WASHINGTON (Reuters) – Industrial production in the US rose for a fourth consecutive month in September, buoyed by both manufacturing and mining production, but momentum slowed sharply in the third quarter.
An employee works on the sealer line in the paint department during a tour of an automotive plant in Marysville, Ohio, October 1
The Federal Reserve said Tuesday industrial production rose 0.3 percent after an unrevised increase of 0.4 percent in August. Industrial production grew at an annualized 3.3 percent in the third quarter, after accelerating 5.3 percent in the second quarter.
The Fed said industrial production was "lightly" depressed in September by Hurricane Florence, who soaked South and North Carolina in mid-September. The US Federal Reserve estimated the impact of the storm on industrial production at "less than 0.1 percentage points".
Manufacturing output rose 0.2 percent in September, the smallest increase in four months, after rising 0.3 percent in August. A 1.7 percent increase in vehicle production helped lift production last month. The production of motor vehicles rose by 4.3 percent in August.
The production of primary metals, machinery and wood products also increased strongly.
U.S. The financial markets were little moved by the data.
The manufacturing sector, which accounts for around 12 percent of the economy, is supported by a strong domestic economy. However, the momentum is slowing in the face of a strong dollar and slowing global growth that is inhibiting exports.
There is little evidence so far that the "America-First" policy of the Trump administration, which has implicated the United States in a bitter trade war with China, is disrupting factory production.
However, manufacturers are increasingly complaining that the tariffs between Washington and Beijing disrupt supply chains, which could affect future production.
There is also a shortage of skilled workers in this sector, especially among truck drivers, which leads to delivery delays and bottlenecks in the supply chain.
Manufacturing output rose 2.8 percent in the third quarter, after rising 2.3 percent from April to June. Mining output rose 0.5 percent in September, up 0.4 percent in August. However, oil and gas drilling declined for the third consecutive time in September.
Mine production increased 11.4 percent in the third quarter, after beating 16.5 percent in the second quarter. The sector rebounded from its low of around 24 percent in 2016.
Utilities production remained flat in September, after rising 1.1 percent in the previous month. A strong increase in natural gas production was offset by a decline in power generation.
Capacity utilization for the industrial sector, a measure of how fully companies use their resources, remained at 78.1 percent. It is 1.7 percentage points below its average from 1972 to 2017. Capacity utilization in the industry rose to 78.0 percent in the third quarter, the highest level since the first quarter of 2015, compared to 77.8 percent in the April-June period ,
Fed officials tend to look at capacity measures to signal how much "leeway" remains in the economy – how much growth can go before it becomes inflationary.
Reporting by Lucia Mutikani; Editing by Andrea Ricci