U.S. Industrial Production Slipped 0.2% in September

U.S. industrial production for SeptemberAmerica's economic recovery suffered a slight setback as industrial production unexpectedly dipped 0.2% in September, the U.S. Federal Reserve announced. It marked that index's first decline since June 2009. Capacity utilization dipped to 74.7% in September from August's revised 74.8%. Although September's utilization rate is 4.2 percentage points higher than a year ago, it's still 5.9 percentage points below the 1972-2009 average of 80.6%.

A Bloomberg survey had expected industrial production to rise 0.2% in September after a 0.2% gain in August. Industrial production rose 0.7% in July, 0.1% in June and 1.1% in May. That same survey also had expected the capacity utilization rate to remain unchanged at 74.8%.

September's industrial production decline was concentrated in utilities and manufacturing. Output at utilities -- which typically falls after the peak summer air-conditioning season passes -- plunged 1.9%, and manufacturing output declined 0.2%. Mining output rose 0.7%.

A Mild Disappointment

The industrial production and capacity utilization data are closely watched because even though manufacturing accounts for less than 20% of U.S. GDP, it accounts for a considerable portion of the nation's cyclical growth. Also, continual declines in production point to a softening economy. Rising output indicates the reverse. A low capacity utilization rate usually reflects softer demand, while high rate means strong demand, with the potential for increased inflation.

Sponsored Links
Separately, foreign demand for long-term U.S. securities totaled $128.7 billion in August, the latest month for which data are available, the U.S. Treasury Department announced today.

September's dip in industrial production is a mild disappointment. Manufacturing was expected to slow in the second quarter, as inventory rebuilding waned, but the 0.2% decline in September was larger than expected.

Still, one month is not enough to suggest a change in the generally positive long-term story of expansion in industrial production. If international demand remains strong -- and a weaker dollar should help American manufacturers like Boeing (BA), Caterpillar (CAT) and Alcoa (AA) with large foreign sales -- industrial production will more than likely resume its uptrend in the months ahead.
Read Full Story


NASDAQ 7,337.39 127.30 1.77%
S&P 500 2,747.30 43.34 1.60%
DJIA 25,309.99 347.51 1.39%
NIKKEI 225 21,892.78 156.34 0.72%
HANG SENG 31,267.17 301.49 0.97%
DAX 12,483.79 21.88 0.18%
USD (per EUR) 1.23 0.00 0.01%
USD (per CHF) 0.94 0.00 0.03%
JPY (per USD) 106.87 0.01 0.00%
GBP (per USD) 1.40 0.00 0.00%

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.