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US Manufacturing Output Rises as Impact from Hurricanes Fades

Oct. 17, 2017
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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