. Factory output fell 0.9% after a minimal 0.1% September uptick and utility output slipped 0.1% (+0.5% y/y). The Fed indicated that industrial production would have risen roughly 0.6% without the storm and that factory output would have been unchanged.

In manufacturing, the 0.9% (+1.6% y/y) decline in production reflected a 0.9% (-0.9% y/y) drop in consumer goods production. That decline was led by a 2.2% (-5.6% y/y) shortfall in apparel production, a 1.9% (+4.0% y/y) decline in machinery output and a 1.2% (-4.1% y/y) drop in paper production. Furniture output fell 0.6% (+1.0% y/y) and motor vehicles & parts production slipped 0.1% (+10.2% y/y). Industrial output of business equipment fell 1.2% but it still was up 7.5% y/y. Excluding motor vehicles, factory output fell 0.9% (+1.0% y/y). Production of high-tech products worked the other way and rose 1.1% (-1.7% y/y). Outside both of these sectors, factory production was off 1.1% (+1.0% y/y).

Capacity utilization fell to 77.8% from a little revised 78.2% in September. In manufacturing alone, utilization dropped to 75.9% but remained up from the recession low of 64.4%. Overall capacity is estimated to have risen 1.6% y/y following a 0.2% dip last year and a 2.0% decline during 2010. In the factory sector, capacity rose 1.4% y/y and, excluding the high-tech industries, it increased 1.3%.

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.

Challenges in Housing and Mortgage Markets is the title of yesterday's speech by Federal Reserve Chairman Ben S. Bernanke and it can be found here.