Industrial Production rose over 1% in the month of October. On a year-to-year basis, the industrial economy is still down, but with the real estate market humming along (homebuilder sentiment is at all-time highs) and Boeing’s 737 Max getting recertified, continued recovery in the industrial sector looks likely. Assuming of course that the incoming administration doesn’t choke off business investment with burdensome regulation.
David Harrison reports on the industrial production results for The Wall Street Journal, writing:
U.S. industrial production rose last month, as output continued its slow climb back from deep declines last spring due to pandemic-related shutdowns.
The Federal Reserve on Tuesday said its index of industrial production—a measure of output at factories, mines and utilities—rose a seasonally adjusted 1.1% in October, following a revised 0.4% decline in September.
Output remains 5.6% below where it was in February, before the coronavirus pandemic hit, the Fed said.
Economists said they expect to see production continue to make up lost ground in the coming months since demand for goods has held up better than demand for services. But the alarming rise in new coronavirus cases around the country could slow that expansion.
“For December and January all bets are off, given the uncertainty over the extent and duration of the restrictions,” which will be needed to bring the new surge in Covid cases under control, said Ian Shepherdson, chief economist at Pantheon Macroeconomics in a note to clients.
Industrial production fell at a record pace in the spring as factories were closed to halt the spread of the coronavirus. The Fed’s index plunged in March and April before rebounding in June and July. Growth since has been more muted.
Manufacturing, the biggest component of production, rose 1%, after a 0.1% increase in September.
Utility production rose 3.9%, the Fed said. Mining output fell 0.6% and remains 14.4% below its level a year ago.
Capacity utilization, a measure of slack in the industrial economy, rose to 72.8% in October from a revised 72% in September. Economists had expected capacity utilization to reach 72.2% in October.
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