US industrial output drops
Industrial production in the US unexpectedly declined in October as superstorm Sandy knocked out power in the Northeast.
Output at factories, mines and utilities dropped 0.4 per cent last month after a revised 0.2 per cent increase in September that was smaller than previously estimated, Federal Reserve data showed on Friday in Washington. Economists forecast a 0.2 per cent gain, according to the Bloomberg survey median. The Fed said the storm cut total production by almost one percentage point.
American factories, a source of strength for much of the three-year expansion, face a persistent challenge from Europe's recession and slower growth in Asia. Further cutbacks in capital spending by companies concerned about the possibility of $607 billion in automatic tax increases and spending reductions next year represent another hurdle for the industry. "Manufacturing isn't the driver of the recovery that it was," John Ryding, chief economist at RDQ Economics in New York, said before the report. "Uncertainties over taxes hitting capital spending and problems overseas have hit the manufacturing sector."
Manufacturing, which makes up 75 per cent of total production, slumped 0.9 per cent last month, matching August as the biggest decrease since May 2009. Factory output excluding the effects of Sandy was about unchanged in October from the prior month, the Fed said. Estimates of the 84 economists surveyed by Bloomberg for overall production ranged from a 0.3 per cent decrease to a 0.6 per cent gain. September's figure was previously reported as a 0.4 per cent increase.