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  Industrial Production Declined 0.9% in August
Posted Under: Data Watch • Industrial Production - Cap Utilization


Implications:  Following six straight monthly gains, industrial production in August declined the most for any month since 2009.  However, the overall 0.9% decline was mostly due to Hurricane Harvey, with the Federal Reserve saying the storm reduced both overall production and manufacturing in particular by roughly 0.75%.  The other big negative in today's report was for utilities, which fell 5.4%, primarily due to mild temperatures reducing demand for air-conditioning on the East Coast.  Excluding these effects – Harvey and mild temperatures in the East –industrial production would have been up close to 0.5% in August, which is consistent with the 1.6% gain in the past year.  Remarkably, auto production rose 2.2% in August.  Look for a bounce in overall production in the months ahead once the effects of Hurricane Irma also filter through the data and weather patterns return to normal.  In the meantime, it'll be a rocky ride.  Take mining, which fell 0.8% in August, held back by drilling and well service activity.  Harvey knocked oil and gas-well drilling down 4.7% in August, although it's still up a massive 86% from a year ago.  Look for a bounce back in drilling activity in the months ahead once the effects of the storms pass.  In other news this morning, the Empire State index, a measure of manufacturing sentiment in New York, fell to a still very high 24.4 in September from 25.2 in August, showing continued strength in the factory sector. 

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Posted on Friday, September 15, 2017 @ 11:58 AM • Post Link Share: 
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