The Federal Reserve has highlighted ongoing challenges in the U.S. economy, particularly in industrial production, as revealed in their latest report released on Friday. The report indicates that industrial production experienced a decline of 0.3 percent in October, aligning with economist predictions, following a revised decline of 0.5 percent in September.
The recent Boeing strike significantly impacted this sector, reducing growth by approximately 0.2 percentage points for the month. Additionally, Hurricane Milton and the residual effects of Hurricane Helene collectively diminished growth by a further 0.1 percentage point.
A closer look at the figures shows manufacturing output suffered a sharper fall, decreasing by 0.5 percent in October, adding to a 0.3 percent drop from the previous month. In contrast, mining output witnessed a recovery, increasing by 0.3 percent after experiencing a considerable decline of 1.9 percent in September. Utilities output also saw an improvement, climbing by 0.7 percent in October compared to a 0.3 percent rise in September.
Bernard Yaros, Lead U.S. Economist at Oxford Economics, commented on these developments, predicting that the resolution of the Boeing strike and diminishing hurricane impacts are likely to uplift the November industrial production figures. Nonetheless, he noted the significant weakness in motor vehicle and parts production, which is unlikely to see an immediate rebound.
The report further noted a dip in capacity utilization within the industrial sector, which fell to 77.1 percent in October from a revised 77.4 percent in September. This was slightly below economists' expectations, who had anticipated a decline to 77.2 percent from the initially reported 77.5 percent for September. Specifically, capacity utilization dropped to 76.2 percent in manufacturing, whereas it increased in the mining and utilities sectors, reaching 88.7 percent and 71.4 percent, respectively.
