U.S Industrial Production Increased 1.3%

Nov. 17, 2008
Manufacturing saw an increase of 0.6%

Manufacturing production, which dropped 3.7% in September, rose 0.6% in October, the Federal Reserve reported on Nov. 17.

Industrial production as a whole increased 1.3%. Industrial production in September and October was substantially affected by the hurricanes and a strike in the commercial aircraft industry, according to the report.

"The October improvement is not anything to cheer about. Hurricane Ike and the Boeing strike severely disrupted production in September and the resumption of oil and chemical production in October boosted production. The Federal Reserve estimates that without the hurricane and strike, industrial production would have fallen 2/3% in both September and October and manufacturing production would have declined 1% each month," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.

"Proof of deteriorating business conditions in the manufacturing sectors is the pervasiveness of the decline across the vast majority of manufacturing industries -- 16 major manufacturing industries declined and only four increased," he added. "The financial crisis hurts business financing of capital projects and the loss of jobs and wealth depress consumers' willingness to spend. Both business and consumers are deleveraging away from debt, and also lack confidence in the short term economic outlook. Unfortunately, economic fears tend to become self-fulfilling."

The capacity utilization rate for total industry rose to 76.4% in October, a level 4.6 percentage points below its average level from 1972 to 2007.

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