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DAGENHAM, ENGLAND - JANUARY 13: An employee works on an engine production line at a Ford factory on January 13, 2015 in Dagenham, England. Originally opened in 1931, the Ford factory has unveiled a state of the art GBP475 million production line that will start manufacturing the new low-emission, Ford diesel engines from this November this will generate more than 300 new jobs, Ford currently employs around 3000 at the plant in Dagenham. (Photo by Carl Court/Getty Images)

US Manufacturing Output Rises as Impact from Hurricanes Fades

History shows economic activity that’s initially subdued due to major storms tends to get a boost amid rebuilding in later months.

U.S. factory production rose last month for the first time since June, a sign the industry is starting to regain its footing after the damage from hurricanes Harvey and Irma, Federal Reserve data showed on Oct. 17. 

Factory output increased 0.1% (est. 0.2% gain) after falling 0.2%.

Total industrial production, which also includes mines and utilities, rose 0.3% (matching est.) after a revised 0.7% drop.

Capacity utilization inched up to 76% (est. 76.2%) from 75.8%.

However the combined effect of Harvey, Irma trimmed industrial production growth by 0.25 percentage point, the Federal Reserve said.

The report showed broad-based gains in consumer durables and non-durables, as well as business equipment and construction. Production of consumer goods rose 0.5%, and output of business equipment increased 0.8%.

For the third quarter, industrial production fell 1.5% at an annual rate, the Fed said. Without the impact of the hurricanes, the index would have climbed at least 0.5%.

As volatility from the hurricanes dissipates, economists expect manufacturing will keep humming along as household demand, business investment and improving overseas markets help to lift production. History shows economic activity that’s initially subdued due to major storms tends to get a boost amid rebuilding in later months.

Recent data have indicated manufacturing is expanding steadily. The Institute for Supply Management’s manufacturing index, released Oct. 2, showed factories expanded in September at the fastest pace in 13 years. Supplier delivery times lengthened, and some ISM survey respondents reported getting new orders because of the hurricanes.

Highlights from the survey:

  • Utility output jumped 1.5% in September after falling 4.9% the prior month
  • Mining production rose 0.4%
  • Production of motor vehicles increased 0.1%
  • Oil and gas well drilling dropped 2.8%

By Shobhana Chandra

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