U.S. Industrial Production Rebounds Much More Than Expected In October
After unexpectedly reporting a steep drop in U.S. industrial production in the previous month, the Federal Reserve released a report on Tuesday showing industrial production rebounded by much more than expected in the month of October.
The report showed industrial production surged up by 1.6 percent in October after tumbling by 1.3 percent in September. Economists had expected industrial production to increase by 0.7 percent.
The Fed said about half of the rebound in industrial production in October reflected a recovery from the effects of Hurricane Ida.
“The drag from Hurricane Ida has quickly faded, but supply-side constraints will continue to be a headwind in the coming months,” said Kathy Bostjancic, Chief US Financial Economist at Oxford Economics. “Logistics difficulties are the worst chokepoint, and input shortages and hiring constraints are making problems worse.”
“We expect supply to catch up to demand around mid-2022, but it could take longer to overcome these challenges,” she added. “Meanwhile, forward-looking data signal demand will stay robust next year.”
Manufacturing output jumped by 1.2 percent in October after falling by 0.7 percent in September, reflecting a sharp increase in the production of motor vehicles and parts.
The report also showed mining output spiked by 4.1 percent in October after plunging by 2.3 percent in September, while utilities output shot up by 1.2 percent after plummeting by 3.7 percent.
Additionally, the Fed said capacity utilization in the industrial sector climbed to 76.4 percent in October from 75.2 percent in September. Capacity utilization was expected to rise to 75.9 percent.
Capacity utilization in the utilities sector rose to 73.8 percent, while capacity utilization in the manufacturing and mining sectors increased to 76.7 percent and 76.9 percent, respectively.
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