US industrial production increases; Job openings at a record level

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.

According to other data released on Tuesday, job offers hit a record high in August, far outpacing the increase in hirings, suggesting that businesses were increasingly deprived of hand-outs. 39; work. Some fear that the shortage of labor, especially in the manufacturing and construction sectors, will slow down economic growth.

"Businesses need more workers than the economy needs to provide, which will slow down economic growth in the future," said Chris Rupkey, chief economist at MUFG in New York. .

The Federal Reserve said industrial production rose 0.3% last month after rising 0.4% in August. Economists polled by Reuters forecast a 0.2% increase in industrial production in September.

Industrial production grew at an annualized rate of 3.3% in the third quarter, slowing from 5.3% in the second quarter. The Fed announced that Hurricane Florence, which flooded southern and northern Carolina in mid-September, had minimal impact on production.

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. Production of primary metals, machinery and wood products also rose sharply last month.

The dollar has changed little in relation to a basket of currencies, while US Treasury yields have increased slightly. Wall Street shares traded higher, boosted by upbeat profits from blue chip companies.

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.

The dollar this year has gained about 6.2% against the currencies of the major trading partners of the United States.

Although the signs of the Trump Administration's "America First" policy, which left the United States struggling with a fierce trade war with China, are currently few, they are hurting production, manufacturers complaining more and more disruptions in the supply chain.

MANUFACTURING SINCE LANDING

"The appreciation of the dollar and the slowdown in global growth will weigh more heavily on the sector in the months to come. As a result, growth in manufacturing output is expected to weaken further, "said Michael Pearce, senior US economist at Capital Economics in New Economics. York.

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 increased 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 reached 78.0% in the third quarter, its highest level since the first quarter of 2015, compared to 77.8% for the period April-June.

Data on industrial production reinforced expectations of strong economic growth in the third quarter. Growth forecasts for the July-September period are above an annualized rate of 3.0%. The economy grew 4.2% in the second quarter. If strong growth is expected this year, the shortage of skilled labor is clouding the outlook.

In a separate report released on Tuesday, the Ministry of Labor announced 7.14 million vacancies in August. This is the highest level since the start of the series in 2000 and 7.08 million vacancies in July.

The increase in vacancies was concentrated in the areas of finance, business services and professional services and health care.

The employment rate also reached an all-time high of 4.6%, compared to 4.5% in July. Hiring reached a record level of 5.78 million in August, compared with 5.71 million the previous month. The hiring rate thus rose from 3.8% in July to 3.9%.

"We have never seen a declining economy because of the labor shortage, but in the next two years it will be the biggest risk for the continued growth of the economy," Rupkey said. from MUFG. "The manufacturing industry needs 488,000 workers to help them produce goods for America."