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US Industrial Production Rebounds in October

US Industrial Production Rebounds in October

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON (AP) — U.S. industrial production rebounded in October as automakers, stung by supply chain problems, posted strong increases and the adverse effects from a hurricane that struck the nation’s energy complex in the Gulf of Mexico faded.

Industrial production rose 1.6% last month after a 1.3% plunge in September, the Federal Reserve reported Tuesday. The gain was double what had been expected.

The September weakness reflected severe shortages of semiconductor chips that contributed to a fall in auto production and the lingering impacts of Hurricane Ida which disrupted oil and gas production.

The Fed attributed about half of the October gain to recovery from the effects of Ida, which had come ashore in Louisiana on Aug. 29, triggering widespread shutdowns at refineries and chemical plants.

Industrial output in October was also helped by an 11% jump in production of motor vehicles and parts, after two months of declines caused by severe supply chain shortages of the semiconductors needed as component parts.

In the major industry groups, manufacturing activity rose 1.2% while mining, which includes oil and gas production, surged 4.1% and output at the nation’s utilities was up 1.2%.

Economists cautioned that even with the better-than-expected October gain, production in coming months will be weighed down by continuing supply chain bottlenecks.

Andrew Hunter, senior U.S. economist at Capital Economics, said that the decision by General Motors to restart all of its North American plants this month pointed to further recovery in auto production, but not a total recovery.

“With many of those factories still running well below capacity, and industry estimates suggesting that the semiconductor shortage will persist, at a minimum until well into next year, we expect auto production will remain weak,” Hunter said.

The Fed reported that output of machinery fell by 1.3% last month with part of that decline attributed to the strike at farm implement manufacturer John Deere.

 

When asked for a comment, NAED’s Data Analyst, Erin Prinster, added: “Automotive unit assemblies jumped 15% in October over September, which was 10% higher than we predicted. October’s numbers show just how assembly production will continue to fluctuate due to the chip shortage; there will be a few months of relief in the chip backlog followed by a few months of slowdowns.”

The most recent edition of NAED’s Economic & Industry Sector Outlook is now available. Keep up on the latest information about the economy, predictions of what’s to come, and what NAED members say about Q4 revenues by purchasing your copy today.

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