U.S. Industrial Production Unexpectedly Tumbles 1.3% In September
October 18 2021 - 5:06AM
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Industrial production in the U.S. unexpectedly showed a steep
drop in the month of September, the Federal Reserve revealed in a
report released on Monday.
The Fed said industrial production tumbled by 1.3 percent in
September following a revised 0.1 percent dip in August.
The sharp decline surprised economists, who had expected
industrial production to edge up by 0.2 percent compared to the 0.4
percent increase originally reported for the previous month.
The report said manufacturing output fell by 0.7 percent, with
the production of motor vehicles and parts plunging by 7.2 percent
amid the semiconductor shortage.
Utilities output also plummeted by 3.6 percent, as demand for
cooling subsided after a warmer-than-usual August, while mining
production slumped by 2.3 percent due to the lingering effects of
Hurricane Ida.
"The drag from Hurricane Ida will inevitably fade, but
supply-side constraints will be with us for some time," said Oren
Klachkin, Lead U.S. Economist at Oxford Economics. "Logistics
difficulties are the worst chokepoint, and input shortages, hiring
constraints, and little spare domestic production capacity are
making problems worse."
"We expect supply to catch up to demand around mid-2022, but it
could take longer to overcome these challenges," he added.
"Meanwhile, forward-looking data signal demand will stay robust
next year."
The Fed also said capacity utilization for the industrial sector
slid to 75.2 percent in September from a downwardly revised 76.2
percent in August.
Economists had expected capacity utilization to inch up to 76.5
percent from the 76.4 percent originally reported for the previous
month.
Capacity utilization in the manufacturing sector fell to 75.9
percent, while capacity utilization in the mining and utilities
sectors slumped to 73.9 percent and 73.0 percent, respectively.
Despite the monthly decrease in September, the Fed noted total
industrial production jumped 4.3 percent year-over-year for the
third quarter as a whole, reflecting the fifth consecutive quarter
with a gain of at least 4 percent.
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