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WASHINGTON (Reuters) – US industrial production rose for a fourth consecutive month in September, driven by gains in manufacturing and mining output, but momentum slowed sharply in the third quarter.
An employee is working on the painting department's sealing line during a visit to a car factory in Marysville, Ohio on October 11, 2012. REUTERS / Paul Vernon / File Photo
The Federal Reserve said Tuesday that industrial production rose 0.3% last month after an unreviewed rise of 0.4% in August. Industrial production grew at an annualized rate of 3.3% in the third quarter, following a 5.3% acceleration in the second quarter.
The Fed said September's industrial output was dampened "slightly" by Hurricane Florence, which flooded North Carolina and the South in mid-September. The US central bank estimated the impact of the storm on industrial production at "less than 0.1 percentage point".
Manufacturing output rose 0.2% in September, the smallest increase in four months, following a 0.3% gain in August. A 1.7% increase in motor vehicle production contributed to the rise in manufacturing output last month. Motor vehicle production rose 4.3% in August.
The production of primary metals, machinery and wood products also rose sharply.
US financial markets were little affected by the data.
The manufacturing sector, which accounts for about 12% of the economy, is supported by a strong national economy. However, momentum is slowing in the context of a strong dollar and a slowdown in global growth, which is holding back exports.
To date, there are few signs that the Trump Government's "America First" policy, which has left the United States struggling with a fierce trade war with China, is disrupting factory production.
But manufacturers are increasingly complaining that the absolute 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 truckers, resulting in delivery delays and also contributing to bottlenecks in the supply chain.
Manufacturing output rose 2.8% in the third quarter, after increasing 2.3% between April and June. Mining output increased 0.5% in September, adding to the 0.4% gain in August. However, drilling for oil and gas wells declined for a third consecutive month in September.
Mining production grew at a rate of 11.4% in the third quarter, following a 16.5% pace in the second quarter. The sector rebounded about 24% from its 2016 low.
Utilities output remained unchanged in September after rising 1.1% the month before. Higher natural gas production was offset by lower electricity generation.
Capacity utilization in the industrial sector, which measures the extent to which firms make full use of their resources, remained unchanged at 78.1%. It is 1.7 percentage points below its average from 1972 to 2017. The use of industrial capacity has increased to 78.0% in the third quarter, its highest level since the first quarter of 2015 against 77.8% for the period April-June.
Fed officials tend to look at capacity utilization measures to indicate how much "room for maneuver" remains in the economy – up to how much growth can it be fulfilled before becoming inflationary?
Reportage of Lucia Mutikani; Edited by Andrea Ricci
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