US Industrial Output Falls Again in September

Overall industrial production, which includes mining and utilities, fell 0.2 per cent, also its second straight decline. It would mark the seventh time this year that this measure of the inflation-adjusted value of manufacturing output comes in negative. This included notable decreases for electrical equipment and appliances (down 2.3 percent), wood products (down 2.0 percent), nonmetallic mineral products (down 1.1 percent), miscellaneous durable goods (down 1.0 percent), paper (down 0.5 percent), petroleum and coal products (down 0.5 percent), plastics and rubber products (down 0.5 percent) and printing and support (down 0.5 percent). Year-over-year, the nation’s industrial activity rose a modest 0.4 percent. A strong US dollar and weak overseas growth have hammered USA exports.

Factory output declined 0.1 percent, the Federal Reserve said Friday, following a drop of 0.4 percent in August.

Steven Ricchiuto, chief economist at Mizuho Securities, said that the auto industry was supporting the industrial sector.

The weak industrial production report added to soft trade, retail sales and employment data that have suggested a significant slowdown in growth after the economy expanded at a 3.9 percent annual pace in the second quarter.

“Excluding autos, output growth is -0.1 percent on the year, showing that there is not much upside in the economy”, he said. For the third quarter, manufacturing output increased at a rate of 2.5 percent. Mounting evidence of economic weakness is raising doubts that the Fed will raise rates by the end of this year. An nearly 60 percent plunge in oil prices since June 2014 has hurt the profits of oil-field companies like Schlumberger and Halliburton, leading to deep cuts in their capital spending budgets. Capacity utilization fell to 77.5% from an upwardly revised 77.8% in August, a bit above the 77.4% expected. Industrial production has fallen in all but one month so far this year, highlighting the continued challenges faced by the sector. “Vehicle output appears to have increased in September, but not enough to offset other sources of drag”.