US industrial output rises marginally, utilities weigh
WASHINGTON: US industrial production barely rose in September as a rebound in manufacturing output was offset by a decline in utilities production, suggesting a moderate acceleration in economic growth in the third quarter. The Federal Reserve said yesterday industrial output edged up 0.1 percent last month after a downwardly revised 0.5 percent decline in August.
Economists polled by Reuters had forecast industrial production gaining 0.1 percent last month after a previously reported 0.4 percent fall in August. Industrial production rose at an annual rate of 1.8 percent in the third quarter, the first quarterly increase since the third quarter of 2015. The report came on the heels of data on Friday showing a mild increase in core retail sales in September, which prompted the Atlanta Fed to lower its third-quarter gross domestic product estimate to below a 2.0 percent annualized rate. The economy grew at a 1.4 percent pace in the second quarter.
The industrial sector continues to be hobbled by the lingering effects of the dollar’s surge and oil price plunge between June 2014 and December 2015. The sector has also been hurt by business efforts to reduce an inventory overhang, which has resulted in fewer orders being placed with factories. But with the dollar’s rally fading and oil prices stabilizing, the worst of the industrial downturn is probably over. A survey early this month showed an acceleration in factory activity in September, and new orders for manufactured capital goods have increased since June. While other data on Monday showed factory activity in New York State weakened further in October, manufacturers were more upbeat about the sector’s prospects over the next six month.
The dollar rose slightly against a basket of currencies after the report, while prices for US Treasuries were little changed. Last month, industrial production was supported by a 0.2 percent rise in manufacturing output, which followed a 0.5 percent drop in August. Manufacturing output was boosted by the production of goods such as textiles and plastics.
Motor vehicle and parts production edged up 0.1 percent, while the output of machinery and primary metals fell. Manufacturing production rose at a 0.9 percent rate in the third quarter.
In September, mining production increased 0.4 percent as gains in oil and gas well drilling offset a drop in crude oil extraction. That left mining output rising at a 3.7 percent rate in the third quarter following six consecutive quarterly declines. Utilities production dropped 1.0 percent last month after slipping 0.3 percent in August.
With output barely rising last month, industrial capacity use edged up 0.1 percentage point to 75.4 percent, and is 4.6 percentage points below its long-run average. Officials at the Fed tend to look at capacity use as a signal of how much “slack” remains in the economy and how much room there is for growth to accelerate before it becomes inflationary. —Reuters
SEATTLE: A group of workers at the C C Filson Co manufacturing facility work at their sewing machines, in Seattle. The Federal Reserve reported yesterday on US industrial production for September.