September 2017 Industrial Production

Industrial production was positive in the final month of the third quarter after pretty dismal showings in the prior two periods.  Output of all physically made goods increased 0.3 percent in September 2017 according to the Federal Reserve.  This uptick was not enough to recapture the losses from July and August.  July was downwardly revised to -0.6 percent (originally -0.1 percent), while August was upwardly revised to -0.7 percent (originally -0.9 percent). 

America’s factory base is struggling.  Manufacturing managed an increase of just 0.1 percent in the period.  This small gain followed declines of 0.4 percent and 0.2 percent in July and August respectively.  Some of the recent weakness was weather related as this segment of the economy felt the influence of bad late-summer weather along the Gulf Coast. 

Mining and utilities fared better in the period.  Mining output increased 0.4 percent, making back all of the prior period's decline of 0.2 percent and then some.  Utilities’ increase of 1.5 percent, however, was not enough to regain fully the prior period’s decline of 4.5 percent.

Capacity utilization gained some ground in the period.  Our nation used 76.0 percent of its potential, improving from 75.8 percent in August.  Most of this uptick came as a result of increased utilities use; this segment grew its utilization by 1.1 percentage points to 74.8 percent.  Mining tapped 83.5 percent of its potential (an increase of 0.1 percentage point).  Manufacturers continued using 75.1 percent of their capacity, matching the prior period’s reading.

This portion of the economy is not performing well.  Manufacturing has gained just 1.0 percent in the past year.  This is being influenced by the 3.2 percent decline for vehicles & parts.  Manufacturing tends to be sensitive to the business cycle, so its weakness will be watched closely here at Atlas.  If continued signs of fragility emerge, you’ll read about it here.