U.S. Industrial Production Drops in September, w/ Boeing Strike and Hurricanes Affecting Output
Summary
- September IP -0.3% m/m (-0.6% y/y); August gain revised down.
- Mfg. IP declines 0.4% m/m, w/ durable goods down 1.0% and nondurable goods up 0.2%.
- Mining activity drops 0.6% m/m, but utilities output rebounds 0.7% vs. two straight m/m falls.
- Key categories in market groups mostly decrease.
- Capacity utilization down 0.3%-pts. to 77.5%.
Total industrial production declined 0.3% m/m (-0.6% y/y) in September following a downwardly revised 0.3% increase in August (+0.8% initially) and an upwardly revised 0.6% drop in July (-0.9% previously), according to the Federal Reserve Board. The September IP index at 102.6, the same as in July, was 7.4% above a low of 95.5 in February 2021. A 0.1% m/m August easing had been expected in the Action Economics Forecast Survey. The Federal Reserve estimated that the Boeing strike reduced September IP growth by 0.3% and the effects of two hurricanes subtracted another 0.3%. In Q3 2024, IP fell 0.2% q/q after a 0.6% q/q rebound in Q2 2024, falling at a 0.6% annualized rate following a 2.5% Q2 annualized rate of increase. IP rose 0.2% in 2023, 3.4% in 2022, and 4.4% in 2021.
By industry groups, manufacturing production fell 0.4% (-0.5% y/y) in September, the third m/m fall in four months, after a downwardly revised 0.5% increase in August (+0.9% initially). Durable goods production declined 1.0% (-1.3% y/y), down for the third month in four, following a 1.2% August rebound. This reflected m/m output drops of 8.3% (-5.8% y/y) in aerospace & miscellaneous transportation equipment, 1.5% (-0.6% y/y) in motor vehicles & parts, 1.5% (-5.2% y/y) in furniture & related products, 1.4% (+3.7% y/y) in electrical equipment, appliances & components, 0.5% (-3.8% y/y) in nonmetallic mineral products, 0.1% (-2.1% y/y) in machinery, and 0.1% (-1.3% y/y) in fabricated metal products. Notably, aircraft & parts production plunged 11.9% (-9.7% y/y), the first m/m drop since May, following a 2.5% August gain. The following durable goods categories, however, increased m/m in September, including output rises of 1.4% (-2.2% y/y) in wood products, 0.7% (-5.5% y/y) in miscellaneous durables goods, 0.5% (-2.8% y/y) in primary metals, and 0.3% (5.2% y/y) in computer & electronic products.
Nondurable goods production rose 0.2% (0.5% y/y) in September, the fourth m/m rise in five months, after a 0.2% decline in August. The September rise reflected m/m output increases of 1.8% (+2.3% y/y) in petroleum & coal products, 1.0% (+6.7% y/y) in printing & related support activities, and 0.3% (3.0% y/y) in chemicals. To the downside, the following nondurable goods categories fell m/m in September, including output drops of 4.2% (-4.5% y/y) in textiles & product mills, 2.6% (-8.5% y/y) in apparel & leather goods, 0.6% (+1.0% y/y) in paper, 0.1% (-3.1% y/y) in plastics & rubber products, and 0.1% (-1.6% y/y) in food, beverages & tobacco.
Mining activity fell 0.6% (-2.2% y/y) in September, as the effects of two hurricanes on oil & gas extraction more than offset increases elsewhere. The m/m fall was the second in three months following a downwardly revised 0.7% August gain (+0.8% initially). In contrast, utilities output rose 0.7% (0.6% y/y), as electric & natural gas utilities increased, following declines of 1.3% (-0.04% initially) in August and 1.1% (-3.0% previously) in July.
By market groups, business equipment output slid 3.5% (-4.2% y/y) in September, the third m/m slide in four months, reversing a 0.2% increase in August. Materials production fell 0.2% (-0.9% y/y), down for the third month in four, after a 0.4% August increase. Construction supplies production dipped 0.1% (-0.2% y/y) following a 0.4% August rebound. To the upside, consumer goods output grew 0.2% (0.2% y/y) in September, the fifth m/m gain in six months, after a 0.6% rise in August, reflecting a 0.7% drop (-1.9% y/y) in durable consumer goods and a 0.5% rebound (0.8% y/y) in nondurable consumer goods.
In special classifications, factory output of selected high-tech industries advanced 1.5% (10.0% y/y) in September, the sixth m/m gain in seven months, on top of a 1.3% rise in August (+1.7% initially). Manufacturing production excluding selected high-tech industries fell 0.4% (-0.8% y/y) following a 0.5% August rebound and manufacturing production excluding selected high-tech and motor vehicles & parts fell 0.3% (-0.8% y/y) after a 0.2% August decline; both posted the third m/m fall in four months.
Capacity utilization fell to 77.5% in September, the lowest since January, after rising to 77.8% in August (78.0% initially). The Action Economics Forecast Survey forecasted 77.8%. The September reading was 2.2 percentage points below its long-run (1972–2023) average. Manufacturing capacity utilization fell to 76.7% in September from 77.1% in August (77.2% initially); the September rate was 1.6 percentage points below its long-run average.
Industrial production and capacity data are in Haver’s USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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