Industrial production climbed 1% in September, the Federal Reserve reported, rebounding from a weak August hurt by lower automotive production.
Manufacturing output in September rose 0.5%. Compared to 2013, manufacturing production is up 3.7% for the year.
“The manufacturing sector scored its best month since March with production excluding high technology and motor vehicles, so-called core manufacturing, climbing by 0.6% on broad-based gains,” noted Michael Montgomery, an economist with IHS Global Insight.
Durable goods production increased 0.4% in September and rose at an annual rate of 6.6% in the third quarter, the Federal Reserve noted. Aerospace and miscellaneous transportation equipment, furniture and related products, and miscellaneous manufacturing all posted increases of more than 1.5% for the month. Wood products and motor vehicles and parts registered declines of more than 0.75%. Capacity utilization for durable goods manufacturing was up 0.1% to 77.6%, a rate 0.6% above its long run average.
Automotive production, while down 1.4%, improved from the 7% decline seen in August. “The auto sector may have overbuilt earlier in the year but it appears to be returning to a more normal pace,” said Don Norman, director of economic studies for the MAPI Foundation. “Given that automobile sales have grown rapidly since 2009 and are now in the neighborhood of a normal annual sales rate, it will be hard to achieve the growth rates in output observed since 2009.”
The production of nondurable goods moved up 0.5% in September and increased at an annual rate of 1.2% in the third quarter. Except for petroleum and coal products, each of the major components of nondurables posted gains, led by apparel and leather and by plastics and rubber products. The operating rate for nondurable manufacturing increased 0.3% to 78.6%, but remained below its long-run average
Total industrial production in September, at 105.1% of its 2007 average, was 4.3% above its level of a year earlier. Capacity utilization moved up 0.6% in September to 79.3%, a rate 0.8% below its long-run average.
Manufacturing capacity utilization edged up to 77.3% in September from 77.1% in August, but remained below the long-term average of 78.7.
Norman cautioned that the positive September report was no indicator of what would happen for the rest of 2014. “Recent events, including the slowdown in economic growth in Europe and China, the intensifying conflict with ISIS in Syria and Iraq, and now the threat posed by Ebola in the United States, present the economy and manufacturing with new challenges” he said.
