US factory output rises 0.5 percent in September
Oct. 16, 2014
WASHINGTON (AP) — U.S. manufacturing output rose in September, led by gains for aerospace products, furniture, clothing and plastics.
The Federal Reserve said Thursday that factory production rose 0.5 percent in September after falling 0.5 percent in August. Over the past 12 months, manufacturing output has increased 3.7 percent.
The continued pace of manufacturing output will likely be a bellwether for the broader economy. Job growth has been solid for much of 2014, yet the stock market has been hammered over the past week over concerns about Europe's financial footing, the slowdown in China's economy and Ebola outbreaks across three continents. Stalled growth — if not the risk of recession — in much of Europe could cut into demand for U.S. exports.
Total industrial production surged 1 percent last month, as output from mines and utilities both increased.
Despite the gains, autos appear to have downshifted after driving much of the output growth of the past year. Factory production of motor vehicles and parts slid 1.4 percent in September, the second straight monthly decline after tumbling 7 percent in August. Most economists expected a decline after auto production soared in July, largely because there were fewer plant shutdowns in July made output look stronger after the government adjusted the figure for normal seasonal variations
That decline was more than offset by improvements in other sectors. Furniture output rose 2.4 percent in September, while aerospace products climbed 1.7 percent. Clothing increased 1.5 percent, as plastics, rubber, chemicals and computer production also improved.
Paul Ashworth, chief U.S. economist at Capital Economics, interpreted those gains as a sign that factories are successfully weathering the dampened performance of the global economy.
"The slowdowns evident in China and the euro-zone are not having the devastating impact on the U.S. economy that the financial markets now apparently believe," Ashworth said.
The Standard & Poor's 500 stock index fell nearly 1 percent in early trading on Thursday and has plunged more than 3 percent since the start of the week.
The Fed report on industrial performance also found that output at utilities surged 3.9 percent last month, likely because hotter than normal temperatures caused more people to crank up the air conditioning. Mining output grew 1.8 percent and has advanced 9.1 percent over the past year, reflecting the shale gas boom.
Other recent manufacturing indicators have been mixed.
The Institute for Supply Management, a trade group of purchasing managers, reported that the pace of manufacturing growth fell in September. Its manufacturing index fell to 56.6 from 59 in August. Anything above 50 signals that manufacturing is growing, yet the survey-based index noted that expectations for hiring and new orders declined from their August levels.
Separately, the Commerce Department said that orders to U.S. factories fell in August by the largest amount on record, declining 10.1 percent after a record increase of 10.5 percent in August. Both months in the government report were affected by swings in demand for commercial aircraft, which soared in July only to plummet in August.
The U.S. economy grew at a 4.2 percent annual rate in the April-June quarter, a significant rebound from a 2.1 percent contraction in the first quarter that reflected in part a severe winter that disrupted a number of activities.
Economists expect that continued gains in employment will spur consumer spending and translate into annual growth of around 3 percent in the second half of this year.