U.S. industrial production grows in September, rebounding from decline in August

U.S. industrial production expanded in September, recovering from a huge decline in the earlier month. Industrial output grew 0.3 percent sequentially in September. Meanwhile, the data for the month of August was upwardly revised a bit to a fall of 0.7 percent from a fall of 0.9 percent; however, this was largely countered by a huge downward revision to July data of 0.5 percentage point to a decline in 0.1 percent.

Overall, the U.S. Fed estimates that industrial production dropped 1.5 percent sequentially in the third quarter, but stripping the effect of hurricanes Harvey and Irma output would have risen it at least 0.5 percent – suggesting a 2 percentage point drag from the hurricane impact on the third quarter industrial output alone, stated Barclays in a research report. Moreover, the U.S. Fed stated that the impact of hurricane was felt in August, as well as September, although it was more pronounced in August.

Delving into details, utilities and mining showed strength, rising 1.5 percent and 0.4 percent respectively. Meanwhile, manufacturing grew modestly by 0.1 percent. In manufacturing, the weakness was mainly because of non-durables, which dropped 0.9 percent, while production of durable goods rose 1 percent. Especially, production of chemicals, petroleum and coal products, paper and apparel were weak in the non-durable category.

Within the market grouping breakdown, production of consumer goods, business equipment and nonindustrial supplies all rose on the month, while production of non-energy materials dropped. Both breakdowns provide a solid indication that the weakness in September was focused on industries and goods that are usually produced in the hurricane-affected areas such as chemical materials, which dropped 7.2 percent in September after a 4.7 percent fall the previous month.

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