WASHINGTON – U.S. factory, utility and mine output rose more than expected last month, after a September decline that was sharper than previously thought, the Federal Reserve said today.
The nation’s total industrial production increased 1.3 percent in October, after falling a revised 3.7 percent in September, Fed data show. Analysts had expected a 0.2-percent rise to follow the 2.8-percent decline previously reported for September, based on the median estimate of 64 economists surveyed by Bloomberg News. (Their October projections ranged from a 1.0-percent decline to a 1.7-percent gain.)
But, the Fed added, excluding the effects of two “special factors” – this summer’s Gulf Coast hurricanes and a strike in the commercial aircraft industry – “total industrial production is estimated to have fallen around two-thirds [of a] percent in both September and October.”
Output at the nation’s factories – about 80 percent of total industrial production – rose 0.6 percent in October after falling 3.7 percent the month before. The report credited production of petroleum and chemical products, as most of the plants idled this summer by Hurricanes Gustav and Ike came back on line.
U.S. production of consumer goods rose 1.3 percent compared with September. The output of non-durable consumer goods rose 2.2 percent, as production of energy products such as gasoline and other fuels rose 6.9 percent and non-energy goods production edged up 0.3 percent. Durable-goods output fell 2.1 percent in October, led by a 3.6-percent decline in automobiles and parts.
Business-equipment production fell 2.2 percent in October. Transit equipment led the decline – falling 10 percent, after plunging more than 30 percent in September – amid an aircraft-industry strike dragged on to nearly the end of the month. Industrial and other equipment fell 1.7 percent, led by lower output of construction equipment and office furniture; computer equipment fell 0.2 percent, extending September’s 0.9-percent decline.
Among other industries, mining output rose 6.1 percent last month, after falling 8.5 percent the month before. And utility output rose 0.4 percent, slowing from September’s 2.4-percent gain.
Compared with the same month a year ago, however, total industrial production fell 4.1 percent, as a 5.3-percent year-over-year decline in factory output and 0.7-percent decline in utility output outweighed a 1.1-percent increases in production at the nation’s mines.
“Manufacturing is going south in a very big way,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, told Bloomberg News. “Export demand is falling apart, and domestic demand has already fallen apart.”
Capacity utilization – a measure of the proportion of total industrial plants in use – was 76.4 percent in October, an increase of 0.9 percentage points from the preceding month’s 75.5 percent but a 4.5-percentage point decline from the 80.9 percent of a year ago. Factory utilization rose slightly to 73.8 percent from September’s 73.5 percent, but was down sharply from the year-ago 79.3 percent. Utilities ran at 83.5 percent of total capacity, edging up from the previous month’s 83.3 percent but lagging the year-ago 86.0 percent. And mining utilization rose to 89.0 percent, an increase from both September’s 84.0 percent and the year-ago 88.7 percent.
Meanwhile, total industrial capacity nationwide grew 1.6 percent compared with a year ago. Factory capacity increased 1.8 percent compared with October 2007, utility capacity 2.2 percent and mining capacity 0.7 percent.
Additional economic research data, including today’s 19-page Industrial Production and Capacity Utilization statistical release, is available from the Federal Reserve System at www.federalreserve.gov.
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