Global| Nov 17 2008U.S. Industrial Production Rebounds Modestly After Hurricanes
by:Tom Moeller
|in:Economy in Brief
Summary
Industrial production recovered 1.3% last month after its 3.8% plummet during September when production was depressed by Hurricanes Gustav & Ike. September output was also held down by a strike at Boeing. Consensus expectations had [...]
Industrial production recovered 1.3% last month after its 3.8% plummet during September when production was depressed by Hurricanes Gustav & Ike. September output was also held down by a strike at Boeing. Consensus expectations had been for no change in output last month.
During each of the last two months, the Fed indicated that industrial output fell 0.7%, excluding the hurricanes (which reduced mining output by 6.1%) and the strike.
Factory output recovered a modest 0.6% after falling 3.7% during September. Output of consumer goods recovered all of its 1.2% September drop but it was still off 2.8% y/y. Production of motor vehicles & parts dropped 3.5% (-18.4% y/y) but, excluding autos, output was still depressed. It recovered a modest 0.8% following the 4.0% plunge during September. Nonetheless, a 4.3% decline in factory output year-to-year compares to 2.0% growth during all of last year.
Industrial production in the high-tech sector is in a retrenchment mode. Output there fell 0.9% during October and that was the third consecutive monthly decline. And production was up just 9.9% y/y, the weakest gain since early 2005. Less both autos and high-tech, output inched up 0.2% last month following the 3.7% September plunge (-5.6% y/y).
The industry detail further reflected recession in the factory sector. Output of furniture & related products fell 2.9% last month for a 16.3% y/y decline. That was the largest y/y drop since the recession of 1975. Machinery production also reflected recession and it was down 1.7% (-6.9% y/y). A somewhat brighter spot was the 0.6% increase in electrical equipment production which left it down just 0.9% year-to-year. Apparel output, in the "recession-resistant" nondurables sector fell just 1.8% (-2.5% y/y. Production of chemicals recovered 5.1% after the 8.3% plunge due to the hurricanes. Reflecting the aftermath of the hurricanes was a 9.9% jump in output of petroleum & coal which recovered an 8.5% plummet.
Capacity utilization recovered to 76.4% which was still near its lowest level since 2003. Utilization in the factory sector of 73.8% also was near the lowest since 2003.
| INDUSTRIAL PRODUCTION (SA, %) | October | September | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Total Output | 1.3 | -3.8 | 1.3 | 1.7 | 2.2 | 3.3 |
| Manufacturing | 0.6 | -3.7 | 0.6 | 1.7 | 2.4 | 4.0 |
| Consumer Goods | 1.4 | -1.2 | -2.8 | 1.7 | 0.3 | 2.8 |
| Business Equipment | -2.2 | -7.1 | -8.8 | 3.3 | 10.4 | 7.3 |
| Construction Supplies | -1.1 | -1.9 | -6.9 | -2.5 | 2.2 | 4.5 |
| Utilities | 0.4 | 2.5 | -0.6 | 3.3 | -0.6 | 2.1 |
| Capacity Utilization | 76.4 | 75.5 | 80.8 | 81.0 | 80.9 | 80.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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