U.S. Industrial Production Accelerates In October After Hurricanes

Industrial activity was boosted in October by a return to normal operations after Hurricanes Harvey and Irma suppressed production in August and September.

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Industrial production rose 0.9 percent in October, and manufacturing increased 1.3 percent. The index for utilities rose 2.0 percent, but mining output fell 1.3 percent, as Hurricane Nate caused a sharp but short-lived decline in oil and gas drilling and extraction. Even so, industrial activity was boosted in October by a return to normal operations after Hurricanes Harvey and Irma suppressed production in August and September. Excluding the effects of the hurricanes, the index for total output advanced about 0.3 percent in October, and the index for manufacturing advanced about 0.2 percent.

With modest upward revisions for July through September, industrial production is now estimated to have only edged down 0.3 percent at an annual rate in the third quarter; the previously published estimate showed a decrease of 1.5 percent.

Total industrial production has risen 2.9 percent over the past 12 months; output in October was 106.1 percent of its 2012 average. Capacity utilization for the industrial sector was 77.0 percent, a rate that is 2.9 percentage points below its long-run (1972–2016) average.

Market Groups

The output of consumer goods moved up 0.9 percent in October, with gains for both durables and nondurables. Among the major components of consumer goods, only the indexes for home electronics and for foods and tobacco moved down. The output of business equipment rose 0.5 percent, with increases posted by all of its major categories. A decline of 0.4 percent in defense and space equipment followed four consecutive months of increases. Construction supplies and business supplies recorded gains of 0.4 percent and 0.6 percent, respectively. The production of materials rose 1.3 percent despite a small decrease in energy materials; all major components of both durable and nondurable materials posted gains. In particular, the output of chemical materials jumped 12.3 percent, as factories shuttered by Hurricane Harvey returned to normal operations.

Industry Groups

Manufacturing output rose 1.3 percent in October, and upward revisions to previous months reduced the decrease estimated for the third quarter to 1.2 percent at an annual rate. In October, the index for durables increased 0.4 percent, and the index for nondurables increased 2.3 percent. Most durable goods industries posted gains, with the largest advance, 1.0 percent, recorded by motor vehicles and parts. Gains were also widespread among nondurable goods producers; notably, the return to more normal levels of production following the hurricanes led to jumps of 5.8 percent for chemicals and 4.0 percent for petroleum and coal products.

In October, the decline of 1.3 percent in mining output reflected reductions in all of its major components. The index for utilities rose 2.0 percent; output in August was revised up from a drop of 4.9 percent to a decline of 1.3 percent, and the rate of change in September was revised down from an increase of 1.5 percent to a decrease of 1.0 percent.

Capacity utilization for manufacturing was 76.4 percent in October, a rate that is 2.0 percentage points below its long-run average. Utilization for durables increased 0.2 percentage point to 75.7 percent, and the operating rate for nondurables rose 1.7 percentage points to 78.1 percent. The operating rate for mines fell 1.3 percentage points to 82.4 percent, and the rate for utilities rose 1.5 percentage points to 77.2 percent.

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