U.S. industrial production rises in September, unlikely to grow substantially in months ahead

U.S. industrial production rose sequentially in September, coming on par with consensus expectations. The industrial output grew 0.1 percent on the month, as compared with the prior month’s -0.5 percent growth. Manufacturing output increased 0.2 percent, while utilities output dropped 1 percent.

The utilities production was expected to be stronger due to the elevated number of cooling days, said Barclays. In the meantime, mining production was up 0.4 percent sequentially and indicates tentative signs of stabilization. Rig counts are increasing, showing that mining might not weigh on monthly industrial production growth for a longer time, noted Barclays.

In manufacturing, motor vehicles and parts increased modestly 0.1 percent sequentially, slowing from previous month’s 0.9 percent growth. Manufacturing excluding motor vehicles rose 0.1 percent. On an annual basis, manufacturing output was flat, implying that the manufacturing sector in the U.S. has stabilized after the impact from the slow growth abroad and past appreciation of the U.S. dollar.

Weak readings on new orders and production from manufacturing surveys show that the weak trend in manufacturing is expected to remain for the next few months. In all, these factors imply that the U.S. industrial sector outlook is possibly one of generalized stability; however, it is unlikely to show spectacular growth in the months ahead, added Barclays.

“The September IP boosted our Q3 GDP tracking estimate to 2.7 percent q/q saar from 2.6 percent after rounding”, noted Barclays.