The Federal Reserve on Tuesday said its index of industrial production, a measure of output at factories, mines and utilities, rose last month as output continued to recover from the depths of the spring.
Total production rose 1.1% in October, slightly above economists’ consensus of 1.0%, following a 0.4% downwardly revised September reading. Even with the monthly gain, output in October was 5.6% lower than the levels earlier this year before the pandemic.
Manufacturing, the biggest component of production, rose 1% after a 0.1% increase in September. The index for durable manufacturing rose 0.9% as small drops in the indexes for furniture and related products, fabricated metal products, and motor vehicles and parts were outweighed by gains elsewhere. These gains were especially strong for aerospace and miscellaneous transportation equipment, and for miscellaneous manufacturing.
Despite the recovery, manufacturers could still face significant headwinds in the coming months.
The index for nondurables rose 1.2%; nearly all of its components posted gains. The output of other manufacturing (publishing and logging) fell 1.5%.
Utility production rose 3.9%, and mining output fell 0.6% and remains 14.4% below its level of a year ago.
Capacity utilization rose to 72.8% in October from a revised 72% in September. Economists had expected that rate to reach 72.2% in October. Capacity utilization for manufacturing rose 0.7% in October to 71.7%, 11.6% higher than its trough in April but still 6.5% below its long-run average.
While it is clear that U.S. manufacturing activity has recovered from the pandemic-induced depths, manufacturers could still face significant headwinds in the coming months. A sudden decline in demand, possibly combined with government-imposed restrictions on their operations because of the virus, would hurt industrial output.
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