In September, US industrial production experienced a more significant decline than anticipated, largely impacted by a strike involving Boeing, a leading aerospace manufacturer, as well as the effects of two hurricanes. The Federal Reserve released data indicating that industrial output fell by 0.3% during the month, following an equal increase of 0.3% in August.
Analysts had projected a milder decrease of 0.2%, according to a survey compiled by Bloomberg. On an annual basis, industrial production reported a decline of 0.6% in September. Manufacturing output saw a 0.4% decrease in September, which contrasts with a 0.5% increase from the prior month. Specifically, the index for durable manufacturing declined by 1%, with substantial drops in the aerospace sector and miscellaneous transportation equipment, which plummeted by 8.3%, as noted by the Federal Reserve. The challenges within the manufacturing sector were exacerbated last week when Boeing retracted its latest pay offer to workers on strike after negotiations with the International Association of Machinists and Aerospace Workers faltered.
Economic analysts at Desjardins pointed out that these factors, including the impact of hurricanes named Francine and Helene, have significantly affected September's industrial production figures. Francis Genereux, Principal Economist at Desjardins, emphasized that while these impacts may be temporary, the ongoing strike at Boeing and Hurricane Milton—having made landfall in October—will likely influence future economic indicators in the fourth quarter. Delving into the durable goods category, a minimum decline of 1% was recorded across furniture, motor vehicles, parts, and electrical equipment and appliances, based on the Federal Reserve’s data.
In contrast, nondurable manufacturing experienced a slight growth of 0.2%, with notable increases in petroleum and coal products, which rose by 1.8%, alongside printing and support services, which saw a 1% increase. Additionally, utilities output grew by 0.7% in September, recovering from a 1.3% decline in August.
However, mining production faced a setback with a 0.6% decline, following a previous increase of 0.7% the month before. The report also indicated a reduction in capacity utilization, which fell to 77.5% in September from 77.8% in the preceding month, suggesting potential economic strain in the industrial sector as businesses navigate striking workforce dynamics and climatic disruptions..