U.S. October industrial output misses expectations on utilities fall; manufacturing to firm this year

The U.S. headline industrial output stayed the same in October in sequential terms, coming in below the consensus projection of 0.2 percent. The miss was mainly due to a larger-than-anticipated decline in utilities production. The September print was revised down from a growth of 0.1 percent to a decline of 0.2 percent. This downward revision was also due to utilities output.

Meanwhile, manufacturing production rose 0.2 percent sequentially in October, whereas mining production surprisingly rose 2.1 percent in sequential terms. In September, mining production had dropped 0.4 percent. The October figures of manufacturing and mining production are in line with the recent increase in rig counts, noted Barclays in a research report.

Motor vehicles and parts rose 0.9 percent month-on-month, as compared with September’s rise of 0.3 percent. This poses further risks on the upside around the projection that motor vehicle sales would fall modestly in the near term, said Barclays. In October, utilities output declined 2.6 percent, driven by a 4.3 percent fall in natural gas production.

Overall, this report is in line with ongoing moderate stabilization in the manufacturing sector. The underlying detail in manufacturing indicates widespread stability in non-energy output. The effects of the dollar strengthening in 2014 and 2015 are now waning and there are increasing signs of stabilization in mining. This stimulates the confidence that manufacturing output would firm in 2016 and expand modestly in 2017, according to Barclays.