Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Industrial Production Declined 1.3% in September
Posted Under: Data Watch • Employment • Government • Industrial Production - Cap Utilization • Retail Sales • Fed Reserve • COVID-19
Supporting Image for Blog Post

Implications:  September was a perfect storm for the US industrial sector, with lingering effects from Hurricane Ida and ongoing supply chain issues coming together to generate an ugly report. The headline index fell 1.3% in September, with every major category contributing to the decline.  Meanwhile, the readings on activity in prior months were revised down as well.  Overall, the Federal Reserve estimates that roughly half of the decline in industrial production in September can be attributed to the hurricane.  Looking at the details, the manufacturing sector led the headline index lower, falling 0.7%.  Both auto and non-auto manufacturing posted declines, but the 7.2% drop in the auto sector due to ongoing issues with semi-conductor shortages illustrates the persistence of supply-chain disruptions in certain key sectors.  Meanwhile, activity in the mining sector fell 2.3%, though the Federal Reserve made a point of noting that this was entirely due to short-term Hurricane Ida disruptions. Look for the mining sector (think oil rigs in the gulf) to be a tailwind for overall industrial production in the months ahead as activity ramps up in crude oil and natural gas extraction, spurred on by a rebound from Ida-related problems as well as prices that are now at the highest levels since 2014.  Finally, utilities output fell 3.5% in September as demand for air conditioning declined after an unseasonably warm August.  Looking at things more broadly, today's decline leaves industrial production 1.3% below its pre-pandemic level and production still has a long way to go to meet current demand.  For example, last week's report on retail sales showed that consumer spending is up 18.9% over that same time period.  Ongoing issues with supply chains and labor shortages are hampering a more robust rise in activity, with job openings in the manufacturing sector currently near a record high and more than double pre-pandemic levels.  This mismatch between supply and demand is why inflation continues to defy the "transitory" narrative.  Look for industrial production to start bouncing back in the months ahead in an effort to close that gap.

Click here for a PDF version
Posted on Monday, October 18, 2021 @ 12:34 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.