U.S. industrial output rises, but momentum slowing
Reuters
Published Oct 16, 2018 15:16
U.S. industrial output rises, but momentum slowing
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. industrial production increased for a fourth straight month in September, boosted by gains in manufacturing and mining output, but momentum slowed sharply in the third quarter.
The Federal Reserve said on Tuesday industrial production rose 0.3 percent last month after an unrevised 0.4 percent increase in August. Industrial output grew at a 3.3 percent annualised rate in the third quarter after accelerating at a 5.3 percent pace in the second quarter.
The Fed said industrial output in September had been held down "slightly" by Hurricane Florence, which drenched South and North Carolina in mid-September. The U.S. central bank estimated the impact of the storm on industrial production as "less than 0.1 percentage point."
Manufacturing output increased 0.2 percent in September, the smallest gain in four months, after rising 0.3 percent in August. A 1.7 percent increase in motor vehicle production helped to lift manufacturing output last month. Motor vehicle production surged 4.3 percent in August.
There were also strong increases in the production of primary metals, machinery and wood products.
U.S. financial markets were little moved by the data.
Manufacturing, which accounts for about 12 percent of the economy, is being supported by a strong domestic economy. Momentum is, however, slowing against the backdrop of a strong dollar and cooling global growth, which is restraining exports.
There are so far few signs that the Trump administration's "America First" policies, which have left the United States embroiled in a bitter trade war with China, are disrupting factory production.
But manufacturers are increasingly complaining that the tit-for-tat trade tariffs between Washington and Beijing are disrupting supply chains, which could hurt future production.
The sector is also facing a shortage of skilled workers, especially truck drivers, which is causing delivery delays and also contributing to the supply chain bottlenecks.
Manufacturing output increased at a 2.8 percent rate in the third quarter after growing at a 2.3 percent pace in the April-June period. Mining production increased 0.5 percent in September, adding to the 0.4 percent rise in August. Oil and gas well drilling, however, fell for a third straight month in September.
Mining output grew at an 11.4 percent rate in the third quarter after notching a 16.5 percent pace in the second quarter. The sector has rebounded about 24 percent from its trough in 2016.
Utilities output was unchanged in September after surging 1.1 percent in the prior month. A surge in natural gas output was offset by a decline the production of electricity.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.1 percent. It is 1.7 percentage points below its 1972-to-2017 average. Industrial capacity utilization increased to 78.0 percent in the third quarter, the highest level since the first quarter of 2015, from 77.8 percent in the April-June period.
Get The App
Officials at the Fed tend to look at capacity use measures for signals of how much "slack" remains in the economy — how far growth has room to run before it becomes inflationary.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.