U.S. Industrial Production Fell in September as Supply-Chain Woes, Ida Hit Activity
October 18 2021 - 10:07AM
Dow Jones News
By Xavier Fontdegloria
Industrial production in the U.S. declined in September as
supply chain disruptions and lingering effects of Hurricane Ida
weighed on manufacturing and mining output during the month.
Industrial production--which includes factory, mining and
utility output--fell at a seasonally adjusted 1.3% in September
compared with the previous month, data from the Federal Reserve
released Monday showed. The reading missed forecasts from
economists polled by The Wall Street Journal, who expected a 0.2%
increase.
September's decline in industrial production is the sharpest
since February, when the severe winter weather in the south and
central region of the country disrupted factory activity. In
August, industrial output fell by a revised 0.1% from a 0.4% rise
previously estimated.
Manufacturing output--the biggest component of industrial
production--fell by 0.7% in September compared with August. Motor
vehicle and parts production decreased by 7.2% amid the shortage of
semiconductors.
The lingering effects of Hurricane Ida also contributed to the
drop in manufacturing, by 0.3 percentage points, the Fed said.
Supply-chain related problems that have been crippling
industrial output in the last few months continue to run rampant,
according to regional surveys for the manufacturing sector.
Economists surveyed this month by the Journal expect
supply-chain related woes to weigh on the economy through much of
next year, with around 45% of them estimating that it will take
until the second half of 2022 for bottlenecks to have mostly
receded.
"With supply issues broadly likely to last for longer than
expected a few months ago, maintaining production levels in line
with pre-pandemic levels over the coming months would be a positive
sign that supply issues are not leading to a more concerning
slowdown in activity," Citi's economist Veronica Clark said in a
note ahead of the industrial production data release.
Utilities output declined 3.6% in September as demand for
cooling subsided after a warmer than usual August, the Fed said.
Mining output decreased 2.3%, with rigs in the Gulf of Mexico still
idled for much of the month after hurricane Ida.
Industrial production in September was 4.6% above the same month
a year earlier.
Capacity utilization, which reflects how much industries are
producing compared with what they could potentially produce, fell
one percentage point to 75.2% in September. Economists expected a
76.5% reading.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
October 18, 2021 09:52 ET (13:52 GMT)
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