Industrial Production is slowing, although other surveys point to stronger manufacturing growth

Industrial production was weaker than expectations in September falling 0.2% in the month. Manufactured production also declined by 0.2% in September. Mining output rose 0.7% in September (and has surged 13.3% at annual rate over the last three months), while utilities production fell 1.9%.

Over the last three months, the growth rate of manufacturing and industrial output has slowed to about half the pace seen over the previous year (and this despite an acceleration in the output of motor vehicles).

However other survey data on manufacturing (ISM, orders, regional surveys), seem to point to manufacturing growth, although much too weak to make a difference in jobs.

You still cannot ignore that industrial output has expanded for five consecutive quarters at an annualized pace of 6.8% (7.3% for manufacturing alone). One bright spot remains the production of business equipment (an investment spending proxy), which rose 9.9% at an annual rate in the third quarter, slightly ahead of its five-quarter recovery growth rate of 9.7%. There remains lots of unused capacity and, with output growth slowing in the quarter, we can see these data providing more support among some members of the FOMC for QE2 in November.

Source RDQ


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