US manufacturing production rises strongly in September
WASHINGTON (Reuters) – U.S. factory output rose more than expected in September despite auto strikes that curbed auto production, further evidence that the economy emerged from the third quarter with momentum.
The Federal Reserve said on Tuesday that manufacturing output rose 0.4% last month. Data for August was revised downward to show factory production falling by 0.1% instead of rising by 0.1% as previously reported. Economists polled by Reuters had expected factory production to rise by 0.1%.
Production fell by 0.8% year-on-year in September. It did not change in the third quarter. Manufacturing production of durable goods increased at an annual rate of 2.3%, which was offset by a 2.4% decline in non-durable industries.
Production of automobiles and spare parts rose 0.3% last month after falling 4.1% in August.
The United Auto Workers (UAW) union embarked on limited strikes at plants owned by General Motors, Ford and Chrysler parent Stellantis in mid-September. The industrial action has since expanded, shutting down a Ford truck plant in Kentucky last week.
Despite last month’s strong performance, manufacturing remains constrained by slowing demand for goods due to rising interest rates. Since March 2022, the Fed has raised its benchmark overnight interest rate by 525 basis points to the current range of 5.25% to 5.50%.
Manufacturing represents 11.1% of the economy. But the worst for the sector is likely over, with the Institute for Supply Management’s measure of national factory activity rising to a 10-month high in September.
Last month, there were strong increases in the production of wood, primary metals, plastics and rubber products. But the production of clothing and leather, as well as printing and supporting goods, is declining.
Mining production rose 0.4% after rising 0.2% in August. Utility production fell 0.3% after rising 0.7% the previous month. Total industrial production rose 0.3% in September after remaining unchanged in August.
Industrial production increased by 2.5% in the third quarter. This came after growth of 0.7% in the second quarter.
The industrial sector’s capacity utilization rate, a measure of how fully companies are using their resources, rose 0.2 percentage points to 79.7% in September. It is now equal to its average over the period 1972-2022. The manufacturing sector’s employment rate rose to 77.8% from 77.7% in the previous month, which is 0.4 percentage points below its long-term average.
(Reporting by Lucia Mutikani; Editing by Paul Simao)