The Federal Reserve reported that manufacturing production edged up 0.1 percent in September, bouncing back ever so slightly from declines across the past two months. With that said, the data continue to reflect softness due to the hurricane-related reductions in activity from Hurricanes Harvey and Irma, and the Federal Reserve estimates that this subtracted 0.25 percentage points from growth in the month.
Beyond weather, we have seen a lot of volatility in the output data for the manufacturing sector since March, essentially seesawing from month to month. This has meant that production has grown less than desired or expected, especially given the more robust outlook in other data sources. As a result, manufacturing production has risen 1.0 percent over the past 12 months. While this is better than last year—when the year-over-year rate registered -0.1 percent—a faster pace of growth is preferable. Indeed, the year-over-year pace has drifted lower since April’s 1.8 percent rate.
Manufacturing capacity utilization remained the same at 75.1 percent in September. Utilization rates have trended down since peaking at 76.0 percent in April, but capacity continues to be slightly higher than the 74.9 percent rate seen at this time last year.
The underlying data were mixed. Durable goods manufacturing production increased a relatively healthy 1.0 percent in September, but nondurable goods output fell 0.9 percent, declining for the second straight month. The largest gains included nonmetallic mineral products (up 3.1 percent), machinery (up 3.0 percent), wood products (up 1.6 percent), plastics and rubber products (up 1.1 percent), computer and electronic products (up 0.9 percent) and fabricated metal products (up 0.7 percent), among others. In contrast, chemicals (down 2.6 percent), petroleum and coal products (down 1.7 percent), apparel and leather (down 1.0 percent), printing and support (down 1.0 percent) and paper (down 0.9 percent) led the declines in September.
Meanwhile, total industrial production also rebounded, up 0.3 percent in September after falling in both July and August. In addition to manufacturing, mining (up 0.4 percent) and utilities (up 1.5 percent) activity improved in September.
Over the past 12 months, industrial production has risen 1.6 percent. This was notably better than the 1.2 percent year-over-year decline in September 2016, but down from the 2.2 percent year-over-year pace in May. Mining production rose 9.8 percent year-over-year, with utilities production off 4.1 percent over the past 12 months. In addition, capacity utilization rose from 75.8 percent to 76.0 percent in this release. This was off from 76.6 percent in April but better than the 75.6 percent reading one year ago.