U.S. September Manufacturing Output Rises on Broad Demand
(Bloomberg) -- U.S. factory production expanded in September for a fourth consecutive month on broad-based demand as the sector accelerated in the third quarter, Federal Reserve data showed Tuesday.
Highlights of Industrial Production (September)
The report showed most categories are supporting industrial output with gains across consumer goods, business equipment and industrial materials.
Factory output increased 2.8 percent at an annual rate in the third quarter, up from a 2.3 percent pace in the prior three-month period, the Fed said in the report. That’s in sync with the Institute for Supply Management’s factory index, which remains near the highest level of this expansion.
Overall output growth in September was held down slightly by Hurricane Florence, with an estimated impact of less than 0.1 percentage point, the Fed said. Florence, which made landfall Sept. 14, caused widespread devastation and power outages in North and South Carolina.
Economists expect continued data volatility because of Hurricane Michael, which shut down offshore oil production in parts of the Gulf of Mexico and led to power outages in the Florida panhandle this month.
Excluding motor vehicles, manufacturing production rebounded 0.1 percent after a 0.1 percent decrease the prior month. Industry reports show vehicle sales grew in September at the fastest pace since March.
While strong consumer demand and lower corporate taxes signal manufacturing will keep expanding, the sector faces headwinds including rising costs for materials and supply constraints linked to tariffs and trade tensions with China.
The Fed’s monthly data are volatile and often get revised. Manufacturing, which makes up 75 percent of total industrial production, accounts for about 12 percent of the U.S. economy.
What Our Economists SayIndustrial production picked up in September, due in part to strength in volatile components such as the auto sector. And while some of the strength in the 12-month growth rate is likely to reverse next month due to base effects, the underlying message is that conditions remain strong, and should be a tailwind to growth in the final quarter of the year.
-- Tim Mahedy and Carl Riccadonna, Bloomberg Economics
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